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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1998.
REGISTRATION NO. 333-21949
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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SAFELITE GLASS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation)
7536
(Primary Standard Industrial
Classification Code Number)
13-3386709
(IRS Employer
Identification No.)
1105 SCHROCK ROAD, COLUMBUS, OHIO 43229 (614) 842-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
SEE TABLE OF ADDITIONAL REGISTRANTS
------------------------
JOHN F. BARLOW
CHIEF EXECUTIVE OFFICER
SAFELITE GLASS CORP.
1105 SCHROCK ROAD
COLUMBUS, OHIO 43229
(614) 842-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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WITH COPY TO:
CHARLES W. ROBINS, ESQ.
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
9 7/8 Series B Senior Subordinated Notes Due 2006..... $100,000,000 $1,000 $100,000,000 $30,303
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Guarantee of 9 7/8 Series B Senior Subordinated Notes $100,000,000 (1) (1) (1)
Due 2006............................................
</TABLE>
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(1) No additional consideration will be paid by the purchasers of the Senior
Subordinated Notes for the Guarantee. Pursuant to Rule 457(n), no separate
fee is payable in respect of the Guarantee.
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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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TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF PRIMARY STANDARD
EXACT NAME OF REGISTRANT INCORPORATION OR CLASSIFICATION I.R.S. EMPLOYER
AS SPECIFIED IN ITS CHARTER ORGANIZATION CODE IDENTIFICATION NO.
--------------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
U.S.A. Glas, Inc.(1)........................ Illinois 7536 36-3711715
U.S. Auto Glass Centers, Inc.(1)............ Illinois 7536 36-2828900
CarComp Services Inc.(1).................... Illinois 7536 36-3737847
</TABLE>
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(1) The address, including zip code, and telephone number, including area code,
of the Additional Registrant's principal executive offices is 1105 Schrock
Road, Columbus, Ohio 43229, (614) 842-3000.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS REGISTRATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 14, 1998
PROSPECTUS
$100,000,000
SAFELITE LOGO
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF
9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2006 FOR EACH $1,000 IN PRINCIPAL
AMOUNT OF OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2006
Safelite Glass Corp. (the "Company") hereby offers to exchange (the "Exchange
Offer") up to $100,000,000 in aggregate principal amount of its 9 7/8% Series B
Senior Subordinated Notes due 2006 (the "Exchange Notes") for $100,000,000 in
aggregate principal amount of its outstanding 9 7/8% Senior Subordinated Notes
due 2006 (the "Initial Notes"; and together with the Exchange Notes, the
"Notes").
The terms of the Exchange Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Initial Notes for which they may be exchanged pursuant to this offer, except
that the Exchange Notes are freely transferable by holders thereof (except as
provided in the next paragraph below) and are issued without any covenant upon
the Company regarding registration. The Exchange Notes will be issued under the
indenture governing the Initial Notes, as amended by the First Supplemental
Indenture dated as of December 12, 1997 and the Second Supplemental Indenture
dated as of December 18, 1997. For a complete description of the terms of the
Exchange Notes, see "Description of the Exchange Notes." There will be no cash
proceeds to the Company from this offer. The Initial Notes and the Exchange
Notes are unsecured obligations of the Company. The Exchange Notes will be
guaranteed on a senior subordinated basis, jointly and severally (the
"Guarantees"), by the Company's subsidiaries (the "Subsidiary Guarantors"). The
Guarantees are an unconditional obligation of the Subsidiary Guarantors.
The Initial Notes were originally issued and sold on December 20, 1996 in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption provided in Section 4(2) of
the Securities Act. Accordingly, the Initial Notes may not be reoffered, resold
or otherwise pledged, hypothecated or transferred in the United States unless so
registered or unless an applicable exemption from the registration requirements
of the Securities Act is available. Based upon interpretations by the Staff of
the Securities and Exchange Commission issued to third parties, the Company
believes that Exchange Notes issued pursuant to the Exchange Offer in exchange
for Initial Notes may be offered for sale, resold and otherwise transferred by
holders thereof (other than any holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act
provided that such Exchange Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal (as defined herein) states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Initial Notes where such Exchange Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The Initial Notes and the Exchange Notes constitute new issues of securities
with no established trading market. Any Initial Notes not tendered and accepted
in the Exchange Offer will remain outstanding. To the extent that Initial Notes
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered and tendered but unaccepted Initial Notes could be adversely
affected. Following consummation of the Exchange Offer, the holders of Initial
Notes will continue to be subject to the existing restrictions on transfer
thereof and the Company will have no further obligation to such holders to
provide for the registration under the Securities Act of the Initial Notes held
by them. No assurance can be given as to the liquidity of the trading market for
either the Initial Notes or the Exchange Notes.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Initial Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on , 1998, unless extended
(the "Expiration Date"). The date of acceptance for exchange for the Initial
Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Initial Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date; otherwise such tenders are
irrevocable.
Interest on the Exchange Notes shall accrue from the last June 15 or December 15
(an "Interest Payment Date") on which interest was paid on the Initial Notes so
surrendered.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Exchange Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission and to which reference is
hereby made. Statements made in this Prospectus as to the contents of any
contract, agreement or other document 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 matter involved, and each such statement shall be deemed
qualified by such reference.
For further information with respect to the Company and the Notes,
reference is made to the Registration Statement. A copy of the Registration
Statement can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth St., N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street Suite 1400, Chicago, Illinois 60661-2511. Copies
of such materials can be obtained from the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov.
The Company intends, and is required by the terms of the Indenture dated as
of December 20, 1996, among the Company, SGC Franchising Corp. (a former
subsidiary of the Company) and Fleet National Bank, as trustee, as amended by
the First Supplemental Indenture dated as of December 12, 1997, between the
Company and State Street Bank and Trust Company, as successor trustee to Fleet
National Bank (the "Trustee"), and the Second Supplemental Indenture dated as of
December 18, 1997, among the Company, the Subsidiary Guarantors and the Trustee,
under which the Notes are issued, to furnish the holders of the Notes with
annual reports containing financial statements audited by its independent
certified public accountants and with quarterly reports containing unaudited
financial statements for each of the first three quarters of each fiscal year.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
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UNTIL , ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS 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.
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PROSPECTUS SUMMARY
The following summary is qualified by, and should be read in conjunction
with, the more detailed information, risk factors and financial statements,
including the related notes, appearing elsewhere in this Prospectus. Unless
otherwise referred to herein or the context otherwise requires, references to
"Safelite" and the "Company" shall mean Safelite Glass Corp., a Delaware
corporation and its consolidated subsidiaries. Unless otherwise referred to
herein or the context otherwise requires, references to "Vistar" shall mean
Vistar, Inc., an Illinois corporation, and its consolidated subsidiaries. Unless
otherwise indicated, all references to fiscal years up to and including 1997 in
this Prospectus are to the fiscal years ending on the Saturday closest to
December 31 of each year. Unless otherwise stated, all references to market
share data in this Prospectus are estimates made by the Company's management
based on Company and industry data and are expressed in units, except with
respect to insurance customer segment data which is expressed in dollar volume.
Unless the context otherwise requires, references to the "Exchange Offer" refer
to the offer to exchange the Exchange Notes for the Initial Notes.
THE COMPANY
COMPANY OVERVIEW
Safelite is the largest provider of automotive glass replacement and repair
services in the United States. The Company installed approximately 1.7 million
replacement units in 1997 for insurance companies, commercial fleet leasing and
rental car companies, car dealerships and body shops, government agencies and
individual consumers. The Company provides these installation services through
its service centers, mobile vans, centralized telephone/dispatch centers and its
network of independent automotive glass replacement and repair providers. The
Company has targeted its marketing efforts principally towards auto insurance
companies which management believes, through their policyholders, directly or
indirectly influence approximately 70% of the selections of automotive glass
replacement providers. The Company has developed fully integrated claims
processing solutions for auto insurance companies which reduce their glass loss
expenses and total administrative costs and provide a higher level of customer
service to their policyholders. Management believes that this outsourcing
capability, coupled with the convenience of nationwide coverage, consistently
high quality service and low costs, has provided the Company with a significant
competitive advantage in the insurance segment of the market. Since 1993, the
Company's management believes that it has significantly increased its leading
market share in this segment, resulting in improved financial performance as
demonstrated by compounded annual growth in sales through 1997 of 10% to $483.3
million. During the same period, operating income improved from an operating
loss of $6.4 million in 1993 to $25.8 million of operating income in 1997.
Adjusted EBITDA (as defined) for the same period grew from $22.0 million to
$49.6 million, a compounded annual growth rate of 22%. Sales, operating income
and adjusted EBITDA for the three months ended April 4, 1998 were $213.8
million, $4.9 million and $18.2 million, respectively. See "Summary Historical
and Pro Forma Financial Information."
On December 19, 1997, Safelite completed a merger with Vistar whereby
Vistar was merged with and into the Company, with the Company as the surviving
corporation (the "Vistar Merger"). The Vistar Merger was accounted for as a
purchase. Accordingly, the operations of Vistar are included in the Company's
financial statements from December 19, 1997 forward. Prior to the Vistar Merger,
Vistar was the second largest provider of automotive glass replacement and
repair services in the United States. Vistar was created on February 29, 1996 by
the merger of Windshields America Inc., a wholly owned subsidiary of Belron
(USA) BV (together with its affiliates hereinafter referred to as "Belron"), and
Globe Glass and Mirror Company. Vistar installed or repaired approximately 1.6
million units in its fiscal year ended March 31, 1997 for insurance companies,
commercial fleet leasing and rental car companies, car dealerships and body
shops, government agencies and individual consumers. Vistar provided these
installation services through its 356 service centers and approximately 1,000
mobile vans and its network of independent automotive glass replacement and
repair providers. Vistar net sales and operating income were $413.5 and $8.8
million, respectively, for its fiscal year ended March 31, 1997 and $339.5
million
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and a loss of $8.2 million, respectively, for the nine months ended December 19,
1997. See "Transactions -- The Vistar Transactions." At April 4, 1998, the
combined companies had two manufacturing facilities, 74 warehouses, 47
centralized telephone/dispatch centers, approximately 2,000 mobile vans and 809
service center locations across the United States.
The automotive glass replacement and repair industry in 1997 was a $3.0
billion market, representing the installation of approximately 12.5 million
replacement units. The replacement and repair of automotive glass is driven by
the incidence of breakage. Over the past 10 years, management estimates that
total industry sales have grown at approximately 4% per year, primarily as a
result of growth in the aggregate number of vehicles on the road, increases in
the number of miles driven and increases in the price of replacement automotive
glass. This price increase principally reflects the increased size and design
complexity of automotive glass. Such growth has been fairly consistent year to
year, with some variations resulting primarily from fluctuations in weather
conditions.
The automotive glass replacement and repair industry is highly fragmented
with approximately 20,000 competitors. Safelite is the industry leader with an
estimated overall market share of approximately 23% and the leading market share
in the insurance segment of the market. Since the early 1990s, the industry has
been consolidating as evidenced by an increase in market share for the top three
industry participants from an estimated 24% in 1992 to an estimated 35% in 1997
and a decline in market share for small "mom and pop" providers from an
estimated 70% to an estimated 55% during the same period.
Management expects this consolidation to continue as insurance companies
and large fleet lessors require nationwide coverage and consistent service while
seeking to reduce costs by outsourcing their automotive glass claims. For
insurance companies, automotive glass repair and replacement claims represent a
disproportionate administrative burden. Management estimates such claims account
for less than 6% of the dollar value of all auto claims paid but over 30% of the
total number of auto claims processed.
COMPETITIVE STRENGTHS
Industry Leadership and Nationwide Coverage. Safelite is the largest
competitor in the highly fragmented automotive glass replacement and repair
industry. The Company operates service centers in all of the top 100
Metropolitan Statistical Areas ("MSAs") in the United States. Through its
nationwide network, the Company can directly serve 70% of the cars and light
trucks in the United States and, through its authorized independent replacement
and repair providers, achieves over 90% coverage. Safelite has the largest
number of service center locations and the largest network of independent
automotive glass replacement and repair providers in the United States.
Management believes that the Company's leadership position and breadth of
geographic coverage is a significant competitive advantage in working with
insurance companies, commercial fleet lessors and other large customers which
increasingly demand consistent quality in both claims processing and automotive
glass repair and replacement services on a nationwide basis.
Strong, Established Relationships with Major Insurance Companies. Safelite
has successfully established strong relationships with the nation's major auto
insurance companies, and management believes it has more program relationships
with these companies than any of its competitors. The top 30 auto insurers
influence approximately 55% of all repairs and replacements in the United
States. Safelite has entered into Total Customer Solution ("TCS") arrangements
with approximately 25 of those insurers including Farmers Insurance Group,
United Services Automobile Association, Prudential Insurance Company of America,
and Safeco Corporation. Under a TCS arrangement, Safelite typically serves as
one of a few recommended automotive glass replacement providers for an insurance
company and provides a range of additional claims management services including
computerized referral management, policyholder call management, electronic
auditing and billing services and management reporting. Of Safelite's
approximately 45 TCS arrangements, those with Allstate, Nationwide Mutual
Insurance Company, GEICO, Liberty Mutual Insurance Company, Travelers Group, CNA
Insurance Group, Metropolitan Property and Casualty Insurance Company and
National General Insurance are also Master Provider ("MP") relation-
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ships. Under an MP program, Safelite acts as the administrator of an insurance
company's automotive glass claims. TCS and MP programs significantly lower the
processing costs and loss expenses for the insurance companies, provide more
consistent and rapid service for policyholders, and increase Safelite's volume
with each insurance account. In addition, the Company has entered into TCS
arrangements with major fleet and rental car companies including GE Capital
Fleet Services, PHH Vehicle Management Services Corporation, USL Capital Fleet
Services, Hertz Corporation and Budget Rent-A-Car Systems, Inc. Of these
arrangements, those with PHH Vehicle Management and USL Capital Fleet are also
MP relationships. By entering into these arrangements with insurance, fleet and
rental car companies, Safelite has substantially increased its volume with these
accounts and enhanced its base of recurring revenues.
Low Cost Provider. Safelite has a total cost advantage compared to its
competitors as a result of its manufacturing facilities, its productivity
incentive programs, the efficiency of its nationwide distribution network and
the critical mass of its centralized customer service, claims processing and
information network. Management believes the Vistar Merger, coupled with the
worldwide industry experience of Belron, the partial owner of Safelite, will
significantly enhance the overall cost advantage Safelite enjoyed prior to the
Vistar Merger.
Safelite is the only full-scale vertically integrated automotive glass
replacement company in the U.S. The Company produces approximately 65% of its
windshield needs at its two manufacturing plants in Enfield, North Carolina and
Wichita, Kansas. Safelite produces only high-volume windshield models,
manufacturing 550 of the total 2,800 active windshield parts available in the
industry. Safelite determines which windshield models to produce by assessing
the sales trends and estimating future windshield demand after a new automobile
model has been on the market for approximately one year. The Company then
designs selected windshield models through a process of reverse engineering.
The Company uses a three tiered distribution system to better serve its
customers and minimize its inventory levels. Two central distribution facilities
are located at the Company's manufacturing facilities in Enfield, North Carolina
and Wichita, Kansas. These central distribution facilities send inventory to the
Company's 74 regional warehouses (27 free-standing warehouses and 47 co-located
with the Company's Central Telephone Units). These facilities can then quickly
and accurately stock the service centers and vans in their local markets on an
as-needed basis.
Every Safelite employee participates in some form of incentive compensation
plan which rewards productivity and/or profitability of the Company. The
Company's management estimates that its performance incentive program has
increased productivity of its installation associates from 2.5 installations per
day in 1991 to 4.0 per day in 1997 (while the industry averaged an estimated 3.0
installations per day and Vistar's installation associates averaged
approximately 3.2 installations per day). As a result of the significant
economies of scale in its manufacturing, information systems, distribution and
installation infrastructure, management believes it has the capacity to add
incremental contracts and units at relatively low marginal cost.
Sophisticated Information Systems. The Company's information systems allow
Safelite to handle all aspects of an insured automotive glass claim effectively
and cost efficiently, from the initial phone call placed by the insured
policyholder to the automatic billing of an insurance company. Through
Safelite's fully integrated network ("SAFENET(TM)"), the Company can provide
full service to the policyholder by electronically accessing the insurance
company's database, verifying the policyholder's coverage status, scheduling the
glass installation, checking relevant inventories, ordering delivery (when
necessary) of automotive glass to a Safelite service center, repairing or
replacing the glass, electronically billing the insurance company and, if
applicable, paying the service providers. The insurance company's role is
limited to funding the claim payment and updating its policy files. In addition
to providing an integrated delivery system, SAFENET(TM) also provides management
and Safelite's customers with valuable information. This "real time" data allows
Safelite to track and monitor important statistics including customer
satisfaction, length of call and speed of installation. Safelite uses this data
to improve its customer service and provide comprehensive monthly management
reports for its large insurance customers. These reports include information to
which the insurance companies otherwise do not have access, including
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<PAGE> 8
statistics on number of claims, price per claim and percent of repairs versus
replacement. Safelite believes it is the only company in the industry currently
providing such reports.
STRATEGIES FOR GROWTH
Expand and Enhance Relationships with Insurance Companies. The Company's
principal business strategy is to increase its share in the segment of the
automotive glass replacement and repair market influenced by insurance companies
by expanding the breadth and depth of its existing relationships. The Company
currently provides its replacement and repair services to the policyholders of
virtually every major automotive insurance company in the U.S. The Company
focuses its marketing and sales strategy on adding new insurance relationships
and increasing its share of business with its existing insurance clients.
Management believes that as it processes greater proportions of an
insurance company's replacement and repair claims, it can continue to reduce
related loss expenses and administrative costs for the insurance company, while
improving policyholder satisfaction through faster, more reliable and consistent
installation service.
The Company continually strives to enhance the value it provides to
insurance company clients while improving profitability through increased market
share. Recent examples include (i) implementation of a Repair First Network to
help improve repair performance, (ii) development of on-line call center
scheduling capability for faster, more efficient policyholder service and (iii)
creation of a SmartPay process under which insurance companies pay only
"reasonable and customary" prices for glass claims serviced by non-program
providers.
Expand Nationwide Coverage. Following the elimination of duplicative
service center locations resulting from the Vistar Merger, the Company plans to
continue expanding the breadth and depth of its nationwide network by
selectively acquiring regional automotive glass replacement and repair
businesses and opening new service center locations. The Company believes that
it can enhance its sales and results through the integration of well-targeted
acquisitions into Safelite's nationwide network. In addition, the Company
expects to open 5 to 10 additional service centers annually to complement its
existing network.
Provide Additional Outsourcing Services to Insurance and Fleet
Companies. Management believes that Safelite can leverage its existing customer
relationships and claims processing infrastructure to provide additional
outsourcing services to insurance and fleet companies for items such as
pre-insurance vehicle inspection, towing referral, post-collision rental car
referral, after hours loss reporting and residential glass claims processing.
These services are characterized by significant administrative burdens, high
processing costs and low dollar loss values like the automotive glass
replacement and repair service that the Company otherwise provides to insurance
and fleet companies efficiently and cost-effectively. The Company is evaluating
plans to offer these services as a natural extension of its core automotive
glass business.
The Company maintains its executive headquarters at 1105 Schrock Road,
Columbus, Ohio 43229, telephone (614) 842-3000.
SUMMARY OF THE TRANSACTIONS
THE THL TRANSACTIONS
Prior to December 20, 1996, the Company was a subsidiary of LSNWY Corp.
("LSNWY"), and an indirect subsidiary of Lear Siegler Holdings Corp. ("Lear
Siegler"). Pursuant to a Recapitalization Agreement and a Plan of Merger and
Stock Purchase Agreement (the "Agreement") dated November 8, 1996, the Company
completed a series of related transactions on December 20, 1996 (collectively,
the "THL Transactions"), whereby Thomas H. Lee Equity Fund III, L.P., certain
affiliates of Thomas H. Lee Company and certain other investors (collectively,
"THL"), acquired for $58.7 million, approximately
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<PAGE> 9
88% of the Company's voting stock and, for approximately $58.2 million, all of
the outstanding shares of the Company's 8% Cumulative Preferred Stock. Certain
existing stockholders, including management of the Company, retained ownership
of approximately 12% of the Company's voting stock. The Agreement also provided
for Safelite's acquisition (through a newly formed subsidiary) of substantially
all of the outstanding common stock of Lear Siegler, its former parent. See
"Transactions -- The THL Transactions."
SALE OF LEAR SIEGLER
On September 12, 1997, the Company sold all of the issued and outstanding
shares of the capital stock (the "Lear Siegler Stock") of Lear Siegler to BPLSI
Investment Company, a Delaware corporation (the "Purchaser") owned by James F.
Matthews, the former President of Lear Siegler. The purchase price for the Lear
Siegler Stock was $100,000 in cash and a Promissory Note delivered by the
Purchaser to the Company. The operations of Lear Siegler, a former industrial
conglomerate whose subsidiaries manufactured a range of products, were never an
integral part of the Company's automotive glass replacement and repair business.
The Company believes that the sale of Lear Siegler has enabled the Company
to focus on its core business. See "Transactions -- Sale of Lear Siegler."
THE CONSENT SOLICITATION
On November 28, 1997, the Company commenced a solicitation of consents (the
"Consent Solicitation"), from the holders of the Initial Notes, to certain
amendments to the Indenture (the "Indenture Amendments") to be effected through
execution of a First Supplemental Indenture. The purpose of the Indenture
Amendments was, among other things, to permit the Company to make the
Distribution (as defined below) and increase the amount of its senior bank
indebtedness in connection with the Distribution and, thereafter, in connection
with the operation of the combined companies following the merger of Vistar with
and into the Company, as contemplated by the Merger Agreement entered into on
October 10, 1997 between the Company and Vistar (the "Vistar Merger Agreement").
See "-- The Vistar Merger." On December 12, 1997, the Company successfully
completed the Consent Solicitation, having received the requisite consents to
the Indenture Amendments from the holders of the Initial Notes. Upon
consummation of the Distribution, the Company made consent payments aggregating
$5.0 million ($50.00 for each $1,000.00 principal amount of Initial Notes then
outstanding).
THE VISTAR TRANSACTIONS
On December 19, 1997, the Company completed the Vistar Merger with the
Company as the surviving corporation. Prior to the Vistar Merger, the Company
declared and paid a dividend on its outstanding shares of Class A Common Stock
in the aggregate amount of approximately $67.2 million and declared and paid a
dividend on its outstanding shares of 8% Cumulative Preferred Stock equal to the
accrued and unpaid dividends thereon in the aggregate amount of approximately
$4.8 million (collectively, the "Dividend"), and redeemed all outstanding shares
of its 8% Cumulative Preferred Stock at an aggregate redemption price of $58.2
million (the "Redemption" and, together with the Dividend, the "Distribution").
Subsequent to the Distribution and prior to consummation of the Vistar Merger,
the Company effected a 1 for 3 reverse stock split (the "Stock Split") of its
Class A Common Stock, which was reclassified as Class A Voting Common Stock, and
reclassified its authorized class of Class B Common Stock as Class B Non-Voting
Stock, and declared and paid a dividend on each share of Class A Voting Stock
outstanding after the Stock Split in the form of two shares of Class B
Non-Voting Stock. The Company also authorized the creation of a new series of
preferred stock, designated as Non-Voting 8% Preferred Stock ("Non-Voting
Preferred Stock").
The aggregate consideration received by the holders of Vistar's outstanding
capital stock (the "Vistar Shareholders") in the Vistar Merger consisted of
1,690,101 shares of Class A Voting Stock, 6,959,771 shares of Class B Non-Voting
Stock, 40,000 shares of Non-Voting Preferred Stock ($40 million
7
<PAGE> 10
aggregate liquidation preference) and $65 million cash (collectively, the
"Merger Consideration"). As a result of the Vistar Merger, the holders of the
Company's outstanding capital stock immediately prior to the Vistar Merger (the
"Safelite Shareholders") retained ownership of 50.5% of the outstanding Class A
Voting Stock and became the owners of approximately 33% of the outstanding Class
B Non-Voting Stock (including shares subject to exercisable options to acquire
Class B Non-Voting Stock) and the Vistar Shareholders became the owners of 49.5%
of the outstanding Class A Voting Stock, approximately 67% of the outstanding
Class B Non-Voting Stock and 100% of the outstanding Non-Voting Preferred Stock.
In connection with the consummation of the Vistar Merger and related
transactions (the "Vistar Transactions"), the Company refinanced its then
existing credit facilities (the "1996 Credit Facilities"). The new credit
facilities (the "Bank Credit Agreement") consist of (a) a term loan facility in
an aggregate principal amount of $350.0 million (the "Term Loan Facility") and
(b) a revolving credit facility providing for revolving loans to the Company and
the issuance of letters of credit for the account of the Company in an aggregate
principal amount (including the aggregate stated amount of letters of credit and
the aggregate reimbursement and other obligations in respect thereof) at any
time not to exceed $100.0 million (the "Revolving Credit Facility" and, together
with the Term Loan Facility, the "Senior Credit Facilities"). See "Description
of Other Indebtedness." The Indenture provides that the Company must cause any
Restricted Subsidiary that guarantees the Company's indebtedness under the Bank
Credit Agreement to execute and deliver a supplemental indenture pursuant to
which such Restricted Subsidiary shall agree to be bound by the Indenture as a
Subsidiary Guarantor. Immediately prior to the Vistar Merger, the Company had no
subsidiaries. Upon consummation of the Vistar Merger, the Company had three
Restricted Subsidiaries, each of which has guaranteed payment of the Company's
indebtedness under the Bank Credit Agreement and, as a Subsidiary Guarantor, has
executed and delivered the Second Supplemental Indenture dated as of December
18, 1997.
THE EXCHANGE OFFER
The Exchange Offer............ The Company is offering to exchange up to
$100,000,000 aggregate principal amount of
9 7/8% Series B Senior Subordinated Notes due
2006 for $100,000,000 aggregate principal
amount of its outstanding 9 7/8% Senior
Subordinated Notes due 2006. The terms of the
Exchange Notes are substantially identical in
all respects (including principal amount,
interest rate and maturity) to the terms of the
Initial Notes for which they may be exchanged
pursuant to the Exchange Offer, except that the
Exchange Notes are freely transferable by
holders thereof (except as provided
herein -- see "The Exchange Offer -- Terms of
the Exchange" and "-- Terms and Conditions of
the Letter of Transmittal"), and are not
subject to any covenant regarding registration
under the Securities Act. The Exchange Notes
will be issued under the Indenture governing
the Initial Notes as amended by the First
Supplemental Indenture dated December 12, 1997
and the Second Supplemental Indenture dated as
of December 18, 1997 (the "Indenture").
Interest Payments............. Interest on the Exchange Notes shall accrue
from June 15, 1998 or from the last Interest
Payment Date on which interest was paid on the
Initial Notes so surrendered.
Minimum Condition............. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Initial
Notes being tendered for exchange.
Expiration Date............... The Exchange Offer will expire at 5:00 p.m.,
New York time, on , 1998, unless
extended.
8
<PAGE> 11
Exchange Date................. The date of acceptance for exchange of the
Initial Notes will be the first business day
following the Expiration Date.
Conditions of the Exchange
Offer......................... The obligation of the Company to consummate the
Exchange Offer is subject to certain
conditions. See "The Exchange
Offer -- Conditions to the Exchange Offer." The
Company reserves the right to terminate or
amend the Exchange Offer at any time prior to
the Expiration Date upon the occurrence of any
such condition.
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
the Expiration Date. Otherwise, all tenders are
irrevocable. Any Initial Notes not accepted for
any reason will be returned without expense to
the tendering holders thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Procedures for Tendering
Initial Notes................. See "The Exchange Offer -- How to Tender."
Federal Income Tax
Consequences.................. The exchange of Initial Notes for Exchange
Notes should be treated as a "non-event" for
Federal income tax purposes. See "Income Tax
Considerations."
Effects on Holders of Initial
Notes......................... As a result of the making of, and upon
acceptance for exchange of all validly tendered
Initial Notes pursuant to the terms of, this
Exchange Offer, the Company will have fulfilled
a covenant contained in the terms of the
Initial Notes and the Exchange and Registration
Rights Agreement as amended (the "Exchange and
Registration Rights Agreement") dated December
20, 1996 between the Company, Chase Securities
Inc., BT Securities Corporation and Smith
Barney Inc. (collectively, the "Initial
Purchasers") and, accordingly, the Company will
have no further obligations to pay an increased
rate of interest on the Initial Notes pursuant
to the terms of the Exchange and Registration
Rights Agreement, the Initial Notes or the
Indenture. The holders of the Initial Notes
will have no further registration rights under
the Exchange and Registration Rights Agreement
with respect to the Initial Notes. Holders of
the Initial Notes who do not tender their Notes
in the Exchange Offer will continue to hold
such Initial Notes and their rights under such
Initial Notes will not be altered, except for
any such rights under the Exchange and
Registration Rights Agreement, which by their
terms terminate or cease to have further
effectiveness as a result of the making of, and
the acceptance for exchange of all validly
tendered Initial Notes pursuant to, the
Exchange Offer. All untendered and tendered but
unaccepted Initial Notes will continue to be
subject to the restrictions on transfer
provided for in the Initial Notes and in the
Indenture. To the extent that Initial Notes are
tendered and accepted in the Exchange Offer,
the trading market for untendered Initial Notes
could be adversely affected.
9
<PAGE> 12
TERMS OF THE EXCHANGE NOTES
Terms capitalized but not defined below have the meanings ascribed to them
in "Description of Exchange Notes."
Issuer........................ Safelite Glass Corp.
Securities Offered............ $100 million aggregate principal amount of
9 7/8% Series B Senior Subordinated Notes due
2006.
Maturity...................... December 15, 2006.
Interest Payment Dates........ June 15 and December 15, commencing June 15,
1997.
Sinking Fund.................. None.
Optional Redemption........... The Exchange Notes are redeemable in whole or
in part, at the option of the Company on or
after December 15, 2001, at the redemption
prices set forth herein plus accrued and unpaid
interest, if any, to the date of redemption. In
addition, prior to December 15, 1999, the
Company, at its option, may redeem up to $35
million of the aggregate principal amount of
the Notes originally issued with the net cash
proceeds of one or more Equity Offerings, at a
redemption price equal to 109.875% of the
principal amount thereof plus accrued and
unpaid interest, if any, to the date of
redemption; provided that at least $65 million
of the original principal amount of Notes
remains outstanding after any such redemption.
Change of Control............. Upon a Change of Control Triggering Event, the
Company will be required to make an offer to
repurchase the Notes at a price equal to 101%
of the principal amount thereof, together with
accrued and unpaid interest, if any, to the
date of repurchase. There can be no assurance
that the Company would have the financial
resources necessary to repurchase the Notes
upon a Change of Control Triggering Event. The
occurrence of certain of the events which would
constitute a Change of Control Triggering Event
would constitute a default under the Bank
Credit Agreement. As of April 4, 1998, the
aggregate indebtedness that would have become
due upon the occurrence of a Change of Control
Triggering Event under the Indenture and a
default under the Bank Credit Agreement was
$491.2 million.
Ranking....................... The Exchange Notes will be general unsecured
obligations of the Company and will be
subordinated in right of payment to all
existing and future Senior Indebtedness of the
Company. The Exchange Notes will rank pari
passu with any future Senior Subordinated
Indebtedness of the Company and will rank
senior to all future subordinated indebtedness
of the Company. The Guarantees will be general
unsecured senior subordinated obligations of
the Subsidiary Guarantors and will be
subordinated in right of payment to all
existing and future Guarantor Senior
Indebtedness, including the guarantees of the
Subsidiary Guarantors under the Bank Credit
Agreement. The Guarantees will rank pari passu
with any future senior subordinated
indebtedness of the Subsidiary Guarantors and
only Indebtedness which is Guarantor Senior
Indebtedness will rank senior in right of
10
<PAGE> 13
payment to the Guarantee of the Subsidiary
Guarantors. The Exchange Notes and the
Guarantees will also be effectively
subordinated to all secured indebtedness of
either the Company or any of its subsidiaries
(including indebtedness under the Bank Credit
Agreement) to the extent of the value of the
assets securing such indebtedness. As of April
4, 1998, the Company had approximately $403.6
million of Senior Indebtedness (excluding $17.6
million in outstanding letters of credit). The
Indenture permits the Company to incur
indebtedness in addition to the Notes and the
Term Loan Facility of up to approximately $73.7
million (including the Revolving Credit
Facility) and certain other indebtedness as
described in the definition of "Permitted
Indebtedness," as well as an additional amount
pursuant to a fixed charge coverage ratio test
that as of April 4, 1998, would not permit the
incurrence of any additional indebtedness. See
"Description of Notes -- Limitation on
Incurrence of Additional Indebtedness." The
Indenture permits all of such additional
indebtedness to be Senior Indebtedness or
Secured Indebtedness. The Senior Indebtedness
under the Senior Credit Facilities will be
Secured Indebtedness. See "Description of Other
Indebtedness."
Restrictive Covenants......... The Indenture contains certain covenants that
limit the ability of the Company and certain of
its subsidiaries to, among other things, incur
additional indebtedness, pay dividends or make
certain other restricted payments, consummate
certain asset sales, enter into certain
transactions with affiliates, incur
indebtedness that is subordinate in right of
payment to any Senior Indebtedness and senior
in right of payment to the Notes, incur liens,
impose restrictions on the ability of a
subsidiary to pay dividends or make certain
payments to the Company and its subsidiaries,
merge or consolidate with any other person or
sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all
of the assets of the Company. The Indenture
permits the Company to incur substantial
additional indebtedness under certain
circumstances. However, all of these
limitations and prohibitions are subject to a
number of important qualifications and
exceptions. See "Ranking" above.
Guarantees.................... The Indenture provides that any Restricted
Subsidiary of the Company which guarantees the
Company's indebtedness under the Bank Credit
Agreement will guarantee the Notes on an
unsecured senior subordinated basis. Each of
the Subsidiary Guarantors has guaranteed the
Company's indebtedness under the Bank Credit
Agreement and, pursuant to the Second
Supplemental Indenture, dated as of December
18, 1997, each of the Subsidiary Guarantors has
unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, the
Notes.
Absence of a Public Market for
the Notes..................... The Exchange Notes are new securities and there
is currently no established market for the
Exchange Notes. The Exchange Notes will
generally be freely transferable (subject to
the restrictions discussed elsewhere herein)
but will be new securities for
11
<PAGE> 14
which there will not initially be a market.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the Exchange Notes. The Exchange Notes have
been designated for trading in the PORTAL
market. The Initial Purchasers have advised the
Company that they currently intend to make a
market in the Exchange Notes. However, the
Initial Purchasers are not obligated to do so,
and any market making with respect to the
Exchange Notes may be discontinued at any time
without notice. The Company does not intend to
apply for a listing of the Exchange Notes on
any securities exchange or on any automated
dealer quotation system.
RISK FACTORS
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for risks involved with an investment in
the Exchange Notes.
12
<PAGE> 15
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following Summary Historical and Pro Forma Financial Information sets
forth financial data of Safelite for each of the five fiscal years during the
period ended January 3, 1998 and for the three months ended March 29, 1997 and
April 4, 1998. The statement of operations data set forth below with respect to
fiscal years ended December 30, 1995, December 28, 1996 and January 3, 1998 and
the three months ended April 4, 1998 and the balance sheet data at December 28,
1996, January 3, 1998 and April 4, 1998 are derived from the consolidated
financial statements included elsewhere in this Prospectus which have been
audited by Deloitte & Touche LLP, independent public accountants. The data
provided for the three months ended March 29, 1997 are derived from unaudited
consolidated financial statements and include in the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the data for such periods. Interim results for the three months
ended April 4, 1998 are not necessarily indicative of results that can be
expected in future periods. The pro forma consolidated financial data have been
derived from the Unaudited Pro Forma Statement of Operations (as defined) and
the related notes thereto included elsewhere in this Prospectus. The pro forma
information does not purport to represent what the Company's results would have
actually been had the Vistar Transactions and the sale of Lear Siegler occurred
at the date indicated nor does such information purport to project the results
of the Company for any future period. The summary financial data below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Unaudited Pro Forma Consolidated
Statement of Operations" and the financial statements and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR(1) THREE MONTHS
--------------------------------------------------- ENDED
PRO --------------------
FORMA MARCH 29, APRIL 4,
1993 1994 1995 1996 1997 1997 1997 1998
------ ------ ------ ------ ------ ------ --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................... $328.3 $357.4 $372.1 $438.3 $483.3 $879.8 $107.8 $213.8
Cost of sales....................... 229.7 246.1 261.7 299.6 331.7 679.8 75.8 155.5
------ ------ ------ ------ ------ ------ ------ ------
Gross profit........................ 98.6 111.3 110.4 138.7 151.6 200.0 32.0 58.3
Selling, general & administrative
expenses.......................... 100.4 90.8 93.5 107.3 111.8 186.6 26.0 46.5
Other operating expenses(2)......... -- 21.1 -- 7.6 5.7 8.1 -- 3.1
Loss on sale of Lear Siegler........ -- -- -- -- 5.4 5.4 -- --
Restructuring expense(3)............ 4.6 -- 6.3 -- 2.9 2.9 -- 3.8
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from operations....... (6.4) (0.6) 10.6 23.8 25.8 (3.0) 6.0 4.9
Interest expense.................... (15.5) (4.5) (6.0) (6.7) (27.5) (44.5) (6.3) (10.9)
Interest income..................... 0.3 2.2 2.9 2.1 1.3 1.5 0.3 0.1
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from continuing
operations before income taxes,
minority interest and
extraordinary items............... (21.6) (2.9) 7.5 19.2 (0.4) (46.0) 0.0 (5.9)
Income tax benefit (provision)(4)... 0.3 (0.2) (0.1) 17.6 6.8 21.8 (0.1) 1.6
Minority interest................... 0.1 (2.7) (1.1) (10.2) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from continuing
operations before extraordinary
items............................. (21.2) (5.8) 6.3 26.6 6.4 $(24.2) (0.1) (4.3)
======
Discontinued operations(5).......... (43.2) -- -- 1.7 -- -- --
Extraordinary loss(6)............... -- (1.5) -- (0.5) (2.8) -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss)................... $(64.4) $ (7.3) $ 6.3 $ 27.8 $ 3.6 $ (0.1) $ (4.3)
====== ====== ====== ====== ====== ====== ======
OTHER FINANCIAL DATA:
EBITDA(7)(8)........................ $ 10.2 $ 6.6 $ 24.5 $ 31.8 $ 37.4 $ 23.8 $ 8.0 $ 15.1
EBITDA margin....................... 3.1% 1.8% 6.6% 7.3% 7.7% 2.7% 7.4% 7.1%
Adjusted EBITDA(8)(9)............... $ 22.0 $ 29.1 $ 25.5 $ 42.6 $ 49.6 $ 37.3 $ 8.7 $ 18.2
Pro Forma Adjusted EBITDA to cash
interest expense(10).............. 0.9x
Cash flows from operating
activities........................ (10.3) 6.5 (10.1) 0.1 2.4 (16.7) (15.6)
Cash flows from investing
activities........................ 153.2 (24.1) (34.7) 21.5 (85.4) (4.3) (5.2)
Cash flows from financing
activities........................ (115.4) 28.9 5.2 (4.2) 59.2 6.3 23.7
Depreciation and amortization....... 12.0 7.2 7.6 8.0 8.7 23.9 2.0 6.4
Capital expenditures................ 7.7 14.2 12.0 12.8 13.9 4.2 2.4
Ratio of earnings to fixed
charges(11)....................... -- -- 1.4x 2.0x -- -- 1.0x --
BALANCE SHEET DATA:
Working capital..................... $ 41.0 $ 41.9 $ 58.1 $ 56.6 $ 29.8 $ 56.6 $ 40.3
Total assets........................ 169.8 193.7 188.3 216.2 558.1 204.0 576.4
Total indebtedness.................. 35.0 63.8 69.0 263.7 479.9 270.0 503.6
Stockholders' equity (deficit)...... 7.7 0.2 (0.6) (128.5) (46.9) (128.6) (48.4)
</TABLE>
- ---------------
(1) Prior to 1998, the Company's fiscal year ended on the Saturday closest to
December 31 of each year. On May 18, 1998, the Company changed its fiscal
year to the Saturday closest to March 31.
13
<PAGE> 16
(2) Other operating expenses in 1994 are comprised of a $2.5 million one-time
charge recorded by the Company to conform its method of accounting to
Statement of Position (SOP) No. 93-7, "Reporting on Advertising Costs" and
$18.6 million primarily related to curtailment and settlement losses for
pension plans of previously disposed Lear Siegler subsidiaries. Other
operating expenses in 1996 are comprised of management transaction bonuses
related to the THL Transaction of $6.9 million and estimated costs
(primarily severance) of $0.7 million to exit the activities of Lear
Siegler. Other operating expenses in 1997 include $1.0 million of
management transaction bonuses, $3.0 million related to acceleration of
vesting of certain management stock options and $0.5 million related to
forgiveness of certain officer loans made in connection with the Vistar
Merger. Also included in other operating expenses in 1997 are costs related
to obtaining bondholder consent to the Vistar Merger of $1.2 million. Other
operating expenses of $3.1 million in the three months ended April 4, 1998
consist of costs associated with the integration of corporate systems,
moving, relocation and other expenses associated with the Vistar Merger.
See Notes 1, 2, 4 and 10 to the Company's Consolidated Financial Statements
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Pro forma results for 1997 also include $2.4
million in one-time integration costs incurred by Vistar in connection with
the merger between Windshields and Globe. See "Unaudited Pro Forma
Statement of Operations."
(3) In 1993, the Company recorded $4.6 million in restructuring charges related
to the planned closing of approximately 70 service center locations. In
1995, the Company recorded $6.3 million in restructuring charges. Of this
amount, $5.6 million related to the planned closing of 100 service center
locations and $0.7 million related to field management reorganization. In
1997, the Company recorded restructuring charges totaling $2.9 million
consisting of $0.4 million for planned closing of Safelite service center
locations and $2.5 million related to Safelite employee severance.
Restructuring charges of $3.8 million for the three months ended April 4,
1998 consisted of $2.5 million for planned closing of approximately 50
Safelite service center locations and $1.3 million related to Safelite
employee severance. See Notes 4 and 5 to the Company's Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(4) The adoption of SFAS No. 109, "Accounting for Income Taxes" in 1993 was not
material to the Company's consolidated results of operations or its
financial condition. During 1996 and 1997, the valuation allowance provided
against the Company's deferred tax assets was reduced by $25.9 million and
$3.0 million, respectively. See Note 14 to the Company's Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(5) In 1993, five operating businesses of Lear Siegler were sold and a
resulting loss on sale of discontinued operations of $45.2 million was
recognized. 1993 income from operations of such businesses was $2.0
million. In 1996, a gain from discontinued operations totaling
approximately $1.7 million was recorded, consisting of $27.2 million in
favorable resolution of various tax contingencies of previously
discontinued Lear Siegler operations offset by $25.5 million of settlement
costs for various liability issues related to previously disposed of Lear
Siegler subsidiaries. See Note 16 to the Company's Consolidated Financial
Statements.
(6) In 1994, 1996 and 1997, extraordinary losses of $1.5 million, $0.5 million
and $2.8 million, respectively, were recorded, net of minority interest and
income tax of $0.3 million, $0.3 million and $1.9 million, respectively, as
a result of expensing unamortized loan origination fees related to the
early retirement of the associated debt.
(7) "EBITDA" is defined herein as income (loss) from operations plus the sum of
depreciation, amortization and restructuring expenses. EBITDA is presented
in this Prospectus as it is a basis upon which the Company assesses its
financial performance and because certain covenants in the Company's
borrowing arrangements are tied to these measures. EBITDA as determined by
the Company may not be comparable to EBITDA as reported by other companies.
EBITDA does not represent funds available for discretionary uses and should
not be considered as an alternative to operating income (loss) or net
income (loss) as a measure of operating results or to cash flows as a
measure of liquidity (each as determined in accordance with generally
accepted accounting principles).
14
<PAGE> 17
(8) The following is a reconciliation of operating income to EBITDA and
adjusted EBITDA for the period presented:
<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS
--------------------------------------------- ENDED
PRO --------------------
FORMA MARCH 29, APRIL 4,
1993 1994 1995 1996 1997 1997 1997 1998
----- ----- ----- ----- ----- ----- --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from operations........ $(6.4) $(0.6) $10.6 $23.8 $25.8 $(3.0) $6.0 $ 4.9
Depreciation and amortization........ 12.0 7.2 7.6 8.0 8.7 23.9 2.0 6.4
Restructuring charges................ 4.6 -- 6.3 -- 2.9 2.9 -- 3.8
----- ----- ----- ----- ----- ----- ---- -----
EBITDA............................... 10.2 6.6 24.5 31.8 37.4 23.8 8.0 15.1
Other operating expenses............. -- 21.1 -- 7.6 5.7 8.1 -- 3.1
Lear Siegler operating expenses...... 11.8 1.4 1.0 3.2 1.1 -- 0.7 --
Loss on sale of Lear Siegler......... -- -- -- -- 5.4 5.4 -- --
----- ----- ----- ----- ----- ----- ---- -----
Adjusted EBITDA...................... $22.0 $29.1 $25.5 $42.6 $49.6 $37.3 $8.7 $18.2
===== ===== ===== ===== ===== ===== ==== =====
</TABLE>
(9) "Adjusted EBITDA" is defined herein as EBITDA plus other operating
expenses, the operating expenses of Lear Siegler (which has been treated as
an exited activity) and the loss recognized by the Company in connection
with the sale of Lear Siegler. The estimated costs to exit Lear Siegler
activities, consisting primarily of severance costs, were accrued in 1996.
Adjusted EBITDA and pro forma adjusted EBITDA do not represent funds
available for discretionary uses and should not be considered as an
alternative to operating income (loss) or net income (loss) as a measure of
operating results or to cash flows as a measure of liquidity (each as
determined in accordance with generally accepted accounting principles).
(10) "Pro Forma Adjusted EBITDA to cash interest expense" is computed as the
ratio of pro forma adjusted EBITDA to pro forma cash interest expense.
Adjusted EBITDA to cash interest expense is presented in this Prospectus as
it is a basis upon which the Company assesses its financial performance and
because certain covenants in the Company's borrowing arrangements are tied
to similar measures. See "Unaudited Pro Forma Consolidated Statement of
Operations."
(11) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes and cumulative effect
of accounting changes, plus fixed charges. Fixed charges consist of
interest expense on all indebtedness and capitalized interest, amortization
of deferred financing costs and one-half of rental expense on operating
leases, representing that portion of rental expense deemed by the Company
to be attributable to interest. For 1993, 1994, 1997, Pro Forma 1997 and
the three months ended April 4, 1998 the deficiency of earnings to fixed
charges was $21.6 million, $2.9 million, $0.4 million, $46.0 million and
$5.9 million, respectively.
15
<PAGE> 18
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the purchase of the
Exchange Notes offered hereby:
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT; NEED TO REFINANCE NOTES
As a result of the THL Transactions and the Vistar Transactions, the
Company has significant debt service obligations. As of April 4, 1998 the
Company had aggregate outstanding indebtedness of approximately $503.6 million,
of which $391.2 million represented aggregate outstanding indebtedness under the
Bank Credit Agreement (which amount excludes outstanding letters of credit), and
stockholders' deficit of $48.4 million. The Company may incur additional
indebtedness in the future, subject to certain limitations contained in the
instruments governing its indebtedness, including the Indenture.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes and other purposes may be
impaired; (ii) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of the principal and interest on its
indebtedness thereby reducing the funds available to finance operations; (iii)
the Company may be more highly leveraged than certain of its competitors, which
may place the Company at a competitive disadvantage; (iv) certain of the
Company's borrowings will be at variable rates of interest (including borrowings
under the Bank Credit Agreement) which will expose the Company to the risk of
fluctuating interest rates; (v) the Company's substantial degree of leverage
will limit its flexibility to adjust to changing market conditions, reduce its
ability to withstand competitive pressures and make it more vulnerable to a
downturn in economic conditions; and (vi) the Company's ability to refinance the
Notes in order to pay the principal of the Notes at maturity or upon a Change of
Control Triggering Event may be adversely affected.
The Company's ability to satisfy its interest payment obligations under its
indebtedness will depend largely on its future performance, which, in turn, is
subject to prevailing economic conditions and to financial, business and other
factors beyond its control. In addition, all amounts owing under the Bank Credit
Agreement will become due prior to the time the principal payments on the
Exchange Notes will become due and such amounts will need to be refinanced.
Furthermore, the Company does not expect to be able to repay the principal
amount of the Notes at maturity and accordingly will need to refinance the
Notes, or repay the Notes with the proceeds of an equity offering, at or prior
to their maturity. There can be no assurance that the Company will be able to
generate sufficient cash flow to service its interest payment obligations under
its indebtedness or that future borrowings or equity financing will be available
for the payment or refinancing of the Company's indebtedness. To the extent that
the Company is not successful in negotiating renewals of its borrowings or in
arranging new financing, it may have to sell significant assets, which would
have a material adverse effect on the Company's business and results of
operations. Among the factors that will affect the Company's ability to effect
an offering of its capital stock or refinance the Notes are financial market
conditions and the value and performance of the Company at the time of such
offering or refinancing. There can be no assurance that any such offering or
refinancing can be successfully completed. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Description of Other Indebtedness."
CERTAIN OPERATING CONSIDERATIONS
The Company entered into the Vistar Transactions with the expectation that
the Vistar Merger will benefit the Company. There can be no assurance that the
Company will integrate the businesses and management teams of Safelite and
Vistar successfully or that the Company will achieve desired net cost savings.
The failure to integrate the two companies' operations or management teams
successfully or to achieve such net cost savings would have a material adverse
effect on the Company. In addition, certain third parties who have business
relationships with the Company, such as customers and suppliers, may
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wish to terminate those relationships as a result of the Company's affiliation
with Vistar or Vistar's affiliation with the Company. Although the Company does
not believe that any loss of such business relationships which would have a
material adverse impact on the Company will occur as a result of the Vistar
Merger, there can be no assurance that third parties will not terminate business
relationships with the Company as a result of the Vistar Merger.
COSTS RELATING TO THE VISTAR MERGER
In connection with the Vistar Merger, the Company expects to incur $37
million to $42 million in aggregate costs for severance and the consolidation
and elimination of duplicate facilities. The Company also expects to incur a
total of $5 million to $10 million in calendar 1998 for certain one-time
expenses associated with the integration of corporate systems, temporary service
fees, training, moving, relocation and other costs associated with the Vistar
Merger. Costs related to the Vistar Merger could increase if the Company
encounters difficulties in the integration of the two businesses. There can be
no assurance that the combined company will not incur additional costs, which in
turn could have a material adverse effect on the business, financial condition
or results of operations of the Company. For a discussion of the expected cost
savings incident to the Vistar Merger, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations." These costs and cost savings
have not been reflected in the pro forma adjustments to the Pro Forma
Consolidated Statements of Operations.
DEBT RESTRICTIONS; COMPLIANCE WITH CERTAIN COVENANTS; ASSET ENCUMBRANCES
The Indenture and the Bank Credit Agreement impose restrictions that
affect, among other things, the ability of the Company and its subsidiaries, as
the case may be, to incur debt, pay dividends, sell assets, create liens, make
capital expenditures and investments and otherwise enter into certain
transactions outside the ordinary course of business. The Bank Credit Agreement
also requires the Company to maintain specified financial ratios and meet
certain financial tests. Although the Company is currently in compliance with
the covenants and restrictions contained in the Bank Credit Agreement, the
Company's ability to continue to comply may be affected by events beyond its
control. The breach of any of these covenants or restrictions could result in a
default under the Bank Credit Agreement, which in turn could result in the
acceleration of indebtedness under other instruments evidencing indebtedness
that may contain cross-acceleration or cross-default provisions. In the event of
any such default, the lenders under the Bank Credit Agreement could elect to
declare all amounts borrowed thereunder, together with accrued interest, to be
due and payable, or the lenders could cease making additional revolving loans.
If, as a result thereof, a default occurs with respect to Senior Indebtedness,
the subordination provisions in the Indenture would likely restrict payments to
the holders of the Exchange Notes.
In connection with the Bank Credit Agreement, the Company has granted the
lenders thereunder a first priority lien on substantially all of its assets. If
the Company were unable to repay such amounts, the lenders could foreclose upon
the assets pledged to secure such repayment, and the holders of the Exchange
Notes might not be able to receive payments, if any, until the payment default
was cured or waived, any such acceleration was rescinded, or the indebtedness
under the Bank Credit Agreement was discharged or paid in full.
SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS
The Notes and the Guarantees are subordinate and junior in right of payment
to all existing and future Senior Indebtedness of the Company, including
indebtedness of the Company under the Bank Credit Agreement, and to all existing
and future Guarantor Senior Indebtedness of the Subsidiary Guarantors, including
the guarantees of the Subsidiary Guarantors under the Bank Credit Agreement, and
the Notes are also effectively subordinated to all secured indebtedness of the
Company and the Subsidiary Guarantors, respectively, to the extent of the value
of the assets securing such indebtedness. The obligations under the Bank Credit
Agreement are guaranteed by the Subsidiary Guarantors and are secured by
substantially all of the assets of the Company and all direct and indirect
subsidiaries of the Company and a pledge of the capital stock of certain
subsidiaries of the Company. As of April 4, 1998,
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the Company had (i) approximately $403.6 million of Senior Indebtedness (which
amount excludes outstanding letters of credit) and (ii) approximately $58.7
million available under the Revolving Credit Facility (less $17.6 million in
outstanding letters of credit), to fund the future liquidity needs of the
Company, if any, all of which would be Senior Indebtedness, if borrowed.
Additional Senior Indebtedness may be incurred by the Company from time to time,
subject to certain restrictions. By reason of such subordination, in the event
of an insolvency, liquidation, or other reorganization of the Company or any
Subsidiary Guarantor, the lenders under the Bank Credit Agreement and other
creditors who are holders of Senior Indebtedness or the Guarantor Senior
Indebtedness, as applicable must be paid in full before the holders of the Notes
may be paid; accordingly, there may be insufficient assets remaining after
payment of prior claims to pay amounts due on the Notes. In addition, under
certain circumstances, no payments may be made with respect to the Notes if a
default exists with respect to certain Senior Indebtedness. See "Description of
Notes -- Ranking of Notes." The holders of the Notes will have no direct claim
against the Subsidiary Guarantors other than the claim created by the
Guarantees. The rights of holders of the Notes to participate in any
distribution of assets of any Subsidiary Guarantor upon liquidation, bankruptcy
or reorganization may, as is the case with other unsecured creditors of the
Company, be subject to prior claims against such Subsidiary Guarantor. The
Guarantees may themselves be subject to legal challenge in the event of the
bankruptcy or insolvency of a Subsidiary Guarantor, or in certain other
circumstances. If such a challenge were upheld, the Guarantees would be
invalidated and unenforceable. See "--Fraudulent Conveyance."
LIMITED ABILITY OF SUBSIDIARY GUARANTORS TO PERFORM UNDER GUARANTEES
The Exchange Notes are guaranteed fully, unconditionally and jointly and
severally, by the Subsidiary Guarantors. The Subsidiary Guarantors are all of
the current subsidiaries of Safelite Glass Corp. The Subsidiary Guarantors
currently do not have any material assets or operations. All significant
operations of the Company are conducted by, and all material assets are held by,
Safelite Glass Corp.
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of a Change of Control
Triggering Event, the Company will make an offer to purchase all of the Notes at
a price in cash equal to 101% of the aggregate principal amount thereof together
with accrued and unpaid interest to the date of purchase. The Bank Credit
Agreement prohibits the Company from repurchasing any Notes, except with the
proceeds of one or more equity offerings. The Bank Credit Agreement also
provides that certain change of control events with respect to the Company would
constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Indebtedness to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control Triggering Event occurs at a time when the Company is prohibited from
purchasing the Notes, or if the Company is required to make a Net Proceeds Offer
(as defined) pursuant to the terms of the Notes, the Company could seek the
consent of its lenders to the purchase of the Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will remain
prohibited from purchasing the Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default under the
Indenture. If, as a result thereof, a default occurs with respect to any Senior
Indebtedness, the subordination provisions in the Indenture would likely
restrict payments to the holders of the Notes. The provisions relating to a
Change of Control Triggering Event included in the Indenture may increase the
difficulty of a potential acquiror obtaining control of the Company. See
"Description of Exchange Notes -- Change of Control." The conversion of the
Company's Class B Non-Voting Stock to Class A Voting Stock could result in a
Change of Control under the Indenture. See "Description of Capital
Stock -- Common Stock."
DEPENDENCE ON CERTAIN CUSTOMERS; POTENTIAL ADVERSE IMPACT OF GOVERNMENT
REGULATION
During fiscal 1997 the Company's five largest customers accounted for
approximately 31% of the Company's sales and no customer accounted for more than
10% of the Company's sales. During the
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three months ended April 4, 1998, however, the Company's five largest customers
accounted for approximately 32% of the Company's sales, and one of those
customers accounted for 12% of the Company's sales. The Company is highly
dependent on recurring revenues generated by its insurance company customers and
could be adversely affected by changes in such insurance companies' policies
concerning coverage for automotive glass replacement claims. Failure by
insurance companies to cover automotive glass replacement claims or the
imposition of increased deductibles with respect to coverage of automotive glass
replacement claims, could significantly reduce the Company's sales generated
through its insurance company customers. Certain of the Company's TCS
arrangements and MP relationships with insurance company customers are not
evidenced by written contracts and are therefore terminable at any time. A
significant decrease in business from the Company's insurance company customers
would have a material adverse effect on the Company's results of operations and
financial condition. See "Business -- Customers" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Many states have statutes or regulations prohibiting certain referral
practices of insurers. Approximately 30 states currently have statutes or
regulations which would prohibit an insurance company from requiring a
policyholder to use a particular vendor. In addition, new laws or regulations
relating to the referral practices of insurance companies may be adopted in
these or other states. The Company does not enter into arrangements with
insurance companies pursuant to which such insurance companies require
policyholders to use the Company for automotive glass replacement or repair
services. Although the Company does not believe that existing government
regulation of insurance company referral practices will have a material adverse
effect on the Company, no assurance can be given that future regulation of such
referral practices will not have a material adverse effect on the Company.
COST AND AVAILABILITY OF RAW MATERIALS
The major raw materials used in the manufacturing of the Company's products
include glass and vinyl. Most of the raw materials used in the Company's
products are available from multiple sources. However, several raw materials
used in the Company's products are currently obtained from a single source. The
Company does not have guaranteed supply arrangements with any of its suppliers
and there can be no assurance that these suppliers will continue to meet the
Company's requirements. An extended interruption in the supply of glass or vinyl
could have a material adverse effect on the Company's operating results. There
can be no assurance that severe shortages of raw materials will not occur in the
future which could increase the cost or delay the shipment of the Company's
products and have a material adverse effect on the Company's operating results.
Significant increases in the prices of raw materials could also have a material
adverse effect on the Company's operating results since the Company may not be
able to adjust product pricing to reflect the increases in raw material costs.
See "Business -- Suppliers and Raw Materials."
RELIANCE ON CENTRALIZED MANUFACTURING
All of the Company's manufacturing occurs at facilities in Enfield, North
Carolina and Wichita, Kansas. The Company's manufacturing operations utilize
certain equipment which, if damaged or otherwise rendered inoperable, would
result in the disruption of the Company's manufacturing operations. Although the
Company maintains business interruption insurance which the Company believes is
adequate, any extended interruption of the operations at these facilities could
have a material adverse effect on the Company's operating results. See
"Business -- Operations -- Manufacturing."
POTENTIAL RISK OF PRODUCT LIABILITY
The manufacture and sale of windshields entails risk of product liability
claims. To date, no such material product liability claims have been made
against the Company relating to its manufacture and sale of windshields. There
can be no assurance, however, that such claims will not be made in the future. A
successful product liability claim (or series of claims) against the Company in
excess of its insurance
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coverage could have a material adverse effect on the Company's business,
financial condition and results of operations.
COMPETITION
The markets for the Company's products and services are very competitive.
In the installation and related services market, competition is based on price,
customer service, technical capabilities, quality and geographic coverage. This
market is highly fragmented with approximately 20,000 competitors. Although the
Company is the market leader in installation and related services, it does
compete against several other large competitors in this market, the largest two
of which have market shares estimated to be 8% and 4%. In addition, many of the
Company's competitors have incurred substantially less debt than the Company,
which may allow them greater flexibility than the Company in managing their
operations. There can be no assurance that the Company will be able to continue
to compete effectively with these or other competitors. State Farm, one of the
Company's largest customers, began, in a region by region rollout commencing in
the summer of 1997, to use a competitor to function as its glass claims call
center and bill processing administrator. There can be no assurance that this
arrangement will not have an impact on the Company's business with State Farm.
See "Business -- Competition."
Competition in the wholesale market is based principally on price and
quality. The Company is a relatively small participant in the wholesale market,
which is dominated by several significantly larger companies.
Future growth in the Company's revenues will depend upon the Company's
ability to (i) maintain and increase its market share in the installation and
related services market while continuing to provide high levels of customer
service to insurers and fleet owners, and (ii) access the wholesale market in
order to utilize excess manufacturing capacity. No assurance can be given that
the Company will be successful in obtaining these objectives.
PRICING
The price of replacement automotive glass is related to the list prices
developed by the National Auto Glass Specification ("NAGS"), an independent
third party. Changes to the NAGS list prices have generally followed the
wholesale price increases announced by the Original Equipment Manufacturers.
Prices charged in the automotive glass replacement industry are calculated using
varying percentage discounts from the NAGS price list. Actual revenue per unit
("RPU") charged in the industry has generally been increasing as a result of
increases in the NAGS list price, increases in the design complexity of
automotive glass and increases in the level of claims processing services
associated with insurance-related replacement automotive glass purchases.
NAGS list prices and offsetting discounts from NAGS list prices have
increased significantly over the past five years. The Company has been informed
that NAGS intends to reset its published list prices in early 1999 in order to
bring actual prices charged more in line with published list prices. While the
Company believes that as list prices are reduced, the related percentage
discounts from list price offered by the Company and the Company's competitors
will also be reduced, there can be no assurance that the resetting of NAGS list
prices will not have an adverse effect on the Company.
EFFECT OF WEATHER CONDITIONS; SEASONAL EARNINGS
The severity of weather has historically affected the Company's sales and
operating income, with severe winters generating increased sales and income and
mild winters generating lower sales and income. Accordingly, mild weather
conditions may adversely affect the Company's results of operations.
The Company's business is somewhat seasonal, with the first and fourth
calendar quarters traditionally its slowest periods of activity. This reduced
level of sales in the first and fourth calendar quarters has resulted in a
disproportionate decline in operating income during these quarters due to the
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Company's significant operating leverage. The Company believes such seasonal
trends will continue for the foreseeable future. See "Summary Historical and Pro
Forma Financial Information."
YEAR 2000 COMPLIANCE
The Company relies heavily on computer technologies to operate its
business. As a result, the Company continuously seeks to upgrade and improve its
computer systems in order to provide better service to its customers and to
support the Company's growth. The Company has initiated a program to prepare its
computer systems and applications for the year 2000 date change ("Year 2000").
As part of this program, a team has been assigned to evaluate the nature and
extent of the work required to make the Company's systems, products, electronic
linkages with insurance customers and infrastructure Year 2000 compliant.
A number of projects are either underway or under review with respect to
Year 2000 compliance for the Company's various business systems, the total cost
of which has not yet been determined. While these on-going efforts will involve
additional costs, management believes that the costs will not have a material
adverse effect on the Company's business, results of operations or financial
condition. Year 2000 project costs are difficult to estimate accurately, and
projected costs could change due to technological difficulties, project delays,
and project cost overruns. The inability of the Company to successfully complete
its Year 2000 compliance project or to maintain computer systems that meet the
Company's and its customers' needs could have an adverse effect on the Company.
ENVIRONMENTAL REGULATION, POSSIBLE CHANGES AND RELATED MATTERS
The Company's manufacturing operations in Wichita, Kansas and Enfield,
North Carolina involve the handling of materials and the generation of waste
materials that are classified as hazardous. The Company is subject to federal,
state and local laws and regulations concerning the handling and disposal of
hazardous materials, and therefore in the ordinary course of its business, the
Company in its manufacturing operations incurs compliance costs. The Company
does not anticipate that compliance with federal, state and local provisions
regarding the use and disposal of materials into the environment or otherwise
relating to the protection of the environment will have any material adverse
effect upon the earnings or competitive position of the Company and does not
anticipate any material capital expenditures for environmental control
facilities for the remainder of the Company's current fiscal year or the
succeeding fiscal year. Actions by federal, state and local governments
concerning environmental matters, however, could increase the costs of producing
the products manufactured by the Company. In addition, the future costs of
compliance with environmental laws and regulations and liabilities resulting
from currently unknown circumstances or developments could be substantial or
could have a material adverse effect on the Company. Regulations resulting from
the 1990 amendments to the Clean Air Act (the "1990 Amendments") that will
pertain to the Company's manufacturing operations are currently not expected to
be promulgated until 1998 or later. The Company cannot predict the level of
required capital expenditures resulting from future environmental regulations;
however, the Company does not anticipate that expenditures required by such
regulations, if any, will have a material adverse effect on the Company.
LITIGATION
The Company has been sued by nine local automotive glass replacement
companies in the U.S. District Court for the Eastern District of Texas.
Plaintiffs allege that defendants conspired with insurance companies to boycott
plaintiffs and control the business in Texas of replacement and repair of
automotive glass and residential and commercial flat glass in violation of
Sections 1 and 2 of the Sherman Act, and interfered with contracts. The
plaintiffs have claimed damages of approximately $8.9 million, plus attorneys'
costs and fees. Under the federal antitrust laws, any damages proven for
antitrust violations would be trebled. Under Texas law, punitive damages can be
assessed for intentional interference with contract claims. The Company intends
to defend these claims vigorously and does not believe they will have a material
adverse effect on the Company's financial condition or results of operations.
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On May 11, 1998, the Company was served with a subpoena requiring that it
produce documents to a grand jury in Dallas, Texas, conducted by the Antitrust
Division of the United States Department of Justice. The documents demanded by
the subpoena relate to the pricing of replacement glass at three service center
locations in the state of Texas. The Company intends to comply fully with the
subpoena. Based on discussions with the Antitrust Division of the United States
Department of Justice, management believes that it is unlikely that the Company
is the target of this investigation. In addition, management does not believe
that the Company or its employees have engaged in any anti-competitive or
collusive activities and does not believe that this investigation will result in
a material adverse effect on the Company. However, no assurance can be given
that the Company will not be found to have engaged in anti-competitive or
collusive activities or be liable for fines, penalties, damages and costs or,
that if it were liable, that it would not have a material adverse effect on the
Company.
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part on the Company's senior
management, including Garen K. Staglin, John F. Barlow and Douglas A. Herron,
and its ability to attract and retain other highly qualified management
personnel. The Company faces competition for such personnel from other companies
and other organizations. There can be no assurance that the Company will be
successful in hiring or retaining key personnel. The Company entered into
employment agreements with each of Messrs. Staglin, Barlow and Herron in
connection with the THL Transactions and the Vistar Merger. The Company does not
maintain key man life insurance on any of its executives. See "Management --
Directors and Executive Officers."
CONCENTRATION OF OWNERSHIP
THL and certain management of the Company own approximately 50.5% of the
outstanding Class A Voting Stock of the Company and 32.0% of the outstanding
Class B Non-Voting Common Stock. Belron owns 49.5% of the Class A Voting Common
Stock and 43.1% of the Class B Non-Voting Common Stock. Pursuant to the
Shareholders Agreement, as amended entered into in connection with the Vistar
Merger, THL and Belron each have the right to elect half of the members of the
Company's Board of Directors. In addition, the Shareholders Agreement gives THL
the exclusive right for a three year period from the consummation of the Vistar
Merger to require the Company to undertake an initial public offering and
requires that THL approval be obtained for any debt or equity financing
transactions in which the Company is expected to receive net proceeds in excess
of $25 million. See "Transactions -- The Vistar Merger." Because THL and certain
management of the Company own more than 50% of the outstanding voting common
stock of the Company and THL has the exclusive ability to determine the outcome
of fundamental corporate transactions such as refinancing indebtedness of the
Company or causing an initial public offering to occur, there can be no
assurance that the interests of THL and such management will not conflict with
the interests of the holders of the Notes. See "Security Ownership of Certain
Beneficial Owners and Management."
FRAUDULENT CONVEYANCE
The net proceeds from the sale of the Initial Notes were used to finance a
portion of the cash consideration paid to the prior shareholders of the Company
and Lear Siegler in the THL Transactions. The obligations of the Company and the
Subsidiary Guarantors incurred under the Notes and the Guarantees, respectively,
may be subject to review under relevant federal and state fraudulent conveyance
statutes (the "fraudulent conveyance statutes") in a bankruptcy, reorganization
or rehabilitation case or similar proceeding or a lawsuit by or on behalf of
unpaid creditors of the Company or the Subsidiary Guarantors, as the case may
be. The requirements for establishing a fraudulent conveyance or revocatory
transfer vary depending on the law of the jurisdiction which is being applied.
If under relevant fraudulent conveyance statutes a court were to find that, at
the time the Company or any Subsidiary
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Guarantor incurred the indebtedness represented by the Notes or the Guarantees,
respectively, (i) with the intent of hindering, delaying or defrauding current
or future creditors of the Company or the Subsidiary Guarantors, as the case may
be, or (ii) received less than reasonably equivalent value or fair consideration
any of such indebtedness or obligation and at the time of such incurrence: (A)
was insolvent or was rendered insolvent by reason of such incurrence, (B) was
engaged or about to engage in a business or transaction for which its assets
constituted unreasonably small capital or (C) intended to incur, or believed
that it would incur, indebtedness beyond its ability to pay as such indebtedness
matured (as all of the foregoing terms are defined in or interpreted under the
applicable fraudulent conveyance statutes), such court could avoid or
subordinate the Notes or Guarantees to presently existing and future
indebtedness of the Company and take other action detrimental to the holders of
the Notes, including, under certain circumstances, invalidating the Notes or
Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, the Company or a Subsidiary Guarantor would be
considered insolvent if, at the time it incurs the indebtedness constituting the
Initial Notes, either (i) the fair market value (or fair saleable value) of its
assets is less than the amount required to pay the probable liability on its
total existing debts and liabilities (including contingent liabilities) as they
become absolute and matured or (ii) it is incurring indebtedness beyond its
ability to pay as such indebtedness matures.
The Company believes that at the time of issuance of the Initial Notes it
received reasonably equivalent value or fair consideration for issuing the
Initial Notes and that it (i) (a) was not insolvent rendered insolvent thereby
for purposes of the foregoing standards, (b) was and remains in possession of
sufficient capital to meet its obligations as such obligations mature or become
due and to operate its business effectively and (c) did (and continues to) incur
obligations within its ability to pay such obligations as they mature or become
due and (ii) will have sufficient assets to satisfy any probable money judgment
against it in any pending action. No assurance can be given, however, that a
court passing on such issues would reach the same conclusions.
LACK OF PUBLIC MARKET; RESTRICTIONS ON TRANSFERABILITY
The Company does not intend to apply for a listing of the Exchange Notes on
a securities exchange or on any automated dealer quotation system. There is
currently no established market for the Exchange Notes and there can be no
assurance as to the liquidity of markets that may develop for the Exchange
Notes, the ability of the holders of the Exchange Notes to sell their Exchange
Notes or the price at which such holders would be able to sell their Exchange
Notes. If such markets were to exist, the Exchange Notes could trade at prices
that may be lower than the initial market value of the Initial Notes or the
Exchange Notes depending on many factors, including prevailing interest rates
and the markets for similar securities. The Exchange Notes are expected to be
designated for trading in the PORTAL market. The Initial Purchasers have advised
the Company that they currently intend to make a market with respect to the
Notes. However, the Initial Purchasers are not obligated to do so, and any
market making with respect to the Notes, may be discontinued at any time without
notice.
The Exchange Offer will not be conditioned upon any minimum or maximum
aggregate principal amount of Initial Notes being tendered for exchange. No
assurance can be given as to the liquidity of the trading market for the
Exchange Notes, or, in the case of non-exchanging holders of Initial Notes, the
trading market for the Notes following the Exchange Offer.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity and trading markets independent of
the financial performance of, and prospects for, the Company.
RECENT HISTORY OF LOSSES ON A CONSOLIDATED BASIS
The Company incurred losses from operations and net losses during its 1993
and 1994 fiscal years. Such losses resulted principally from the discontinued
operations of Lear Siegler. Adjusted EBITDA of the
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Company, which is defined herein as EBITDA plus other operating expenses, the
operating expenses of Lear Siegler (which was treated as an exited activity) and
the loss recognized by the Company in connection with the sale of Lear Siegler
on September 12, 1997, was $22.0 million and $29.1 million, respectively, during
such years. The Company also recognized a net loss for the three months ended
April 4, 1998. Such loss resulted principally from restructuring charges and
one-time costs associated with the Vistar Merger. See "Summary Historical and
Pro Forma Financial Information."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Initial Notes who do not exchange their Initial Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of Initial Notes set forth in the legend thereon as a
consequence of the issuance of the Initial Notes pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act. In general, the Initial Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the
Initial Notes under the Securities Act.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements concerning the
Company's operations, economic performance and financial condition, including,
in particular, the likelihood of the Company's success in developing and
expanding its business and successfully realizing expected net synergies from
the Vistar Merger. These statements are based upon a number of assumptions and
estimates which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, and reflect
future business decisions which are subject to change. Some of these assumptions
inevitably will not materialize, and unanticipated events will occur which will
affect the Company's results.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Initial Notes were originally issued and sold on December 20, 1996.
Such sales were not registered under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act. In connection with the
sale of the Initial Notes, the Company agreed to file with the Commission a
registration statement relating to an exchange offer (the "Exchange Offer
Registration Statement") pursuant to which the Exchange Notes would be offered
in exchange for Initial Notes tendered at the option of the holders thereof or,
if applicable interpretations of the staff of the Commission did not permit the
Company to effect such an exchange offer or any holder of Initial Notes is
either not eligible to participate in the exchange offer or does not receive
freely transferrable securities in the exchange offer, the Company agreed, at
its cost, to file a shelf registration statement covering resales of the Initial
Notes (the "Resale Registration Statement") and to have such Resale Registration
Statement declared effective and kept effective for a period of three years from
the effective date thereof subject to certain exceptions, including suspending
the effectiveness thereof for certain valid business reasons. In the event that
(i) the Company fails to file the Exchange Offer Registration Statement, (ii)
the Exchange Offer Registration Statement is not declared effective by the
Commission, or (iii) the Exchange Offer is not consummated or the Resale
Registration Statement is not declared effective by the Commission, in each case
within specified time periods, the interest rate borne by the Notes shall
increase, which interest will accrue and be payable in cash until completion of
such filing, declaration of effectiveness or completion of such exchange. See
"Exchange and Registration Rights Agreement."
The sole purpose of the Exchange Offer is to fulfill obligations of the
Company with respect to the foregoing agreement. Following the consummation of
the Exchange Offer, the Company does not currently anticipate registering any
untendered Initial Notes under the Securities Act and will not be obligated to
do so.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the carrying value of the Initial
Notes that are exchanged. Therefore, no gain or loss will be recorded in the
Company's financial statements as a result of the transaction.
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, subject to the conditions set forth
herein and in the Letter of Transmittal accompanying this Prospectus, $1,000 in
principal amount of Exchange Notes for each $1,000 in principal amount of the
Initial Notes. The terms of the Exchange Notes are identical in all respects to
the terms of the Initial Notes, for which they may be exchanged pursuant to this
Exchange Offer, except that the Exchange Notes will generally be freely
transferable by holders thereof and the holders of the Exchange Notes (as well
as remaining holders of any Initial Notes, other than those who were not
eligible to participate in this Exchange Offer) will not be entitled to
registration rights under the Exchange and Registration Rights Agreement. See
"Exchange and Registration Rights Agreement." The Exchange Notes will evidence
the same debt as the Initial Notes and will be entitled to the benefits of the
Indenture. See "Description of the Exchange Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Initial Notes being tendered for exchange.
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes the Exchange
Notes issued pursuant to the Exchange Offer in exchange for Initial Notes may be
offered for sale, resold or otherwise transferred by any holder of such Exchange
Notes (other than any such holder which is an "affiliate" of the Issuer within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such
25
<PAGE> 28
holder's business and such holder has no arrangement or understanding with any
person to participate in the distribution of such Exchange Notes. Any holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the Exchange Notes cannot rely on such interpretations by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Initial Notes, where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
Interest on the Exchange Notes shall accrue from the last Interest Payment
Date on which interest was paid on the Initial Notes so surrendered.
Tendering holders of the Initial Notes will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Initial Notes
pursuant to the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer shall expire on the Expiration Date. The term
"Expiration Date" means 5:00 p.m. New York City time, on , 1998,
unless the Company, in its sole discretion, extends the period during which the
Exchange Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date on which the Exchange Offer, as so extended by the Company,
shall expire. The Company reserves the right to extend the Exchange Offer at any
time and from time to time by giving oral or written notice to State Street Bank
& Trust Company (the "Exchange Agent") and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Initial Notes previously tendered pursuant to the Exchange
Offer will remain subject to the Exchange Offer.
The Exchange Date will be the first business day following the Expiration
Date. The Company expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Initial Notes if either of the events set
forth below under "Conditions to the Exchange Offer" shall have occurred and
shall not have been waived by the Company and (ii) amend the terms of the
Exchange Offer in any manner which, in its good faith judgment, is advantageous
to the holders of the Initial Notes, whether before or after any tender of the
Initial Notes. If any such termination or amendment occurs, the Company will
notify the Exchange Agent and will either issue a press release or give oral or
written notice to the holders of the Initial Notes as promptly as practicable.
Unless the Company terminates the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date, the Company will exchange the Exchange Notes
for the Initial Notes on the Exchange Date.
HOW TO TENDER
The tender to the Company of Initial Notes by a holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
A holder of an Initial Note may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all reference in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Initial Notes being tendered and any required
signature guarantees, to the Exchange Agent at its address set forth on the back
cover of this Prospectus on or prior to the Expiration Date, (ii) complying with
the procedure for book entry transfer described below or (iii) complying with
the guaranteed delivery procedures described below.
If tendered Initial Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Initial Notes are
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to be reissued) in the name of the registered holder (which term, for the
purposes described herein, shall include any participant in The Depository Trust
Company ("DTC") (also referred to as a book-entry transfer facility) whose name
appears on a security listing as the owner of Initial Notes), the signature of
such signer need not be guaranteed. In any other case, the tendered Initial
Notes must be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Issuer and duly executed by the registered holder and the
signature on the endorsement or instrument of transfer must be guaranteed by a
commercial bank or trust company located or having an office or correspondent in
the United States, or by a member firm of a national securities exchange or of
the National Association of Securities Dealers, Inc. (any of the foregoing
hereinafter referred to as an "Eligible Institution"). If the Exchange Notes
and/or Initial Notes not exchanged are to be delivered to an address other than
that of the registered holder appearing on the note register for the Initial
Notes, the signature in the Letter of Transmittal must be guaranteed by an
Eligible Institution.
The method of delivery of Initial Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance obtained,
and the mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent on or before the Expiration Date.
The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's system (a "Participant") may utilize DTC's
Automated Tender Offer Program ("ATOP") to tender Initial Notes.
The Exchange Agent will request that DTC establish an account with respect
to the Initial Notes for purposes of the Exchange Offer within two business days
after the date of this Prospectus. Any Participant may make book-entry delivery
of Initial Notes by causing DTC to transfer such Initial Notes into the Exchange
Agent's account in accordance with DTC's ATOP procedures for transfer. However,
the exchange for the Initial Notes so tendered will only be made after timely
confirmation (a "Book-Entry Confirmation") of such book-entry transfer of
Initial Notes into the Exchange Agent's account, and timely receipt by the
Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming part of a Book-Entry Confirmation, which states that
DTC has received an express acknowledgment from a Participant tendering Initial
Notes which are the subject of such Book-Entry Confirmation that such
Participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Issuer may enforce such agreement against such
Participant.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Initial Notes 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 the Exchange Agent has received at
its office listed on the back cover hereof on or prior to the Expiration Date a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering holder, the names in which the
Initial Notes are registered and, if possible, the certificate numbers of the
Initial Notes to be tendered, and stating that the tender is being made thereby
and guaranteeing that within five New York Stock Exchange trading days after the
date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, the Initial Notes, in proper form for transfer (or a
confirmation of book-entry transfer of such Initial Notes into the Exchange
Agent's account at the book-entry transfer facility), will be delivered by such
Eligible Institution together with a properly completed and duly executed Letter
of Transmittal (and any other required documents). Unless Initial Notes being
tendered by the above-described method are deposited with the Exchange Agent
within the time period set forth above (accompanied or preceded by a properly
completed Letter of Transmittal and any other required documents), the Company
may, at its option, reject the tender. Copies of a Notice of Guaranteed Delivery
which may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent.
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A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Initial Notes is received by the Exchange Agent, (ii) a
confirmation of book-entry transfer of such Initial Notes into the Exchange
Agent's account at the book-entry transfer facility is received by the Exchange
Agent, or (iii) a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) for an Eligible Institution
is received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Initial Notes tendered pursuant to a Notice of Guaranteed Delivery or letter,
telegram or facsimile transmission to similar effect (as provided above) by an
Eligible Institution will be made only against deposit of the Letter of
Transmittal (and any other required documents) and the tendered Initial Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Initial Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of the counsel
of the Company, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
in the tender of any Initial Notes. None of the Company, the Exchange Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Initial Notes for exchange (the "Transferor")
exchanges, assigns and transfer the Initial Notes to the Company and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Initial Notes to be assigned, transferred and
exchanged. The Transferor represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Initial Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Initial
Notes, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Initial Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Initial Notes or transfer ownership of such Initial Notes on the
account books maintained by a book-entry transfer facility. The Transferor
further agrees that acceptance of any tendered Initial Notes by the Company and
the issuance of Exchange Notes in exchange therefor shall constitute performance
in full by the Company of its obligations under the Exchange and Registration
Rights Agreement and that the Company shall have no further obligations or
liabilities thereunder. All authority conferred by the Transferor will survive
the death or incapacity of the Transferor and every obligation of the Transferor
shall be binding upon the heirs, legal representatives, successors, assigns,
executors and administrators of such Transferor.
By tendering Initial Notes, the Transferor certifies that it is not an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act and that it is acquiring the Exchange Notes offered hereby in the ordinary
course of such Transferor's business and that such Transferor has no arrangement
with any person to participate in the distribution of such Exchange Notes.
WITHDRAWAL RIGHTS
Initial Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at its address set forth on the back cover of this Prospectus.
Any such notice of withdrawal must specify the person named in the Letter of
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Transmittal as having tendered Initial Notes to be withdrawn, the certificate
numbers of Initial Notes to be withdrawn, the principal amount of Initial Notes
to be withdrawn, a statement that such holder is withdrawing his election to
have such Initial Notes exchanged, and the name of the registered holder of such
Initial Notes, and must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the issuer
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Initial Notes being withdrawn. The Exchange Agent will return the
properly withdrawn Initial Notes promptly following receipt of notice of
withdrawal. If Initial Notes have been tendered pursuant to the procedures for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Initial Notes or otherwise comply with book-entry transfer facility
procedure. All questions as to the validity of notices of withdrawals, including
time of receipt, will be determined by the Company, and such determination will
be final and binding on all parties.
ACCEPTANCE OF NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance of Initial Notes validly tendered and not withdrawn and issuance of
the Exchange Notes will be made on the Exchange Date. For the purpose of the
Exchange Offer, the Company shall be deemed to have accepted for exchange
validly tendered Initial 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 Initial
Notes for the purpose of receiving Exchange Notes from the Company and causing
the Initial Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Exchange Notes to
be issued in exchange for accepted Initial Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Initial Notes. Initial Notes not
accepted for exchange by the Company will be returned without expense to the
tendering holders promptly following the Expiration Date or, if the Company
terminates the Exchange Offer prior to the Expiration Date, promptly after the
Exchange Offer is so terminated.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue Exchange Notes
in respect of any properly tendered Initial Notes not previously accepted and
may terminate the Exchange Offer (by oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service) or, at its option, modify or otherwise amend the Exchange Offer, if
there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any court
or governmental agency or other governmental regulatory or administrative agency
or commission, (i) seeking to restrain or prohibit the making or consummation of
the Exchange Offer or any other transaction contemplated by the Exchange Offer,
or assessing or seeking any damages as a result thereof, or (ii) resulting in a
material delay in the ability of the Issuer to accept for exchange or exchange
some or all of the Initial Notes pursuant to the Exchange Offer, or any statute,
rule, regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of the
transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in the reasonable judgment of the Company,
might directly or indirectly result in any of the consequences referred to in
clauses (i) or (ii) above or, in the reasonable judgment of the Company, might
result in the holders of Exchange Notes having obligations with respect to
resales and transfers of Exchange Notes which are greater than those described
in the interpretations of the Commission referred to on the cover page of this
Prospectus, or would otherwise make it inadvisable to proceed with the Exchange
Offer.
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In addition, the Company will not accept for exchange any Initial Notes
tendered and no Exchange Notes will be issued in exchange for any such Initial
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of 1939
(the "Trust Indenture Act").
The Company expressly reserves the right to terminate the Exchange Offer
and not accept for exchange any Initial Notes upon the occurrence of either of
the foregoing conditions (which represent all of the material conditions to the
acceptance by the Company of properly tendered Initial Notes). In addition, the
Company may amend the Exchange Offer at any time prior to the Expiration Date if
either of the conditions set forth above occur. Moreover, regardless of whether
either of such conditions has occurred, the Company may amend the Exchange Offer
in any manner which, in its good faith judgment, is advantageous to holders of
the Initial Notes.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole part, if, in its reasonable judgment, such
waiver is not disadvantageous to holders of the Initial Notes. Any determination
made by the Company concerning an event, development or circumstance described
or referred to above will be final and binding on all parties.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as the Exchange
Agent for the Exchange Offer. Letters of Transmittal must be addressed to the
Exchange Agent at its address set forth on the back cover of this Prospectus.
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
herein, will not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of the Initial Notes and in handling or forwarding
tenders for their customers.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Initial Notes in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Initial
Notes in such jurisdiction. In any jurisdiction the securities laws or blue sky
laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
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OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Initial Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Initial Notes pursuant to the terms of, this Exchange Offer,
the Company will have fulfilled a covenant contained in the terms of the
Exchange and Registration Rights Agreement. Eligible holders of the Initial
Notes who do not tender their certificates in the Exchange Offer will continue
to hold such certificates and their rights under such Initial Notes will not be
altered, except for any such rights under the Exchange and Registration Rights
Agreement, which by their terms terminate or cease to have further effect as a
result of the making of this Exchange Offer. See "Description of the Initial
Notes." All untendered Initial Notes will continue to be subject to the
restrictions on transfer set forth in the Indenture. To the extent that Initial
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered Initial Notes could be adversely affected.
The Company may in the future seek to acquire untendered Initial Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Initial
Notes which are not tendered in the Exchange Offer or to file a registration
statement to permit resales of any Initial Notes which are not tendered pursuant
to the Exchange Offer.
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TRANSACTIONS
THE THL TRANSACTIONS
During 1996, in order to effect the THL Transactions described below, Lite
Acquisition Corp., formed and capitalized by THL, made an approximately $117
million equity investment in Safelite (the "THL Equity Investment"). Pursuant to
the Recapitalization Agreement, Lite Acquisition Corp. was merged with and into
Safelite on December 20, 1996, with Safelite surviving the merger (the "THL
Merger").
Upon completion of the THL Merger, THL owned approximately 88% of the
voting stock of Safelite and certain existing stockholders of the Company,
including management, retained approximately 12% of Safelite's voting stock. The
aggregate cash consideration received by the previous owners of Safelite,
including LSNWY, was approximately $300 million. Immediately following the THL
Merger, Safelite acquired substantially all of the outstanding capital stock of
Lear Siegler (including LSNWY) from its current owners for a promissory note
equal to the cash THL Merger consideration for Safelite received by LSNWY (the
"Seller Note"). Lear Siegler was then merged with and into L.S. Acquisition
Corp., a wholly-owned subsidiary of the Company, with L.S. Acquisition Corp.
surviving the merger and changing its name to Lear Siegler Holdings Corp. As a
result, Lear Siegler became a wholly-owned subsidiary of the Company upon
completion of the THL Transactions. LSNWY distributed the THL Merger
consideration to a subsidiary of Safelite which repaid the Seller Note.
As part of the THL Transactions, the proceeds of the THL Equity Investment,
together with approximately $250 million of aggregate proceeds from the debt
financings described below, were used to (i) repay approximately $42 million of
existing indebtedness, (ii) pay approximately $300 million of stock purchase
price and THL Merger consideration, (iii) pay an estimated $17 million of
transaction fees and expenses and (iv) pay transaction bonuses aggregating
approximately $7 million to certain members of Safelite management.
A summary schematic diagram of the structure of Safelite before the THL
Transactions and the corporate structure of Safelite following the THL
Transactions is set forth below.
[PRE-TRANSACTIONS STRUCTURE CHART & POST-TRANSACTIONS STRUCTURE CHART]
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Prior to the THL Transactions, the capital stock of Safelite consisted of a
class of Preferential Common Stock, as well as Class A and Class B Common Stock.
The Preferential Common Stock was owned by LSNWY Corp., an indirect subsidiary
of Lear Siegler. The Class A Common Stock was owned by LSNWY and certain other
stockholders, including management of Safelite. The Class B Common Stock was
owned by LSNWY and certain other stockholders.
The THL Transactions occurred in three steps, each described below.
In the first step of the THL Transactions, THL acquired 169,000 shares of
Safelite Class A Common Stock for $13.40 per share from certain selling
stockholders for aggregate consideration of approximately $2.3 million. Except
for such shares and approximately 627,000 shares of Safelite Class A Common
Stock and 18,000 shares of Class B Common Stock owned by other existing
stockholders, primarily management of Safelite, all remaining shares of Safelite
were then owned by LSNWY.
In the second step of the THL Transactions, THL capitalized Lite
Acquisition Corp. with $56.4 million of common equity and $58.2 million of
preferred equity (which, together with the $2.3 million paid for Safelite Class
A Common Stock in the first step of the THL Transactions, comprise the $116.9
million THL Equity Investment). Lite Acquisition Corp. then merged with and into
Safelite, with Safelite surviving the THL Merger. Immediately following the THL
Merger, the Company borrowed $150.0 million pursuant to the 1996 Credit
Facilities and consummated the Offering of the Initial Notes, from which it
received approximately $97.0 million. Upon effectiveness of the THL Merger:
(i) each share of Safelite Class A Common Stock outstanding prior to
the Merger (A) was converted into the right to receive cash in the amount
of $13.40 or (B) at the election of any holder thereof, remained
outstanding and unaffected by the THL Merger (LSNWY agreed that it would
not elect to retain any of the 310,000 shares of Safelite Class A Common
Stock owned by it and therefore received approximately $4.2 million for
such shares in the THL Merger and other stockholders and optionholders
received approximately $0.6 million for their Class A Common Stock and
options);
(ii) each share of Safelite Class B Common Stock outstanding prior to
the THL Merger was converted into the right to receive cash equal to $.01;
(iii) each share of Safelite Preferential Common Stock outstanding
prior to the THL Merger was converted into the right to receive cash (in
the aggregate amount of approximately $293.1 million);
(iv) each share of Lite Acquisition Corp.'s common stock outstanding
prior to the THL Merger was converted into one share of Safelite Class A
Common Stock; and
(v) each share of Lite Acquisition Corp.'s preferred stock outstanding
prior to the THL Merger was converted into one share of Safelite 8%
Preferred Stock.
Safelite was then owned approximately 88% by THL, and certain existing
stockholders of the Company, including management, retained approximately 12% of
Safelite's voting stock.
In the final step of the THL Transactions, Safelite, through a new
wholly-owned subsidiary, L.S. Acquisition Corp., acquired in excess of 96% of
the outstanding capital stock of Lear Siegler (including all shares of Lear
Siegler preference stock) for a demand promissory note with a principal amount
equal to the consideration received by LSNWY in the THL Merger, which amount was
approximately $297.3 million. Lear Siegler was merged with and into L.S.
Acquisition Corp. with L.S. Acquisition Corp. surviving the merger and changing
its name to Lear Siegler Holdings Corp., making Lear Siegler a wholly-owned
subsidiary of the Company. On the closing date of the THL Transactions, all of
the consideration received by LSNWY in the THL Merger was distributed to L.S.
Acquisition Corp. and used to repay the note delivered in connection with the
purchase of Lear Siegler's capital stock.
As a result of this three-step transaction, THL held a direct equity
investment in Safelite and other stockholders of Safelite, primarily management,
retained their existing interest in Safelite. The Company believed that this
resulting structure accurately reflected the Company's operations, which consist
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entirely of the operations of Safelite, as opposed to the prior Lear Siegler
structure which was put in place at a time when Safelite was only one of several
operating subsidiaries owned within the Lear Siegler consolidated group.
The sources and uses of funds for the THL Transactions were as follows:
SOURCES AND USES
<TABLE>
<CAPTION>
AMOUNT
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
Sources:
Term Loan Facility(1)....................................... $150.0
Senior Subordinated Notes................................... 100.0
THL Equity Investment(2).................................... 116.9
Management Retained Equity(3)............................... 7.9
------
$374.8
======
Uses:
Working Capital............................................. $ 0.9
Merger Consideration(4)..................................... 300.1
Repayment of Existing Debt.................................. 41.9
Management Transaction Bonuses(5)........................... 6.9
Management Retained Equity(3)............................... 7.9
Fees and Expenses........................................... 17.1
------
$374.8
======
</TABLE>
- ---------------
(1) After the Closing, the Company had $30 million of availability under a
Revolving Credit Facility (less approximately $4.9 million in outstanding
letters of credit) and, excluding Lear Siegler and the uses described above,
approximately $5 million of cash on the balance sheet.
(2) Comprised of $58.7 million of common equity and $58.2 million of preferred
equity.
(3) Represents value of Safelite Class A Common Stock retained by management.
(4) Includes $2.3 million paid directly by THL to certain current stockholders
of Safelite for Safelite common stock.
(5) These bonuses were accrued in fiscal 1996 and paid in January 1997.
SALE OF LEAR SIEGLER
On September 12, 1997, the Company sold all of the issued and outstanding
shares of the capital stock of Lear Siegler (the "Lear Siegler Stock") to BPLSI
Investment Company, a Delaware corporation (the "Purchaser"), pursuant to a
Stock Purchase Agreement by and among Lear Siegler, the Company, the Purchaser,
and James F. Matthews, the former President of Lear Siegler and the sole
stockholder of the Purchaser. The purchase price for the Lear Siegler Stock was
$100,000 in cash and a Promissory Note delivered by the Purchaser to the
Company. The Promissory Note is not for a fixed dollar amount but instead
provides that the Purchaser must pay to the Company an amount equal to 50% of
the net proceeds realized, directly or indirectly, by Lear Siegler from the
liquidation or other disposition, if any, of the assets belonging to Lear
Siegler or its direct or indirect subsidiaries which were seized by the Cuban
government when Fidel Castro came to power, or from settlement of any claims
relating thereto (the "Cuban Assets"). Due to certain restrictions in the
acquisition documents governing the THL Transactions, it is not expected that
the Purchaser will be able to make any payment under the Promissory Note until
June 21, 2003. Also, due to the wholly-contingent nature of the ability of Lear
Siegler or any of its subsidiaries to realize any proceeds from the liquidation
or other disposition of any of the Cuban Assets,
34
<PAGE> 37
there can be no assurance that the Purchaser will make any payments to the
Company under the Promissory Note. Accordingly, the Company has recorded the
Promissory Note at a net book value of zero, and recorded a loss of $5.4 million
in the year ended January 3, 1998 related to the sale of Lear Siegler.
The operations of Lear Siegler, a former industrial conglomerate whose
subsidiaries manufactured a range of products, were never an integral part of
the Company's automotive glass replacement and repair business. The Company
believes that the sale of Lear Siegler will enable the Company to focus on its
core business.
THE CONSENT SOLICITATION
On November 28, 1997, the Company commenced a solicitation of consents (the
"Consent Solicitation"), from the holders of the Initial Notes, to certain
amendments to the Indenture (the "Indenture Amendments") to be effected through
execution of a First Supplemental Indenture. The purpose of the Indenture
Amendments was, among other things, to permit the Company to make the
Distribution (as defined below) and increase the amount of its senior bank
indebtedness in connection with the Distribution and, thereafter, in connection
with the Vistar Merger as contemplated by the Merger Agreement entered into on
October 10, 1997 between the Company and Vistar (the "Vistar Merger Agreement").
See "-- The Vistar Merger." On December 12, 1997, the Company successfully
completed the Consent Solicitation, having received the requisite consents to
the Indenture Amendments from the holders of the Initial Notes. Upon
consummation of the Distribution, the Company made consent payments aggregating
$5.0 million ($50.00 for each $1,000.00 principal amount of Initial Notes then
outstanding).
THE VISTAR TRANSACTIONS
On December 19, 1997, pursuant to the Vistar Merger Agreement, the Company
completed the Vistar Merger, whereby Vistar was merged with and into the
Company, with the Company as the surviving corporation. Prior to the Vistar
Merger, the Company declared and paid a dividend on its outstanding shares of
Class A Common Stock in the aggregate amount of approximately $67.2 million and
declared and paid a dividend on its outstanding shares of 8% Cumulative
Preferred Stock equal to the accrued and unpaid dividends thereon in the
aggregate amount of approximately $4.7 million (collectively, the "Dividend"),
and the Company redeemed all outstanding shares of its 8% Cumulative Preferred
Stock at an aggregate redemption price of $58.2 million (the "Redemption" and,
together with the Dividend, the "Distribution"). Subsequent to the Distribution
and prior to consummation of the Vistar Merger, the Company effected a 1 for 3
reverse stock split (the "Stock Split") of its Class A Common Stock, which was
reclassified as Class A Voting Common Stock ("Class A Voting Stock"),
reclassified its currently authorized class of Class B Common Stock as Class B
Non-Voting Common Stock ("Class B Non-Voting Stock"), and declared and paid a
dividend on each share of Class A Voting Stock outstanding after the Stock Split
in the form of two shares of Class B Non-Voting Stock. The Company also
authorized the creation of a new series of preferred stock, designated as
Non-Voting 8% Preferred Stock (the "Non-Voting Preferred Stock"). As a result of
restrictions contained in the Indenture, dividends are not payable in respect of
the Non-Voting Preferred Stock unless such payment is in compliance with the
"Limitation on Restricted Payments" covenant contained in the Indenture. The
Non-Voting Preferred Stock is not mandatorily redeemable. Unlike the 8%
Cumulative Preferred Stock, however, the Non-Voting Preferred Stock will be
redeemable by the Company, at its option, at any time (provided that the Company
is in compliance with the "Limitation on Restricted Payments" covenant in the
Indenture). See "Description of Capital Stock -- Preferred Stock."
Upon consummation of the Vistar Merger, the holders of Vistar's outstanding
capital stock immediately prior to the Vistar Merger (the "Vistar Shareholders")
received in exchange for all of the outstanding capital stock of Vistar prior to
the Vistar Merger an aggregate of 1,690,101 shares of Class A Voting Stock,
6,959,771 shares of Class B Non-Voting Stock, 40,000 shares of Non-Voting
Preferred Stock ($40 million aggregate liquidation preference) and $65 million
cash (collectively, the "Merger
35
<PAGE> 38
Consideration"). As a result of the Vistar Merger, the holders of the Company's
outstanding capital stock immediately prior to the Vistar Merger (the "Safelite
Shareholders") retained ownership of 50.5% of the outstanding Class A Voting
Stock and became the owners of approximately 33% of the outstanding Class B
Non-Voting Stock (including shares subject to exercisable options to acquire
Class B Non-Voting Stock) and the Vistar Shareholders became the owners of 49.5%
of the outstanding Class A Voting Stock, approximately 67% of the outstanding
Class B Non-Voting Stock and 100% of the outstanding Non-Voting Preferred Stock.
See "Security Ownership of Certain Beneficial Owners and Management." The Class
B Non-Voting Stock may convert into Class A Voting Stock under certain
circumstances. See "Description of Capital Stock -- Common Stock."
In connection with the Vistar Merger, substantially all of the Safelite
Shareholders and all of the Vistar Shareholders entered into a Shareholders
Agreement (the "Shareholders Agreement") which established certain rights and
restrictions with respect to the management of the Company and transfers of the
Class A Voting Stock and the Class B Non-Voting Stock, and a Registration
Agreement providing for certain rights to cause the Company to register the
Class A Voting Stock and the Class B non-Voting Stock under the Securities Act
of 1933, as amended (the "Securities Act"). The Shareholders Agreement was
amended by Amendment No. 1 to the Shareholders Agreement, dated as of March 26,
1998. Unless otherwise noted, references herein to the Shareholders Agreement
shall mean the Shareholders Agreement, as amended. See "Certain Relationships
and Related Transactions."
36
<PAGE> 39
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated statements of operations
(the "Unaudited Pro Forma Consolidated Statements of Operations") of the Company
are based on the audited and unaudited financial statements of Safelite and
Vistar which are included elsewhere in this Prospectus, as adjusted to
illustrate the estimated effects of the Vistar Merger and sale of Lear Siegler.
The unaudited pro forma adjustments are based upon available information and
certain assumptions that the Company believes are reasonable. The total purchase
price for Vistar has been allocated to the tangible and intangible assets and
liabilities of Vistar acquired based upon the results of a preliminary
evaluation of their estimated respective values. It is the Company's intention,
prior to the end of calendar 1998, to complete its evaluation of the acquired
assets and liabilities and, as a result, the allocation of the acquisition costs
among tangible and intangible assets and liabilities acquired may change. The
Unaudited Pro Forma Consolidated Statements of Operations and accompanying notes
should be read in conjunction with the historical financial statements of
Safelite and other financial information pertaining to both companies included
elsewhere in this Prospectus including "Vistar Transactions" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Unaudited Pro Forma Consolidated Statements of Operations have been
prepared to give effect to the Vistar Merger and sale of Lear Siegler as though
such transactions had occurred as of December 29, 1996, the first day of the
Company's 1997 fiscal year. See "Transactions."
The Unaudited Pro Forma Consolidated Statements of Operations do not
purport to be indicative of what the Company's results of operations would
actually have been had the Vistar Merger and sale of Lear Siegler been completed
at the beginning of the period indicated or to project the Company's results of
operations for any future date.
37
<PAGE> 40
SAFELITE GLASS CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (1)
FOR THE YEAR ENDED JANUARY 3, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LEAR SIEGLER VISTAR SAFELITE
SAFELITE VISTAR PRO FORMA PRO FORMA PRO FORMA
HISTORICAL(2) HISTORICAL ADJUSTMENTS ADJUSTMENTS COMBINED
------------- ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Sales:
Installation and related
services............. $430,290 $434,245 $ (15,446)(3) $826,789
(22,300)(4)
Wholesale............... 53,014 -- 53,014
-------- -------- --------
Total sales..... 483,304 434,245 879,803
Cost of sales............. 331,658 363,545 (15,446)(3) 679,757
-------- -------- --------
Gross profit.............. 151,646 70,700 200,046
Selling, general and
administrative.......... 111,815 80,575 (1,107)(5) (5,149)(6) 186,634
500(7)
Restructuring expenses.... 2,865 -- 2,865
Loss on sale of Lear
Siegler................. 5,418 5,418
Other operating
expenses................ 5,704 2,409 8,113
-------- -------- --------
Operating income (loss)... 25,844 (12,284) (2,984)
Interest expense.......... (27,517) (1,554) 72(5) (15,536)(8) (44,535)
Interest income........... 1,254 710 (483)(5) 1,481
-------- -------- --------
Income (loss) from
continuing operations
before income taxes..... (419) (13,128) (46,038)
Income tax benefit
(provision)............. 6,842 (88) (278)(5) 15,334(9) 21,810
-------- -------- --------
Income (loss) from
continuing operations... $ 6,423 $(13,216) $(24,228)
======== ======== ========
Other data:
EBITDA(10)(12)............ $ 23,790
Adjusted EBITDA(11)(12)... 37,321
Adjusted EBITDA to cash
interest
expense(8)(11)(12)...... 0.9x
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statement of Operations.
38
<PAGE> 41
SAFELITE GLASS CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
1. The pro forma financial data do not give effect to any potential synergies
that could result from the Vistar Transactions. The pro forma data are not
necessarily indicative of the operating results or financial position that
would have occurred had the sale of Lear Siegler and the Vistar Transactions
been consummated at the dates indicated, nor are they necessarily indicative
of future operating results.
2. The Safelite Historical Statement of Operations includes the operations of
Vistar, Inc. from December 19, 1997 (the date of the Vistar Merger) through
the Company's fiscal year end.
3. Represents the elimination of inter-company sales between Safelite and
Vistar.
4. Reflects estimated impact of certain customer contractual arrangements as a
result of the merger of the two companies.
5. Represents the operating expenses, interest expense, interest income and
related tax impact of Lear Siegler.
6. Adjusts goodwill amortization to reflect the purchase of Vistar using a
thirty year estimated useful life. The preliminary allocation of the
purchase price to the tangible and intangible assets of Vistar acquired is
detailed below:
<TABLE>
<S> <C>
Accounts receivable......................................... $ 25,839
Inventory................................................... 5,654
Prepaids and other current assets........................... 1,457
Property, plant and equipment............................... 17,878
Deferred taxes.............................................. 31,557
Goodwill.................................................... 278,041
Other assets................................................ 2,726
Accounts payable............................................ (14,900)
Other current liabilities................................... (13,133)
Restructuring reserves...................................... (26,622)
Other liabilities........................................... (8,697)
Long-term debt.............................................. (17,716)
--------
Total....................................................... $282,084
========
</TABLE>
7. Represents the increase in management fees payable to THL as a result of the
Amended and Restated Management Agreement. See "Certain Relationships and
Related Transactions."
39
<PAGE> 42
8. Reflects the adjustment to interest expense and amortization of deferred
financing fees as a result of the Vistar Transactions as detailed below.
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 3, 1998
----------------
<S> <C>
Credit Facility borrowings at estimated interest rates(a):
Revolver at 7.50% (includes premium financing)............ $ 4,175
Term Loan A at 7.60%...................................... 11,400
Term Loan B at 8.10%...................................... 8,100
Term Loan C at 8.35%...................................... 8,350
The Notes at 9.875%......................................... 9,875
Vistar unsecured notes payable.............................. 600
--------
Cash interest expense....................................... 42,500
Amortization of deferred financing fees..................... 2,035
--------
Pro forma interest expense.................................. 44,535
Less: Historical interest expense........................... (28,999)
--------
Pro forma adjustments....................................... $ 15,536
========
</TABLE>
- ---------------
(a) A 0.125 percent change in interest rates would change annual pro forma
interest expense by $500.
9. Represents the tax effect of adjustments to reflect the Vistar Transactions.
10. "Pro forma EBITDA" is defined herein as pro forma operating income (loss)
plus the sum of depreciation, amortization and restructuring expenses.
EBITDA is presented in this Prospectus as it is a basis upon which the
Company assesses its financial performance and because certain covenants in
the Company's borrowing arrangements are tied to these measures. EBITDA as
determined by the Company may not be comparable to EBITDA as reported by
other companies. EBITDA does not represent funds available for discretionary
uses and should not be considered as an alternative to operating income
(loss) or net income (loss) as a measure of operating results or to cash
flows as a measure of liquidity (each as determined in accordance with
generally accepted accounting principles).
11. "Pro forma adjusted EBITDA" is defined herein as pro forma EBITDA plus other
operating expenses. Safelite's other operating expenses includes $1,000 in
management transaction bonuses, $2,976 related to the acceleration of
certain management options, and $470 related to the forgiveness of certain
officer loans made in connection with the Vistar Transactions. Safelite
other operating expenses also include $1,258 in costs related to obtaining
bondholder consent to the Vistar Merger. Vistar other operating expenses
represent one-time integration costs incurred by Vistar as a result of the
merger between Windshields and Globe. Pro forma adjusted EBITDA does not
represent funds available for discretionary uses and should not be
considered as an alternative to operating income (loss) or net income (loss)
as a measure of operating results or to cash flows as a measure of liquidity
(each as determined in accordance with generally accepted accounting
principles).
12. Management has identified certain synergies which are expected to be
realized as a result of combining the Company's and Vistar's operations.
These synergies are not included in pro forma income from continuing
operations before taxes or pro forma adjusted EBITDA. Management has
estimated that the annual pre-tax cost savings from these items will range
from $52,000 to $57,000 and that net synergies after reflecting the impact
of certain customer contractual arrangements discussed in note (3) above
will range from $30,000 to $35,000. These net synergies are expected to be
realized in part during calendar 1998 and in full during calendar 1999. The
synergies identified include (i) reductions in redundant administrative
overhead within both field and corporate operations, (ii) elimination of
redundant service center locations, (iii) elimination of redundant sales and
marketing force activities and (iv) reductions in product costs due to
increased purchasing leverage.
40
<PAGE> 43
The foregoing are forward looking statements that involve certain risks and
uncertainties that could cause actual results to differ materially from
those contained herein. Potential risks and uncertainties include such
factors as the substantial leverage and debt service obligations of the
Company as a result of the Vistar Transactions, the ability of the Company
to integrate the operations of Vistar with its own operations and achieve
the synergies that management currently anticipates, demand for the
Company's products and services, competition and other risks identified
herein.
41
<PAGE> 44
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data of Safelite set forth below with respect to
fiscal years ended December 30, 1995, December 28, 1996 and January 3, 1998 and
the three months ended April 4, 1998 and the balance sheet data at December 28,
1996, January 3, 1998 and April 4, 1998 are derived from the financial
statements included elsewhere in this Prospectus which have been audited by
Deloitte & Touche LLP, independent public accountants. The data presented for
the three months ended March 29, 1997 are derived from unaudited consolidated
financial statements and include, in the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the data for such periods. The selected financial data below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Unaudited Pro Forma Consolidated Statements of
Operations" and the financial statements and notes thereto included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR(1) -----------------------
----------------------------------------------- MARCH 29, APRIL 4,
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------- ------ ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales........................... $328.3 $357.4 $372.1 $ 438.3 $483.3 $ 107.8 $213.8
Cost of sales................... 229.7 246.1 261.7 299.6 331.7 75.8 155.5
------ ------ ------ ------- ------ ------- ------
Gross profit.................... 98.6 111.3 110.4 138.7 151.6 32.0 58.3
Selling, general &
administrative expenses....... 100.4 90.8 93.5 107.3 111.8 26.0 46.5
Other operating expenses(2)..... -- 21.1 -- 7.6 5.7 -- 3.1
Loss on sale of Lear Siegler.... -- -- -- -- 5.4 -- --
Restructuring expense(3)........ 4.6 -- 6.3 -- 2.9 3.8
------ ------ ------ ------- ------ ------- ------
Income (loss) from operations... (6.4) (0.6) 10.6 23.8 25.8 6.0 4.9
Interest expense................ (15.5) (4.5) (6.0) (6.7) (27.5) (6.3) (10.9)
Interest income................. 0.3 2.2 2.9 2.1 1.3 0.3 0.1
------ ------ ------ ------- ------ ------- ------
Income (loss) from continuing
operations before income
taxes, minority interest and
extraordinary items........... (21.6) (2.9) 7.5 19.2 (0.4) 0.0 (5.9)
Income tax benefit
(provision)(4)................ 0.3 (0.2) (0.1) 17.6 6.8 (0.1) 1.6
Minority interest............... 0.1 (2.7) (1.1) (10.2) -- -- --
------ ------ ------ ------- ------ ------- ------
Income (loss) from continuing
operations before
extraordinary items........... (21.2) (5.8) 6.3 26.6 6.4 (0.1) (4.3)
Discontinued operations(5)...... (43.2) -- -- 1.7 -- -- --
Extraordinary loss(6)........... -- (1.5) -- (0.5) (2.8) -- --
------ ------ ------ ------- ------ ------- ------
Net Income (loss)............... $(64.4) $ (7.3) $ 6.3 $ 27.8 $ 3.6 $ (0.1) $ (4.3)
====== ====== ====== ======= ====== ======= ======
OTHER FINANCIAL DATA:
Depreciation and amortization... $ 12.0 $ 7.2 $ 7.6 $ 8.0 $ 8.7 $ 2.0 $ 6.4
Capital expenditures............ 7.7 14.2 12.0 12.8 13.9 4.2 2.4
Ratio of earnings to fixed
charges(7).................... -- -- 1.4x 2.0x -- 1.0x --
BALANCE SHEET DATA:
Working capital................. $ 41.0 $ 41.9 $ 58.1 $ 56.6 $ 29.8 $ 56.6 $ 40.3
Total assets.................... 169.8 193.7 188.3 216.2 558.1 204.0 576.4
Total indebtedness.............. 35.0 63.8 69.0 263.7 479.9 270.0 503.6
Stockholders' equity
(deficit)..................... 7.7 0.2 (0.6) (128.5) (46.9) (128.6) (48.4)
</TABLE>
- ---------------
(1) Prior to 1998, the Company's fiscal year ended on the Saturday closest to
December 31 of each year. On May 18, 1998, the Company changed its fiscal
year to the Saturday closest to March 31.
(2) Other operating expenses in 1994 are comprised of a $2.5 million one-time
charge recorded by the Company to conform its method of accounting to
Statement of Position (SOP) No. 93-7, "Reporting on Advertising Costs" and
$18.6 million primarily related to curtailment and settlement losses for
pension plans of previously disposed Lear Siegler subsidiaries. Other
operating expenses in 1996 are comprised of management transaction bonuses
related to the THL Transactions of $6.9 million
42
<PAGE> 45
and estimated costs (primarily severance) of $0.7 million to exit the
activities of Lear Siegler. Other operating expenses in 1997 include $1.0
million of management transaction bonuses, $3.0 million related to
acceleration of vesting of certain management stock options and $0.5 million
related to forgiveness of certain officer loans made in connection with the
Vistar Merger. Also included in other operating expenses in 1997 are costs
related to obtaining bondholder consent to the Vistar Merger of $1.2
million. Other operating expenses of $3.1 million in the three months ended
1998 consist of costs associated with the integration of corporate systems,
moving, relocation and other expenses associated with the Vistar Merger. See
Notes 1, 2, 4 and 10 to the Company's Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(3) In 1993, the Company recorded $4.6 million in restructuring charges related
to the planned closing of approximately 70 service center locations. In
1995, the Company recorded $6.3 million in restructuring charges. Of this
amount, $5.6 million related to the planned closing of 100 service center
locations and $0.7 million related to field management reorganization. In
1997, the Company recorded restructuring charges totaling $2.9 million
consisting of $0.4 million for planned closing of Safelite service center
locations and $2.5 related to Safelite employee severance resulting from the
consolidation of Safelite and Vistar field and administrative activities.
Restructuring charges of $3.8 million for the three months ended April 4,
1998 consisted of $2.5 million for planned closing of Safelite service
center locations and $1.3 million related to Safelite employee severance.
See Notes 4 and 5 to the Company's Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(4) The adoption of SFAS No. 109, "Accounting for Income Taxes" in 1993 was not
material to the Company's consolidated results of operations or its
financial condition. During 1996 and 1997, the valuation allowance provided
against the Company's deferred tax assets was reduced by $25.9 million and
$3.0 million, respectively. See Note 14 to the Company's Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(5) In 1993, five operating businesses of Lear Siegler were sold and a resulting
loss on sale of discontinued operations of $45.2 million was recognized.
1993 income from operations on such businesses was $2.0 million. In 1996, a
gain from discontinued operations totaling approximately $1.7 million was
recorded, consisting of $27.2 million in favorable resolution of various tax
contingencies of previously discontinued Lear Siegler operations offset by
$25.5 million of settlement costs for various liability issues related to
previously disposed of Lear Siegler subsidiaries. See Note 16 to the
Company's Consolidated Financial Statements.
(6) In 1994, 1996 and 1997, extraordinary losses of $1.5 million, $0.5 million
and $2.8 million, respectively, were recorded, net of minority interest and
income tax of $0.3 million, $0.3 million and $1.9 million, respectively, as
a result of expensing unamortized loan origination fees related to the early
retirement of the associated debt.
(7) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as earnings before income taxes and cumulative effect of
accounting changes, plus fixed charges. Fixed charges consist of interest
expense on all indebtedness and capitalized interest, amortization of
deferred financing costs and one-half of rental expense on operating leases,
representing that portion of rental expense deemed by the Company to be
attributable to interest. For fiscal 1993, 1994, 1997 and the three months
ended April 4, 1998 the deficiency of earnings to fixed charges was $21.6
million, $2.9 million, $0.4 million and $5.9 million, respectively.
43
<PAGE> 46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Safelite is the largest provider of automotive glass replacement and repair
services in the United States. The Company's installation and related services
customers include insurance companies, commercial fleet leasing and rental car
companies, car dealerships and body shops, government agencies and individual
consumers. Safelite also acts as a subcontractor for other automotive glass
replacement and repair providers. Approximately 94%, or $201.7 million, of the
Company's sales for the three months ended April 4, 1998 were derived from
installation and related services sales. Of these sales, approximately 80% were
generated through the Company's own service centers, mobile vans, and
centralized telephone/dispatch centers ("service center sales"). The remainder
of installation and related services sales, or $40.5 million, for the three
months ended April 4, 1998 were derived from the Company's network of
independent automotive glass installation and repair providers which install
glass for Safelite under subcontracting arrangements ("network sales").
On December 19, 1997, the Company acquired Vistar, the second largest
automotive glass replacement and repair company in the United States (see Note 4
to the Company's financial statements). At April 4, 1998, the combined company
had two manufacturing facilities, 74 warehouses, 47 dispatch command
centers/central telephone units and 809 service center locations. From the date
of the Vistar Merger through April 4, 1998, the Company began its review and
elimination of redundant operations. The Company expects to complete these
consolidation activities by the end of calendar year 1998.
Insurance companies represent the largest installation and related services
customer segment comprising approximately 59% and 69% of installation and
related services sales in 1997 and the three months ended April 4, 1998,
respectively. The implementation of new Master Provider programs coupled with
the Vistar Merger continued to generate increases in the Company's sales to
insurance companies, with a related increase in lower margin network sales
during these periods.
The Company manufactures approximately 65% of the windshields it installs
and utilizes its excess manufacturing capacity to produce windshields for sale
into the wholesale market. Wholesale customers are primarily regional and local
automotive glass replacement and repair companies. Approximately 11% and 6% of
Safelite's sales for 1997 and the three months ended April 4, 1998,
respectively, were derived from wholesale sales. The decline in wholesale sales
as a percent of total sales is due primarily to the increase in overall sales
resulting from the Vistar Merger. Safelite's strategic focus for its wholesale
operations is to maintain sales and increase overall gross margins.
The Company's costs and expenses include cost of sales and selling, general
and administrative expenses. Cost of sales includes product and distribution
costs, installation labor, service center occupancy and vehicle expenses.
Selling, general and administrative expenses include costs of the Company's
national phone centers, sales force and other general and administrative
functions.
From 1995 to 1997, the Company's sales increased from $372.1 million to
$483.3 million, and Adjusted EBITDA increased from $25.5 million to $49.6
million. For the three month period ended April 4, 1998, the Company generated
sales and Adjusted EBITDA of $213.8 million and $18.2 million, respectively.
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<PAGE> 47
RESULTS OF OPERATIONS
The following table reflects the Company's sales, related expenses and
earnings expressed as a percentage of sales for the periods set forth below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ---------------------
----------------------- MARCH 29, APRIL 4,
1995 1996 1997 1997 1998
----- ----- ----- --------- --------
<S> <C> <C> <C> <C> <C>
SALES:
Installation and related services:
Service center........................... 80.7% 75.9% 75.3% 77.0% 75.4%
Network.................................. 4.1 10.8 13.7 11.4 18.9
Wholesale................................... 15.2 13.3 11.0 11.6 5.7
----- ----- ----- ----- -----
Total sales................................... 100.0 100.0 100.0 100.0 100.0
Cost of sales................................. 70.3 68.4 68.6 70.3 72.7
----- ----- ----- ----- -----
Gross profit.................................. 29.7 31.6 31.4 29.7 27.3
Selling, general and administrative
expenses.................................... 25.1 24.5 23.2 24.1 21.7
Restructuring expense......................... 1.7 0.6 1.8
Other operating expenses...................... 1.7 1.2 1.5
Loss on sale of Lear Siegler.................. 1.1
Interest expense.............................. (1.6) (1.5) (5.7) (5.9) (5.1)
Interest income............................... 0.7 0.5 0.3 0.3
----- ----- ----- ----- -----
Income (loss) before income taxes............. 2.0 4.4 (0.1) 0.0 (2.8)
Income tax benefit (provision)................ 4.0 1.4 0.8
Minority interest............................. (0.3) (2.4)
Discontinued operations....................... 0.4
Extraordinary loss............................ (0.1) (0.6)
----- ----- ----- ----- -----
Net income (loss)............................. 1.7% 6.3% 0.7% 0.0% (2.0)%
===== ===== ===== ===== =====
</TABLE>
Three Months Ended April 4, 1998 Compared with Three Months Ended March 29, 1997
Sales. Sales increased $106.0 million in the three months ended April 4,
1998, or 98.3%, to $213.8 million, from $107.8 million in the three months ended
March 29, 1997. Installation and related services grew $106.4 million, or 111.7
% to $201.7 million. Approximately 73% of this growth was attributable to
service center sales while the remainder was provided by increased network
sales. The growth in installation and related services revenue over last year
was due primarily to the Vistar Merger and favorable pricing, as overall market
conditions remained soft in the first three months of 1998.
Wholesale sales fell 3.5 % to $12.1 million despite an 8.0% increase in
unit sales. Soft market conditions and greater industry capacity have increased
competition at the wholesale level, particularly in the higher margin smaller
local glass chains and shops. As a result, much of the increase in unit sales
was derived from the more price sensitive truckload buyers who were purchasing
in advance of the industry-wide NAGS price increase which took effect March 16,
1998.
Gross Profit. Gross profit increased 81.8% to $58.3 million in the three
months ended April 4, 1998, from $32.0 million in the corresponding period of
the prior year. Gross profit margin decreased to 27.3% in the first three months
of 1998, from 29.7% in the corresponding prior year period, as the impact of
improved installation and related services pricing and customer mix was more
than offset by the higher growth rate of network business relative to total
sales. The gross profit margin on network sales is substantially lower than on
work performed through Safelite owned service centers.
45
<PAGE> 48
Selling, General and Administrative Expenses. Selling, general and
administrative expenses rose 78.8% in the first three months of 1998 to $46.5
million, with the Vistar Merger accounting for substantially all of the
increase. As a percentage of sales, selling, general and administrative expenses
declined to 21.7% in the first three months of 1998 from 24.1% for the
corresponding prior year period. This decline in selling, general and
administrative expenses as a percent of sales is a result of the Company's
improved operating leverage.
Income Before Income Taxes. Income before taxes declined to a loss of $5.9
million for the three months ended April 4, 1998, compared with essentially
break-even performance for the corresponding prior year period. The decline in
income before income taxes despite higher overall gross margin dollars and lower
selling general and administrative expenses as a percent of sales was caused
primarily by $6.9 million in restructuring charges and one-time integration
costs and $4.6 million in increased interest costs associated with the Vistar
Merger.
Income taxes. The Company recorded an income tax benefit in the first
three months of 1998 of $1.6 million, compared to a $0.1 million income tax
provision for the first three months of 1997. The income tax benefit (provision)
in both periods differs from amounts computed using statutory rates due
primarily to amortization of goodwill.
Net income. Net income declined to a loss of $4.3 million for the three
months ended April 4, 1998 from a loss of $0.1 million in the corresponding
prior year period due to the changes described above.
1997 Compared with 1996
Sales. Sales increased $45.0 million in 1997, or 10.3%, to $483.3 million,
from $438.3 million in 1996. Installation and related services grew $50.1
million, or 13.2% to $430.3 million. Approximately 63% of this growth was
attributable to service center sales while the remainder was provided by
increased network sales. The growth in installation and related services revenue
over last year was due primarily to favorable pricing and improved customer mix.
Instrumental to the improved customer mix has been the addition of new
multi-year MP programs with several large insurers, most notably GEICO. Under an
MP program, the Company administers 100% of an insurance company's automotive
glass claims and, as a result, receives more referrals both to be performed in
its own service centers and through its network of independent automotive glass
installation providers. The increase in insurance customer sales volume was
partially offset by a decline in subcontracting sales volume, as overall market
conditions were soft in 1997.
Wholesale sales fell 8.9% to $53.0 million as a result of a decline in unit
sales partially offset by increased pricing. The pricing improvement came about
through a shift of business from more price sensitive truckload buyers to
smaller local glass chains and shops. The wholesale business performance
reflected the soft market conditions and resulting competition at the wholesale
level.
Gross Profit. Gross profit increased 9.3% to $151.6 million, from $138.7
million in 1996. Gross profit margin remained virtually constant in 1997 at
31.4% compared to 31.6% in 1996, as the impact of improved installation and
related services pricing and customer mix was partially offset by higher product
and installation costs. Also negatively affecting the gross margin percentage
was the higher growth rate of network business relative to total sales. The
gross profit margin on network sales is substantially lower than on work
performed through Safelite owned service centers.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses rose 4.2% in 1997 to $111.8 million. Vistar selling,
general and administrative expenses from the December 19, 1997 merger date
through year-end accounted for nearly all of the total increase. As a percentage
of sales, selling, general and administrative expenses declined to 23.2% in 1997
from 24.5% in 1996.
Income Before Income Taxes. Income before income taxes decreased to a loss
of ($0.4) million in 1997 from income of $19.2 million in 1996. The decrease was
due primarily to $20.8 million in higher interest costs incurred as a result of
the Company's December 20, 1996 recapitalization, coupled with a $5.4 million
loss on the sale of Lear Siegler and $2.9 million in restructuring charges.
Partially offsetting
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<PAGE> 49
these items was a decline in other operating expenses of $1.9 million. Other
operating expenses in 1997 consisted of one-time charges related to the Vistar
Merger as follows: (i) $3.0 million for acceleration of vesting of certain
management stock options, (ii) $1.0 million in management transaction bonuses,
(iii) $0.5 million related to the forgiveness of officer loans and (iv) $1.2
million in costs associated with obtaining bondholder consent to amend the terms
of the Notes and approve the Vistar Merger.
Income Taxes. In 1997, the Company recorded a credit provision for income
taxes substantially in excess of the statutory rate primarily due to a reduction
of the Company's valuation allowance for deferred tax assets in recognition of
the Company's improved profitability, and the recognition of the right to use
previously unrecognized federal net operating loss carryforwards obtained in
connection with the Lear Siegler sale transaction. The credit provision for
income tax in 1997 was $10.8 million less than 1996. The valuation allowance was
substantially reduced in 1996 in recognition of the Company's improved
profitability at that time.
Net Income. Net income declined to $3.6 million from $27.8 million in 1996
primarily as a result of the changes described above as well as the elimination
of the adjustment for minority interest as a result of the THL Transactions in
1996. Also contributing to the change was a $2.8 million extraordinary loss in
1997 for the early extinguishment of debt which was made in connection with
obtaining new financing for the Vistar Merger.
1996 Compared with 1995
Sales. Sales in 1996 increased $66.2 million, or 17.8%, to $438.3 million,
from $372.1 million in 1995. Installation and related services sales grew $64.5
million, or 20.4% to $380.1 million. Approximately half of this growth was
attributable to increased service center sales while the remainder was provided
by increased network sales. Service center sales increases were the result of
volume improvements associated with the continued implementation of Master
Provider programs, favorable pricing and improved customer mix. The $32.3
million increase in network sales to $47.5 million was a direct result of the
growth in the Company's Master Provider programs.
Wholesale sales rose 3% to $58.2 million as a result of price increases
which were partially offset by a decline in unit sales of 4.4%. These results
reflect the Company's strategic shift of wholesale sales efforts towards higher
margin local automotive glass accounts and away from larger, more
price-sensitive regional customers.
Gross Profit. Gross profit in 1996 increased 25.6% to $138.7 million, from
$110.4 million in 1995. Gross profit margin increased to 31.6% in 1996, from
29.7% in 1995. This improvement in gross profit margin was primarily the result
of increased service center sales volume, higher prices, and reductions in the
Company's fixed cost structure as a result of the 1995 restructuring activities.
These improvements in gross profit margin were partially offset by increases in
the lower-margin network sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses rose 14.8% in 1996 to $107.3 million. As a percentage of
net sales, selling, general and administrative expenses declined to 24.5% from
25.1%. The overall increase in selling, general and administrative expenses was
related to the opening of the Company's third national phone center, increased
staffing to support the rapid growth in network sales and higher incentive
compensation. The decline in selling, general and administrative expenses as a
percentage of sales is a result of increased total sales and the benefits of the
Company's improved operating leverage.
Income Before Income Taxes. Income before income taxes increased 156.0% to
$19.2 million in 1996, from $7.5 million in 1995. Income before taxes increased
from 2.0% of total sales to 4.4% of total sales as a result of the improved
gross profit margins and a decline in selling, general and administrative
expenses as a percentage of total sales described above, partially offset by
one-time charges for management transaction bonuses of $6.9 million and
estimated costs (primarily severance) of $0.7 million to exit the activities of
Lear Siegler.
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<PAGE> 50
Income Taxes. In 1996, the Company recorded a credit provision for income
taxes of $17.6 million primarily as a result of reversing a valuation allowance
for certain deferred tax assets in accordance with the provisions of SFAS No.
109 and in recognition of the Company's improved profitability.
Net Income. The increase in net income to $27.8 million from $6.3 million
in 1995 was due primarily to the changes in income before taxes and the reversal
of the deferred tax valuation allowance described above, offset by an increase
in 1996 in the deduction for minority interest earnings of $9.1 million. Also
affecting net income in 1996 was a $1.7 million gain, related to Lear Siegler
discontinued operations. See Note 16 to the Company's consolidated financial
statements.
RESTRUCTURING CHARGES
Prior to 1990, the Company grew through acquisitions and new service center
openings. In late 1991, the new management team undertook a comprehensive review
of the Company's operations. The new management team recognized that insurance
companies and large fleet owners were responsible for the majority of automotive
glass replacement purchasing decisions in the U.S. and focused the Company on
providing a total claims management solution. In addition, the Company
reorganized its national network by introducing sophisticated information
systems that permitted the Company to close redundant service center locations
and consolidate certain administrative functions. The initiatives associated
with the execution of the Company's new strategy and closing of non-strategic
operations resulted in restructuring charges in fiscal 1993 and 1995. In 1993,
the Company recorded $4.6 million in restructuring charges related to the
closing of approximately 70 service center locations. In 1995, the Company
recorded restructuring charges of $5.6 million related to the closing of 100
service center locations and $0.7 million related to field management
reorganization. There were no restructuring charges during 1996.
As a result of the Vistar Merger, the Company intends to consolidate
redundant overhead in both field and corporate operations, eliminate redundant
service center locations and eliminate redundant sales and marketing force
activities. Management estimates that the aggregate of all merger related
closing and consolidation costs will range from $37 million to $42 million. At
January 3, 1998 and April 4, 1998, the Company had partially completed its
evaluation of redundant locations and activities and recorded $20.8 million and
$3.3 million in accruals, respectively, for Vistar employee severance, closure
of Vistar service center locations and elimination of duplicate Vistar corporate
functions. These costs have been recorded as part of the Company's purchase
accounting for Vistar. In addition, at January 3, 1998 and April 4, 1998, the
Company recorded restructuring charges of $2.9 million and $3.8 million,
respectively, for Safelite employee severance and closing of Safelite service
centers (see Notes 4 and 5 to the Company's financial consolidated statements).
Prior to December 1998, the Company expects to complete its
market-by-market analysis of overlapping field locations and administrative
activities of both Vistar and the Company. Costs associated with additional
consolidation of Vistar functions and activities will be recorded as an
adjustment to the initial purchase allocation. Costs associated with closing
Safelite locations will be expensed when the decision to close the facility is
made. The Company also expects to incur a total of $5 million to $10 million in
calendar 1998 for certain one-time expenses associated with the integration of
corporate systems, temporary services fees, training, moving, relocation and
other costs associated with the Vistar Merger. Management believes that
substantial synergies will result from the integration of Safelite and Vistar
operations and the related restructuring activities. These net cost savings are
estimated by management to range from $30 million to $35 million, annually.
Headcount and service center closings or site consolidations are expected to
comprise over 70% of the cost savings. Management believes that a portion of the
synergies are achievable during calendar 1998 with full synergies expected to be
realized in calendar 1999.
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<PAGE> 51
EFFECTIVE INCOME TAX RATE
For the quarter ended April 4, 1998, the Company's provision for income
taxes was below the statutory rate due to permanent differences, primarily
goodwill. The Company recorded a net income tax benefit of $6.8 million for
fiscal year 1997. This tax benefit resulted primarily from a reduction in the
valuation allowance relating to net operating loss carryforwards generated prior
to 1994, and from obtaining the right to use approximately $16.2 million of
previously unrecognized federal net operating loss carryforwards as part of the
Lear Siegler sale transaction. The reduction in the valuation allowance was
based upon management's review of the Company's historical and current pre-tax
earnings, giving effect to adjustments and statutory limitations resulting from
the THL Transactions and the Vistar Merger. Based upon this review, management
believes that the Company will realize the benefit of a portion of its existing
deductible temporary differences. See Note 14 to the Company's Consolidated
Financial Statements. Management expects that the increase in interest expense
which will occur as a result of the Vistar Merger combined with the Company's
net operating loss carryforwards may result in reduced Federal tax payments for
a period of up to 10 years.
EFFECTS OF INFLATION
Inflation has not been material to the Company's operations for the periods
presented.
QUARTERLY DATA
The following table sets forth the Company's quarterly sales for fiscal
1995, 1996, and 1997.
NET SALES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ------------- -------------
SALES % SALES % SALES %
--------- --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
First Quarter........................... $ 85.6 23% $102.9 24% $107.8 22%
Second Quarter.......................... 99.0 26 122.0 28 129.1 27
Third Quarter........................... 99.5 27 115.8 26 126.3 26
Fourth Quarter.......................... 88.0 24 97.6 22 120.1 25
------ --- ------ --- ------ ---
Total Annual.................. $372.1 100% $438.3 100% $483.3 100%
====== === ====== === ====== ===
</TABLE>
Historically, the Company has experienced seasonal variations in revenues,
with lower revenues typically reported in the first and fourth calendar quarters
of each year. See "-- Effect of Weather Conditions; Seasonal Earnings."
EFFECT OF WEATHER CONDITIONS; SEASONAL EARNINGS
The severity of weather has historically affected the Company's sales and
operating income, with severe winters generating increased sales and income and
mild winters generating lower sales and income. Accordingly, mild weather
conditions may adversely affect the Company's results of operations.
The Company's business is somewhat seasonal, with the first and fourth
calendar quarters of each year traditionally being its slowest periods of
activity. This reduced level of sales in the first and fourth calendar quarters
has resulted in a disproportionate decline in EBITDA during the those quarters
due to the Company's significant operating leverage. The Company believes such
seasonal trends will continue for the foreseeable future.
IMPACT OF YEAR 2000
The Company has initiated a program to prepare its computer systems and
applications for the year 2000 date change ("Year 2000"). As part of this
program, a team has been assigned to evaluate the
49
<PAGE> 52
nature and extent of the work required to make the Company's systems, products,
electronic linkages with insurance company customers and infrastructure Year
2000 compliant. A number of projects are either underway or under review with
respect to Year 2000 compliance for the Company's various business systems, the
total cost of which has not yet been determined. Year 2000 project costs are
difficult to estimate accurately, and projected costs could change due to
technological difficulties, project delays, and project cost overruns.
Management will continue to evaluate the estimated cost associated with ensuring
that the Company's systems, products and infrastructure are Year 2000 compliant.
While these on-going efforts will involve additional costs, management believes
that the costs will not have a material adverse effect on the Company's
business, results of operations or financial condition.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the three months ended April 4,
1998 was $15.6 million, a decrease in cash usage of $1.1 million from the
corresponding prior year period. Excluding Lear Seigler discontinued operations
in the quarter ended March 29, 1997, cash usage increased by $2.8 million,
primarily due to increases in accounts receivable, inventory and debt service
associated with the Vistar Merger. Net cash provided by operating activities for
1997 was $2.4 million, an increase in operating cash flows of $2.3 million from
1996. Excluding Lear Siegler discontinued operations, cash flows decreased by
$23.3 million in 1997. The primary factor in this decrease was the additional
cash required to service the increase in debt which resulted from the THL
Transactions in December 1996. Net cash generated by operating activities for
1996 was $0.1 million, an increase of $10.2 million from 1995. Excluding cash
flows used to settle Lear Siegler pension plan liabilities in 1995 and Lear
Siegler discontinued operations in 1996, the increase in cash flow from
operating activities was $20.8 million. This $20.8 million improvement in cash
flow was primarily due to improvements in operating income and improved working
capital management, offset by the purchase of insurance liability coverage for
1997 through 1999 for approximately $12.0 million.
The Company's investing activities consist mainly of capital expenditures
for new and existing service center and warehouse locations, capacity and
efficiency upgrades to manufacturing facilities, and information technology
equipment. Capital expenditures totaled $4.2 million and $2.4 million for the
three months ended March 29, 1997 and April 4, 1998, respectively, and $13.9
million, $12.8 million and $12.0 million for 1997, 1996 and 1995, respectively.
Included in 1995 capital spending is $3.5 million for the purchase and
renovation of the Company's manufacturing/distribution facilities in Wichita,
Kansas. The level of 1996 capital expenditures reflects expansion of service
center and warehouse coverage into new markets and an upgrade to the Company's
manufacturing facilities. The increase in capital spending during 1997 reflects
the Company's expansion of service center and warehouse coverage and the
purchase of new point of sale equipment for the former Vistar service centers.
Capital spending during the three months ended April 4, 1998 reflects the
Company's focus on planning merger consolidation activities.
Management expects post-integration capital spending levels to increase to
approximately $22.0 million annually as a result of the Vistar Merger.
Additional integration-related capital expenditures of $3.0 million to $5.0
million in both calendar 1998 and calendar 1999 are expected as a result of (i)
converting Vistar service centers and mobile vans to the Safelite logo and
format and (ii) expansion of certain centralized telephone/dispatch center
locations. The Company believes that cash flows from operating activities and
its ability to borrow under its credit facilities will be adequate to meet its
debt service obligations, working capital needs and planned capital expenditures
at least through the Company's fiscal year end.
Historically, the Company has utilized internally generated funds and
borrowings under credit facilities to meet ongoing working capital and capital
expenditure requirements. In connection with the Distribution and the Vistar
Merger, the Company retired existing indebtedness of approximately $150 million
and incurred new indebtedness aggregating approximately $365 million.
Substantially all of the proceeds of such indebtedness were used to refinance
existing bank debt, to fund the Distribution, to pay Vistar Merger consideration
and to pay bonuses, fees and expenses related to the Vistar Merger.
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<PAGE> 53
As a result of the Vistar Merger, the Company has significantly increased
cash requirements for debt service relating to the New Bank Credit Facilities.
See Note 10 to the Company's Consolidated Financial Statements for a description
of the amortization of the Term Loan Facility. The Company will rely on
internally generated funds and, to the extent necessary, on borrowings under the
Revolving Credit Facility, which provides for borrowings up to $100 million, to
meet its liquidity needs. At April 4, 1998, the Company has long-term borrowings
of $503.6 million and $58.7 million of availability under the Revolving Credit
Facility (less $17.6 million in letters of credit outstanding).
Management believes that based on the current level of operations and
anticipated internal growth, cash flow from operations, together with other
available sources of funds, including borrowings under the Revolving Credit
Facility, will be adequate to make required payments of principal and interest
on the Company's indebtedness and to fund anticipated capital expenditures and
working capital requirements. However, actual capital requirements may change.
The ability of the Company to meet its debt service obligations and reduce its
total debt will be dependent on the future performance of the Company, which in
turn, will be subject to general economic conditions and to financial, business,
and other factors, including factors beyond the Company's control. A portion of
the Company's debt bears interest at floating rates; therefore, its financial
condition is and will continue to be affected by changes in prevailing interest
rates.
CHANGES IN ACCOUNTING STANDARDS
At April 4, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." The components of comprehensive income are net income and
the change in minimum pension liability, net of tax.
In June 1997, FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information" which is effective for the Company's fiscal
year ended March 1999. This statement establishes standards for the way that
business enterprises report information about operating segments and may result
in additional financial statement disclosures for the Company.
In February 1998, FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Post-Retirement Benefits" which is effective for the
Company's fiscal year ended March 1999. The statement will result in revised
financial statement disclosures regarding employers' pensions and other retiree
benefits.
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement requires derivatives to be
recorded on the balance sheet as assets or liabilities, measured at fair value.
Gains or losses resulting from changes in fair value of the derivatives are
recorded depending upon whether the instruments meet the criterion for hedge
accounting. This statement is effective for fiscal years beginning after June
15, 1999. The impact of adopting this statement has not been determined.
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<PAGE> 54
BUSINESS
COMPANY OVERVIEW
Safelite is the largest provider of automotive glass replacement and repair
services in the United States. The Company installed approximately 1.7 million
replacement units in 1997 for insurance companies, commercial fleet leasing and
rental car companies, car dealerships and body shops, government agencies and
individual consumers. The Company provides these installation services through
its network of service centers, mobile vans, centralized telephone/dispatch
centers and its network of independent automotive glass replacement and repair
providers. The Company has targeted its marketing efforts principally towards
auto insurance companies which management believes, through their policyholders,
directly or indirectly influence approximately 70% of the selections of
automotive glass replacement providers. The Company has developed fully
integrated claims processing solutions for auto insurance companies which reduce
their glass loss expenses and total administrative costs and provide a higher
level of customer service to their policyholders. Management believes that this
outsourcing capability, coupled with the convenience of nationwide coverage,
consistently high quality service and low costs, has provided the Company with a
significant competitive advantage in the insurance segment of the market. Since
1993, the Company estimates that it has increased its leading market share in
this segment, resulting in improved financial performance as demonstrated by
compound annual growth in sales through 1997 of 10% to $483.3 million. During
the same period, operating income improved from a loss of $6.4 million in 1993
to $25.8 million of operating income in 1997. Adjusted EBITDA (as defined) for
the same period grew from $22.0 million to $49.6 million, a compounded annual
growth rate of 22%. Sales, operating income and adjusted EBITDA for the three
months ended April 4, 1998 were $213.8 million, $4.9 million and $18.2 million,
respectively. See "Summary Historical and Pro Forma Financial Information."
On December 19, 1997, Safelite completed the Vistar Merger whereby, Vistar
merged with and into the Company with the Company as the surviving corporation.
The Vistar Merger was accounted for as an acquisition; accordingly, the
operations of Vistar are included in the Company's financial statements from
December 19, 1997 forward. Prior to the Vistar Merger, Vistar was the second
largest provider of automotive glass replacement and repair services in the
United States. Vistar was created on February 29, 1996 from the merger of
Windshields America, Inc., a wholly owned subsidiary of Belron (USA) BV, and
Globe Glass and Mirror Company. Vistar installed or repaired approximately 1.6
million units in its fiscal year ended March 31, 1997 for insurance companies,
commercial fleet leasing and rental car companies, car dealerships and body
shops, government agencies and individual consumers. Vistar provided these
installation services through its network of 356 service centers and
approximately 1,000 mobile vans and its network of independent automotive glass
replacement and repair providers. Vistar net sales and operating income were
$413.5 and $8.8 million, respectively, for its fiscal year ended March 31, 1997
and $339.5 million and a loss of $8.2 million, respectively, for the nine months
ended December 19, 1997. See "Summary of Transactions -- The Vistar
Transactions" and "Transactions -- The Vistar Transactions." At April 4, 1998,
the combined companies had two manufacturing facilities, 74 warehouses, 47
centralized telephone/dispatch centers, approximately 2,000 mobile vans and 809
service center locations across the United States.
The automotive glass replacement and repair industry in 1997 was a $3.0
billion market, representing the installation of approximately 12.5 million
replacement units. The replacement and repair of automotive glass is driven by
the incidence of breakage. Over the past 10 years, management estimates that
total industry sales have grown at approximately 4% per year, primarily as a
result of increases in the aggregate number of vehicles on the road, the
increases in the number of miles driven and increases in price of automotive
replacement glass and repair service, which principally reflect the increasing
size and design complexity of automotive glass. Such growth has been fairly
consistent year to year, with some variations resulting primarily from
fluctuations in weather conditions.
The automotive glass replacement and repair industry is highly fragmented
with approximately 20,000 competitors. Safelite is the industry leader with an
overall market share of approximately 23% and
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<PAGE> 55
the leading market share in the insurance segment of the market. Since the early
1990's, the industry has been consolidating as evidenced by an increase in
market share for the top three industry participants from an estimated 24% to an
estimated 35% and a decline in market share for small "mom and pop" providers
from an estimated 70% to an estimated 55% during the same period.
COMPETITIVE STRENGTHS
Industry Leadership and Nationwide Coverage. Safelite is the largest
competitor in the highly fragmented automotive glass replacement and repair
industry. The Company operates service centers in all of the top 100
Metropolitan Statistical Areas ("MSAs") in the United States. Through its
nationwide network, the Company can directly serve 70% of the cars and light
trucks in the United States and, through its authorized independent replacement
and repair centers, achieves over 90% coverage. Safelite has the largest number
of service centers and the largest network of independent automotive glass
replacement and repair providers in the United States. Management believes that
the Company's leadership position and breadth of geographic coverage is a
significant competitive advantage in working with insurance companies,
commercial fleet lessors and other large customers which increasingly demand
consistent quality in both claims processing and automotive glass repair and
replacement services on a nationwide basis.
Strong, Established Relationships with Major Insurance Companies. Safelite
has successfully established strong relationships with the nation's major auto
insurance companies, and management believes it has more program relationships
with these companies than any of its competitors. The top 30 auto insurers
influence approximately 55% of all repairs and replacements in the United
States. Safelite has entered into Total Customer Solution ("TCS") arrangements
with approximately 25 of those insurers including Farmers Insurance Group,
United Services Automobile Association, Prudential Insurance Company of America,
and Safeco Corporation. Under a TCS arrangement, Safelite typically serves as
one of a few recommended automotive glass replacement providers for an insurance
company and provides a range of additional claims management services including
computerized referral management, policyholder call management, electronic
auditing and billing services and management reporting. Of Safelite's
approximately 45 TCS arrangements, those with Allstate, Nationwide Mutual
Insurance Company, GEICO, Liberty Mutual Insurance Company, Travelers Group, CNA
Insurance Group, Metropolitan Property and Casualty Insurance Company and
National General Insurance are also Master Provider relationships. Under an MP
program, Safelite acts as the administrator of the insurance company's
automotive glass claims. TCS and MP programs significantly lower the processing
costs and loss expenses for the insurance companies, provide more consistent and
rapid service for policyholders, and increase Safelite's volume with each
insurance account. In addition, the Company has entered into TCS arrangements
with major fleet and rental car companies including GE Capital Fleet Services,
PHH Vehicle Management Services Corporation, USL Capital Fleet Services, Hertz
Corporation and Budget Rent-A-Car Systems, Inc. Of these arrangements, those
with PHH Vehicle Management and USL Capital Fleet are also MP relationships. By
entering into these arrangements with insurance, fleet and rental car companies,
Safelite has substantially increased its volume with these accounts and enhanced
its base of recurring revenues.
Low Cost Provider. Management believes its merger with Vistar, coupled
with Belron's worldwide industry experience, will significantly enhance the
overall cost advantage Safelite enjoyed prior to the Vistar Merger. Safelite has
a total cost advantage compared to its competitors as a result of its
manufacturing facilities, its productivity incentive programs, the efficiency of
its nationwide distribution network and the critical mass of its centralized
customer service, claims processing and information network.
Safelite is the only full-scale vertically integrated automotive glass
replacement company in the U.S. The Company produces approximately 65% of its
windshield needs at its two manufacturing plants in Enfield, North Carolina and
Wichita, Kansas. Safelite produces only high-volume windshield models,
manufacturing 550 of the total 2,800 active windshield parts available in the
industry. Safelite determines which windshield models to produce by assessing
the sales trends and estimating future windshield demand after a new automobile
model has been on the market for approximately one year.
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The Company uses a three tiered distribution system to better serve its
customers and minimize its inventory levels. Two central distribution facilities
are located at the Company's manufacturing facilities in Enfield, North Carolina
and Wichita, Kansas. These central distribution facilities send inventory to the
Company's 74 regional warehouses (27 free-standing warehouses and 47 co-located
with the Company's Centralized Telephone Units). These facilities can then
quickly and accurately stock the service centers and vans in their local markets
on an as-needed basis.
Every Safelite employee participates in some form of incentive compensation
plan which rewards productivity and/or profitability of the Company. The
Company's management estimates that its performance incentive program has
increased productivity of its installation associates from 2.5 installations per
day in 1991 to 4.0 per day in 1997 (while the industry averaged an estimated 3.0
installations per day and Vistar's installation associates averaged
approximately 3.2 installations per day). As a result of the significant
economies of scale in its manufacturing, information systems, distribution and
installation infrastructure, management believes it has the capacity to add
incremental contracts and units at relatively low marginal cost.
Sophisticated Information Systems. The Company's automotive information
systems allow Safelite to handle all aspects of an insured automotive glass
claim effectively and cost efficiently from the initial phone call placed by the
insured policyholder to the automatic billing of an insurance company. Through
Safelite's fully integrated network ("SAFENET(TM)"), the Company can provide
full service to the policyholder by electronically accessing the insurance
company's database, verifying the policyholder's coverage status, scheduling the
glass installation, checking relevant inventories, ordering delivery (when
necessary) of automotive glass to a Safelite service center, repairing or
replacing the glass, electronically billing the insurance company and, if
applicable, paying the service providers. The insurance company's role is
limited to funding the claim payment and updating its policy files. In addition
to providing an integrated delivery system, SAFENET(TM) also provides management
and Safelite's customers with valuable information. This "real time" data allows
Safelite to track and monitor important statistics including customer
satisfaction, length of call and speed of installation. Safelite uses this data
to improve its customer service and provide comprehensive monthly management
reports for its large insurance customers. These reports include information to
which the insurance companies do not otherwise have access, including statistics
on number of claims, price per claim and percent of repairs versus replacement.
Safelite believes it is the only company in the industry currently providing
such reports.
STRATEGIES FOR GROWTH
Expand and Enhance Relationships with Insurance Companies. The Company's
principal business strategy is to increase its share in the segment of the
automotive glass replacement and repair market influenced by the insurance
companies by expanding the breadth and depth of its existing relationships. The
Company currently provides its replacement and repair services to the
policyholders of virtually every major automotive insurance company in the U.S.
The Company focuses its marketing and sales strategy on adding new insurance
relationships and increasing its share of business with its existing insurance
clients. Management believes that as it processes greater proportions of an
insurance company's replacement and repair claims, it can continue to reduce the
loss expenses and administrative costs of automotive glass replacement and
repair claims for the insurance company, while improving policyholder
satisfaction through faster, more reliable and consistent installation service.
The Company continually strives to enhance the value it provides to
insurance company clients while improving profitability through increased market
share. Recent examples include (i) implementation of a Repair First Network to
help improve repair performance, (ii) development of on-line call center
scheduling capability for faster, more efficient policyholder service and (iii)
creation of a SmartPay process under which insurance companies pay only
"reasonable and customary" prices for glass claims serviced by non-program
providers.
Expand Nationwide Coverage. Following the elimination of duplicative
service center locations resulting from the Vistar Merger, the Company plans to
continue expanding the breadth and depth of its
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nationwide network by selectively acquiring regional automotive glass
replacement and repair businesses and opening new service center locations. The
Company believes that it can enhance its sales and results through the
integration of well-targeted acquisitions into Safelite's nationwide network. In
addition, the Company expects to open 5 to 10 additional service centers
annually to complement its existing network.
Provide Additional Outsourcing Services to Insurance and Fleet
Companies. Management believes that Safelite can leverage its existing customer
relationships and claims processing infrastructure to provide additional
outsourcing services to insurance and fleet companies for items such as
pre-insurance vehicle inspection, towing referral, post-collision rental car
referral, after hours loss reporting and residential glass claims processing.
These services historically carry significant administrative burdens, high
processing costs and low dollar loss values, like the automotive glass
replacement and repair service that Safelite otherwise provides to insurance and
fleet companies efficiently and cost-effectively. The Company is evaluating
plans to offer these additional services as a natural extension of its core
automotive glass business.
INDUSTRY OVERVIEW
The market consists of two segments, the manufacture and sale of automotive
glass to large original equipment manufacturers ("OEMs") and the manufacturing
and installation of automotive glass for the replacement market. The OEM market
is generally characterized as a high-volume, manufacturing intensive industry.
By contrast, the automotive glass replacement market consists of service
providers focused on providing automotive glass replacement installation to a
broad base of institutional and individual customers. Replacement automotive
glass is generally purchased by installers from large OEM suppliers in the
wholesale market.
The automotive glass replacement and repair industry in 1997 was an
approximately $3.0 billion industry representing the installation of
approximately 12.5 million replacement units. The replacement and repair of
automotive glass is driven by the incidence of breakage. The market for the
installation of replacement automotive glass is highly fragmented with over
20,000 providers of automotive glass replacement services. Many competitors in
the industry are small "mom & pop" installers who do not have either the
national networks or sophisticated information systems required to effectively
compete in a national market. Since the early 1990s, the industry has been
consolidating as evidenced by an increase in market share for the top three
industry participants from an estimated 24% in 1992 to an estimated 35% in 1997
while the market share for small "mom and pop" providers declined from an
estimated 70% to an estimated 55% during the same period. Management expects
this consolidation to continue, as insurance companies and large fleet lessors
require nationwide coverage and more consistent service while seeking to reduce
costs by outsourcing their automotive glass claims. See
"-- Customers -- Installation Customers."
Over the past 10 years, management estimates that total industry sales have
grown at approximately 4% per year. Revenue growth has been due primarily to an
increase in the aggregate number of vehicles on the road, from approximately 157
million units in 1985 to approximately 193 million units in 1995 and the
increasing number of miles driven per year, from approximately 1.8 billion miles
in 1985 to 2.2 billion miles in 1995. Growth in industry sales have also been
driven by price increases which principally reflect the increasing size and
design complexity of automotive glass. In the aggregate, industry growth has
been fairly consistent, with some variation resulting primarily from
year-to-year fluctuations in weather conditions.
Customers in the automotive glass replacement industry include auto
insurance companies, commercial fleet leasing companies, rental car companies,
car dealerships, body shops, governmental agencies and individual consumers.
Insurance companies represent the largest segment of the market as a result
of their payment of replacement automotive glass claims for their policyholders.
The Company believes that insurance companies through their policyholders,
directly or indirectly, influence approximately 70% of the
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selections of automotive glass replacement providers. As a result of this
influence, insurance companies represent the most important segment of the
automotive glass replacement market. Auto insurance companies have been under
pressure to improve policyholder service, while simultaneously reducing their
operating expenses. As a result, the outsourcing of certain functions associated
with high volume and low dollar payouts is gaining increasing acceptance within
the insurance industry. Automotive glass repair and replacement claims represent
a disproportionate administrative burden. Management estimates such claims
account for less than 6% of the dollar value of all auto claims paid but over
30% of the total number of auto claims processed. By outsourcing the claims
management function and spreading the costs over a larger claims base, insurance
companies can eliminate an estimated $50-$100 of processing costs per claim. In
addition, insurance companies can reduce their loss severity through lower per
unit pricing, and improved repair ratios.
PRICING
The price of replacement automotive glass is related to the list prices
developed by the National Auto Glass Specification ("NAGS"), an independent
third party. Changes to the NAGS list prices generally have followed the
wholesale price increases announced by the OEMs. Prices charged in the
automotive glass replacement industry are calculated using varying percentage
discounts from the NAGS price list. Actual revenue per unit ("RPU") charged in
the industry has generally been increasing as a result of increases in the NAGS
list price, the increasing design complexity of automotive glass and the
increasing level of claims processing services associated with insurance-related
replacement automotive glass purchases.
NAGS list prices and offsetting discounts from NAGS list prices have
increased significantly over the past five years. The Company has been informed
that NAGS intends to reset its published list prices in early 1999 in order to
bring actual prices charged more in line with published list prices. While the
Company believes that as list prices are reduced, the related percentage
discounts from list price offered by the Company and the Company's competitors
will also be reduced, there can be no assurance that the resetting of NAGS list
prices will not have a material adverse effect on the Company.
CUSTOMERS
Safelite has a broad customer base across two primary segments: (i)
installation and related services and (ii) wholesale customers. The Company's
largest customer base is insurance companies, generating approximately 58%, 53%
and 49%, respectively, of total sales for the three months ended April 4, 1998,
the year ended January 3, 1998 and the year ending December 28, 1996. Safelite's
top ten customers accounted for approximately 41%, 40% and 39% of the Company's
consolidated sales in the three months ended April 4, 1998 and fiscal years 1997
and 1996, respectively. Approximately 12% of the Company's consolidated sales
were from a single customer in the three months ended April 4, 1998. No customer
accounted for more than 10% of the Company's consolidated sales during 1997 and
1996.
Installation Customers. The Company's installation and related services
customers are described as follows:
Insurance. Insurance companies represent Safelite's primary area of
strategic focus. Safelite has aggressively pursued this customer group and is
the leader in this market segment. From 1993 to 1997, the Company's sales to
this market segment have grown at a compound annual rate of approximately 17%.
The Company has developed fully integrated claims processing solutions for auto
insurance companies which reduce their glass loss expenses and total
administrative costs and provide a higher level of customer service to their
policyholders. Management believes this outsourcing capability, coupled with the
convenience of nationwide coverage, consistently high quality service and low
costs, has provided the Company with a significant competitive advantage in the
insurance-influenced segment of the market.
The Company has developed Total Customer Solution (TCS) arrangements and
Master Provider (MP) relationships to service its auto insurance company
customers. Under a TCS arrangement, Safelite
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serves as one of a few recommended automotive glass replacement providers for an
insurance company and typically provides a range of additional claims management
services including computerized referral management, policyholder call
management, electronic auditing and billing services and management reporting.
Under an MP program, Safelite serves as administrator of the insurance company's
automotive glass claims. As administrator, Safelite manages the allocation of
the automotive glass replacement business between Safelite and other approved
providers based on the insurance company's predetermined criteria. The Company
currently provides its automotive glass replacement and repair services for the
policyholders of virtually every significant auto insurance company in the U.S.
Following is a list of the Company's top insurance customers ranked by
total auto insurance premiums written for 1996:
<TABLE>
<CAPTION>
PRIVATE PASSENGER
AUTO PHYSICAL DAMAGE
NATIONAL RANK NAME PREMIUMS WRITTEN
------------- ---- --------------------
(DOLLARS IN BILLIONS)
<C> <S> <C>
1 State Farm................................................. $8.9
2 Allstate................................................... 5.1
3 Farmers Insurance.......................................... 2.3
4 Nationwide Insurance....................................... 1.5
5 USAA Insurance............................................. 1.3
6 GEICO...................................................... 1.0
7 Progressive Group.......................................... 1.0
8 American Family Insurance Group............................ 0.7
9 Liberty Mutual............................................. 0.6
10 Travelers Insurance........................................ 0.6
13 Prudential................................................. 0.4
14 Hartford Insurance Group................................... 0.4
16 Erie Insurance Group....................................... 0.4
17 CNA Insurance Group........................................ 0.4
18 Safeco..................................................... 0.4
19 Metropolitan Group......................................... 0.4
20 Hanover.................................................... 0.4
</TABLE>
Source: Best's Review, October 1997
The Company believes that its ability to provide complete claims
outsourcing and a consistent level of high quality service on a nationwide basis
will continue to make it an attractive partner for the insurance industry.
Consumer. The Company defines consumers as cash and credit card customers.
Much of this business occurs on a "walk-in" basis as a result of Yellow Pages
advertising and insurance referrals. Safelite believes that its 47 Dispatch
Command Center/Central Telephone Units ("DCC/CTUs") enable the Company to close
more of these consumer sales by using scripted Customer Service Representatives
("CSRs") and offering the most comprehensive mobile and in-store service at
competitive prices. This segment does not include individuals who file a claim
to be paid by insurance companies.
Dealer. The dealer segment is comprised of new and used car dealerships
and body shops. Sales are generated largely by the Company's experienced field
sales force, which is the largest in the industry. Safelite has dedicated
Customer Service Representatives at several DCC/CTU locations who only handle
customers in the dealer segment. Dealers generally request automotive glass
repair and replacement services for work being done at their captive repair
shops, and, to a lesser extent, for mishaps with their car inventories. Body
shops generally perform their own installations.
Rental Car. The Company has national account relationships with most large
rental car companies, including significant arrangements with Budget Rent-A-Car
and Hertz. Management estimates that
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Safelite replaces over 90% of both Budget's and Hertz's units. Customers in this
segment are served in a cost effective manner, with multiple jobs completed
during a single visit to the customer's rental car lot.
Fleet. Safelite has national account relationships with the major
commercial fleet lessors, including GE Capital Fleet, PHH Vehicle Management and
USL Capital Fleet. Of these, the Company has established Master Provider
relationships with PHH Vehicle Management and USL Capital Fleet. As fleet
companies concentrate their sales with a smaller group of providers who can
satisfy requirements for nationwide service and more sophisticated systems,
Safelite believes it is well positioned to increase its market share in this
segment. By outsourcing their automotive glass replacement needs, large fleet
customers are able to take advantage of many of the same benefits provided to
Safelite's insurance clients, including lower costs and better service.
Subcontract. The subcontract segment represents business which is
subcontracted to Safelite by other glass companies. Safelite is an attractive
subcontractor because of its broad geographic coverage and ability to deliver
rapid and consistent service. In addition, Safelite's fully-automated systems
and top quality reputation make the Company an attractive business partner.
Government. The government segment includes sales to state and local
government agencies such as police and highway departments.
WHOLESALE CUSTOMERS. The Company utilizes its excess manufacturing
capacity to produce windshields sold into the wholesale market. Wholesale
customers include other automotive glass replacement companies and distributors.
Almost all of the Company's wholesale customers are in the United States. The
Company's wholesale volume allows Safelite to maximize the efficiency of its
manufacturing facilities. As the Company grows its higher margin insurance
business, however, management expects the wholesale business to decline as a
percent of total sales.
OPERATIONS
SALES AND MARKETING. Safelite's sales organization, with approximately 250
associates, is the largest in the industry. The Company's sales associates are
highly trained and use a team selling approach when interacting with customers.
Safelite has 15 national "strategic account" representatives. These individuals
have built relationships with the major insurance, fleet and rental car company
decision makers and average 10 years of industry experience. The strategic
account representative system is designed to establish an environment of
confidence that positions Safelite to become the sole administrator for an
insurance company's glass claims. Safelite also utilizes approximately 235 field
sales representatives to educate local insurance agents on the benefits of using
Safelite. The field sales representatives have been a critical component in
increasing compliance with insurance company automotive glass programs.
PRICING. Safelite has a reputation for providing innovative pricing
solutions to its customers. Safelite's low cost position enables the Company to
be competitive on price. In addition, the Company's TCS and MP programs have
shifted the emphasis for auto insurance companies away from the price of an
installation to the all-in cost of an automotive glass claim. The Company's
prices are generally calculated using a percentage discount from the NAGS price
list. Windshields carry higher unit prices than curved tempered glass, and glass
parts used in newer vehicle models tend to carry higher list prices than those
used in older models. In addition, due to the higher levels of service required
for outsourcing programs, insurance and fleet claims typically have a higher
average revenue per unit ("RPU"). Overall, Safelite's average RPU has increased
from $189 in 1993 to $239 in 1997, a compounded annual growth rate of 6%.
CLAIMS MANAGEMENT PROCESS. Safelite is an industry leader in using
information systems and technology to improve customer service and better manage
its business. The Company's fully integrated network, SAFENET(TM), connects its
service centers, vans, central telephone units, warehouses and distribution
centers and provides associates with "real time" data for customer information,
scheduling, billing, sales and inventory management. The Company's 47
centralized DCC/CTU locations and four 24-hour National Referral Centers serve
as the local market "hubs," are strategically located in the
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Company's major markets and receive "real time" data from SAFENET(TM).
Approximately 70% of the Company's total customer calls are routed to one of the
National Referral Centers or DCC/CTUs.
The Company's four National Referral Centers (three in Columbus, Ohio and
one in Chicago, Illinois) have capacity for over 6 million calls per year. These
facilities provide overflow capacity for local CTU operations and handle almost
65% and 35% respectively, of the Company's auto insurance and fleet calls. Each
auto insurance company that outsources automotive glass claims with Safelite
receives a dedicated "1-800" number which connects directly into one of the
National Referral Centers.
At each of the Company's National Referral Centers and DCC/CTUs,
professional, scripted CSRs answer customer calls and input directly into a
computer the information necessary to schedule an installation, complete the
paperwork, order the glass and deliver it to the service location and issue
billing. Unlike any of its competitors, the Safelite CSRs can access scheduling
information for their entire local market of service centers and vans, as well
as monitor inventory levels to determine glass availability. Using SAFENET(TM),
the CSRs can schedule the customer at the most convenient service center
location and electronically send the customer's information to the service
center computer or arrange mobile van service. If there is no nearby Safelite
location, the CSRs can schedule the customer through one of the Company's 5,000
authorized independent installation centers. On average, over 90% of Safelite's
installations are done through a company owned service center or mobile van.
Safelite's DCC/CTUs operate extended evening and weekend hours, enabling
customers to make appointments with Safelite when many competitors are closed.
The National Referral Centers operate on a 24-hour per day basis.
Once the CSR schedules an appointment, the piece of glass is automatically
ordered and dispatched. The glass is loaded from the warehouse, which is
co-located with the DCC/CTU, onto a Glassmobile for mobile installation or
delivery to the appropriate service center location. The inventory movement is
recorded electronically by the SAFENET(TM) point-of-sale system. Based on
predetermined "optimal" inventory levels for each stock-keeping-unit (SKU) at
each warehouse, the sale of a windshield automatically sends an order request to
the distribution center and manufacturing request to the production floor. The
Company maintains the majority of its inventory at its distribution centers and
warehouses (instead of at the service centers) in order to minimize inventory
levels and maximize flexibility/speed of delivery.
In addition to providing an integrated delivery system, SAFENET(TM) also
provides management and Safelite's customers with valuable information. This
"real time" data allows Safelite to track and monitor important statistics
including customer satisfaction, length of call, and speed of installation.
Safelite uses this data to improve its customer service and provide
comprehensive monthly management reports for its large insurance customers.
These reports include information otherwise generally unavailable to the
insurance companies, including statistics on number of claims, price per claim
and percent of repairs versus replacement. Safelite believes it is the only
company in the industry currently providing such reports.
DISTRIBUTION. The Company uses a three tiered distribution system to
better serve its customers and minimize its inventory levels. Two central
distribution facilities are located at the Company's manufacturing facilities in
Enfield, North Carolina and Wichita, Kansas. These central distribution
facilities send inventory to the Company's 74 regional warehouses (27
free-standing warehouses and 47 co-located with the Company's CTUs). These
facilities can then quickly and accurately stock the service centers and vans in
their local markets on an as-needed basis.
The Company's distribution system has been structured to optimize speed and
efficiency. Trucks pick up windshields from the distribution centers and follow
a fixed route schedule, making delivery stops at the Company's warehouses and
wholesale customers at almost exactly the same time each week. The same trucks
then pick up raw glass from the Company's suppliers and back haul it to
Safelite's central distribution facilities.
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The back hauling process lowers Safelite's freight costs for its raw glass,
as Safelite is able to move the goods less expensively than its suppliers'
delivery rates. Safelite believes that its modern distribution centers are among
the lowest cost distribution centers in the industry.
PRODUCTS
Safelite's primary installation product is the auto windshield. Windshields
are made of laminated safety glass, which consists of two layers of glass bound
together with a thin layer of vinyl. The safety benefit of laminated glass comes
from the strength which the vinyl adds; the vinyl makes it very difficult to
penetrate the windshield upon impact. As part of Safelite's commitment to serve
all of its customers' automotive glass needs, the Company also offers tempered
automotive glass and other products. Tempered glass is generally used for side
and rear car and truck windows and is twice as strong as raw glass because of
specialized processing which causes the glass to break into dull-edged pebbles,
reducing glass-related injuries. Safelite also offers auto products and services
including flat glass, bipass glass, installation supplies, wiper blades, window
tinting, sunroofs, alarm systems and vehicle inspection services for insurance
companies.
MANUFACTURING. Safelite is the only full-scale vertically integrated
automotive glass replacement company in the U.S. The Company produces 65% of its
windshield needs at its two manufacturing plants in Enfield, North Carolina and
Wichita, Kansas. The Enfield facility encompasses 146,000 square feet of
manufacturing space and has an annual capacity of over one million units. The
Wichita facility encompasses 98,000 square feet with an annual production
capacity of over 600,000 units.
Safelite produces only high-volume windshield models, manufacturing 550 of
the total 2,800 active windshield parts available in the industry. Safelite
determines which windshield models to produce by assessing the sales trends and
estimating future windshield demand after a new automobile model has been on the
market for approximately one year. The Company then designs selected windshield
models through a process of reverse engineering. The manufacturing process is
described as follows:
Cutting. Both the Enfield and Wichita plants have numerically controlled
(computer programmable) cutting machines and automated machines which follow a
cutting ring tool. Two pieces of glass are cut for each windshield; the outer
piece is slightly larger than the inner piece (they are later equalized in the
bending process). After cutting, the freshly cut edges are ground down to remove
any burrs or sharp corners. This process gives the windshield a safe and smooth
edge for handling. The glass is then washed and sprayed with a lubricant
(allowing the two pieces of glass to later bend independently without sticking
together).
Painting. The border or band of most new windshields is painted with a
ceramic (non-lead based) paint. The paint band hides the installation sealants
(urethane) and gives the windshield an improved cosmetic appearance. The paint
band designs are reverse engineered from actual OEM windshields and follow the
same specifications.
Bending. The flat pairs of glass are inspected prior to bending. The pairs
are then fitted into the bending tools (molds) that run along a conveyor system
through the furnace. This process is repeated every 30 seconds as the new
bending mold is readied for another windshield. The bending furnaces are gas
heated, time indexed and computer controlled.
Lamination. A Poly Vinyl Butyl ("PVB") is used to laminate the two pieces
of glass together. The vinyl layer is stored, cut and sandwiched between the
pairs of glass in environmentally controlled rooms. A vacuum channel is placed
around the sandwich to draw air out. While de-airing, the windshield is sealed
into a pressure vessel. The process of lamination begins by rapidly heating and
pressurizing the windshields. The heat and pressure are maintained for several
minutes and then the vessel is rapidly cooled. The entire process takes about
one hour and each autoclave has a capacity of approximately 100 windshields.
Encapsulation. Some windshields require a specialized molding to be
attached at the plant. This process, Reactive Injection Molding (RIM), is a
process whereby two chemicals meet and form a border
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(or gasket) around the part. The attached gasket saves time for the windshield
installer since everything is attached at the plant. The Company outsources its
encapsulation needs to a supplier.
Inspection. Each windshield is inspected through a process consisting of
four different functions of inspection and assembly. The finished goods scrap
rate has historically been less than 1%.
Scrap. The overall manufacturing process produces approximately 11% scrap
(as a percentage of original input). The excess glass trim in cutting and other
pre-laminated glass is recycled back to the supplier. Scrap glass which has
paint on it is disposed of as hazardous waste. Likewise, the vinyl trim is
collected and stored to be recycled back to the supplier.
Production Scheduling. Production scheduling is a shared responsibility by
the plant scheduler, the materials management department in Columbus, Ohio and
the Company's MIS system. The system receives daily updated sales and inventory
data from all Safelite facilities. This data is used to update the plant
schedule by recommending the parts that have the greatest need for
replenishment. A computerized schedule of manufacturing is created on a daily
basis to optimize inventory levels, plant capacity, plant tooling availability,
raw material availability and furnace scheduling.
SUPPLIERS AND RAW MATERIALS
Safelite generally purchases low volume windshields from third parties, as
well as raw glass, vinyl, paint, adhesives and tempered glass. In the three
months ended April 4, 1998 and the year ended January 3, 1998, the Company
sourced 79% and 63%, respectively, of its purchased glass from Libby-
Owens-Ford. The Company also utilizes other suppliers for both domestic and
foreign windshields. Safelite buys all of its raw glass from Guardian
Automotive, with the exception of solar resistant glass. Vinyl is purchased from
E.I. Du Pont De Nemours. The Company believes alternate sources of vinyl are
also available. With few exceptions, inventory is centrally purchased at
Safelite's headquarters in Columbus, Ohio. The Company believes that its primary
raw materials are widely available from numerous suppliers and has not had
material difficulty in sourcing windshields or raw materials in the past.
PROPERTIES
Safelite leases 770 of its 809 installation service centers, with the terms
of its leases generally being five years with one or two five year renewal
options. Safelite also leases 71 of its 74 warehouses, with the terms of its
leases generally being five years with one or two five year renewal options. The
Company owns its manufacturing facilities in Enfield, North Carolina and
Wichita, Kansas. Safelite's principal corporate office is at 1105 Schrock Road
in Columbus, Ohio. Safelite leases this space pursuant to agreements expiring in
June 2001. The Company maintains administrative offices at 2400 Farmers Drive in
Columbus, Ohio, which it leases pursuant to a lease expiring in November 1998,
which the Company plans to renew. Vistar's corporate headquarters and national
call center are located at 2 North LaSalle Street, Chicago, Illinois under a
lease expiring in July 2005. It is Safelite's intention to retain the space
associated with the Chicago call center, but to exit the leased space used for
Vistar's corporate headquarters' activities. Safelite also maintains a national
referral center, local DCC/CTU and regional warehouse at 760 Dearborn Park Lane
in Columbus, Ohio. Safelite leases this space pursuant to agreements expiring in
April 2006. The Company's leases generally provide that the Company pay property
tax, utilities, common area maintenance, and insurance expenses. Safelite
believes that its facilities are adequate for its current needs and that
suitable additional space will be available as required.
EMPLOYEES
As of April 4, 1998, the Company employed approximately 6,850 people. The
Company has approximately 400 employees covered by four unions. Safelite has
experienced no labor related work stoppages and believes that its employee
relations are good.
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COMPETITION
The markets for the Company's products and services are very competitive.
In the automotive glass replacement industry, competition is based on price,
customer service, technical capabilities, quality and geographic coverage. This
industry is highly fragmented with approximately 20,000 competitors. Although
the Company is the industry leader in the automotive glass replacement industry,
it does compete against several other large competitors in this market, the
largest two of which have market shares estimated to be 8% and 4%. State Farm,
one of the Company's largest customers, began in a region by region rollout
commencing in the summer of 1997 to use a competitor to function as its glass
claims call center and bill processing administrator. There can be no assurance
that this arrangement will not have an impact on the Company's business with
State Farm.
Competition in the wholesale market is based principally on price and
quality. The Company is a relatively small participant in the wholesale market,
which is dominated by several significantly larger companies.
Future growth in the Company's revenues will depend upon the Company's
ability to maintain and increase its market share in the automotive glass
replacement industry, while continuing to provide high levels of customer
service to insurance companies and fleet owners, and its ability to access the
wholesale market in order to utilize excess manufacturing capacity. See "Risk
Factors -- Competition."
ENVIRONMENTAL REGULATION
The Company's manufacturing operations in Wichita, Kansas and Enfield,
North Carolina involve handling of materials and the generation of waste
materials that are classified as hazardous. The Company is subject to federal,
state and local laws and regulations concerning the handling and disposal of
hazardous materials, and therefore in the ordinary course of its business, the
Company in its manufacturing operations incurs compliance costs. The Company
does not anticipate that compliance with federal, state and local provisions
regarding the use and disposal of materials into the environment or otherwise
relating to the protection of the environment will have any material adverse
effect upon the earnings or competitive position of the Company and does not
anticipate any material capital expenditures for environmental control
facilities for the remainder of the Company's current fiscal year or the
succeeding fiscal year. Actions by federal, state and local governments
concerning environmental matters, however, could increase the costs of producing
the products manufactured by the Company. In addition, the future costs of
compliance with environmental laws and regulations and liabilities resulting
from currently unknown circumstances or developments could be substantial or
could have a material adverse effect on the Company. Regulations resulting from
the 1990 amendments to the Clean Air Act that will pertain to the Company's
manufacturing operations are currently not expected to be promulgated until 1998
or later. The Company cannot predict the level of required capital expenditures
resulting from future environmental regulations; however, the Company does not
anticipate that expenditures required by such regulations, if any, will have a
material adverse effect on the Company.
LITIGATION
Safelite is party to certain claims and litigation in the ordinary course
of business and litigation concerning environmental compliance which it does not
believe will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations. See
"-- Environmental Regulation."
Safelite has been sued by nine local automotive glass replacement companies
in the U.S. District Court for the Eastern District of Texas, claiming violation
of federal antitrust laws and interference with contracts. The Company intends
to defend these claims vigorously and does not believe they will have a material
adverse effect on the Company's financial position or results of operations.
On May 11, 1998, the Company was served with a subpoena requiring that it
produce documents to a grand jury in Dallas, Texas, conducted by the Antitrust
Division of the United States Department of Justice. The documents demanded by
the subpoena relate to the pricing of replacement glass at three service center
locations in the state of Texas. The Company intends to comply fully with the
subpoena.
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Based on discussions with the Antitrust Division of the United States Department
of Justice, management believes that it is unlikely that the Company is the
target of this investigation. In addition, management does not believe that the
Company or its employees have engaged in any anti-competitive or collusive
activities and does not believe that this investigation will result in a
material adverse effect on the Company. However, no assurance can be given that
the Company will not be found to have engaged in anti-competitive or collusive
activities or be liable for fines, penalties, damages and costs or, that if it
were liable, that it would not have a material adverse effect on the Company.
See "Risk Factors -- Litigation."
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<PAGE> 66
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information concerning the directors and
executive officers of the Company after giving effect to the Vistar Merger. All
directors will hold office until the next annual meeting of stockholders of the
Company and until their successors have been duly elected and qualified. All
officers will serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Garen K. Staglin............. 52 Chairman of the Board and Director
John F. Barlow............... 54 President, Chief Executive Officer and Director
Douglas A. Herron............ 48 Senior Vice President, Chief Financial Officer and
Director
Thomas M. Feeney............. 46 Senior Vice President, Client Sales and Support
Douglas R. Maehl............. 50 Senior Vice President, Manufacturing, Distribution
and Purchasing
Elizabeth A. Wolszon......... 43 Senior Vice President, Marketing and Strategic
Planning
James K. West................ 55 Senior Vice President, Global Business Development
Poe A. Timmons............... 38 Vice President -- Finance and Corporate Controller
Anthony J. DiNovi............ 35 Director
Selwyn Herson................ 45 Director
Adrian F. Jones.............. 44 Director
Seth W. Lawry................ 33 Director
Thomas H. Lee................ 54 Director
Gary Lubner.................. 39 Director
Ronnie Lubner................ 64 Director
John E. Mason................ 50 Director
M. Louis Shakinovsky......... 54 Director
Scott M. Sperling............ 40 Director
Rodney Stansfield............ 59 Director
</TABLE>
A brief biography of each director and executive officer follows:
Garen K. Staglin has served as the Company's Chairman of the Board since
July 1991 and served as the Company's Chief Executive Officer from July 1991
through the completion of the THL Transactions. From January 1979 to June 1991,
Mr. Staglin served in various management roles, most recently as President of
the Automotive Services Group of ADP, Inc., a computer services firm. He
currently serves as a director for First Data Corp., Cyber Cash, Inc. and
QuickResponse Services, Inc. and serves on the Advisory Board of the Stanford
Graduate School of Business.
John F. Barlow has served as a director and the Company's Chief Operating
Officer since September 1991. Mr. Barlow was made Chief Executive Officer
following the THL Transactions. From October 1986 to August 1991, Mr. Barlow
served as the President and Chief Executive Officer of Western Auto Stores, a
retailer of automobile parts.
Douglas A. Herron has served as the Company's Senior Vice President and
Chief Financial Officer since June 1992. Mr. Herron was elected as a Director of
the Company in March 1998. From December 1989 to May 1992, Mr. Herron served as
Manager, Finance Operation of GE Medical Systems,
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<PAGE> 67
a leading manufacturer and supplier of diagnostic imaging equipment and
financing products to hospitals and clinics throughout the world.
Thomas M. Feeney has served as the Company's Senior Vice President Client
Sales and Support since 1991 and has been employed with the Company since 1988.
Prior to joining Safelite, Mr. Feeney was a Vice President with Tenneco
Automotive Retail.
Douglas R. Maehl has served as the Company's Senior Vice President of
Manufacturing, Distribution and Purchasing since October 1991. From September
1978 to September 1991, Mr. Maehl served as Vice President of Merchandising for
Western Auto Stores, a retailer of automobile parts.
Poe A. Timmons has served as the Company's Vice President-Finance and
Corporate Controller since January 1996. Prior to 1996, Ms. Timmons was an audit
partner at Deloitte & Touche LLP, where she served clients in the manufacturing,
retail and service industries.
Elizabeth A. Wolszon has served as the Company's Senior Vice President of
Marketing and Strategic Planning since July 1992. From January 1989 to June
1992, Ms. Wolszon served as Senior Vice President of Marketing for Western Auto
Stores, a retailer of automobile parts, and Director of Strategic Planning for
Sears Specialty Merchandising, a group of specialty retailing chains owned by
Sears Roebuck & Co.
James K. West served as the Company's Senior Vice President of Information
Systems from June 1990 through February 1998 and recently assumed the role of
Senior Vice President, Global Business Development. From November 1987 to May
1990, Mr. West served as the Director of Information Systems for Transworld
Music, the largest record retailer in the United States.
Anthony J. DiNovi has served as a director since December 1996. Mr. DiNovi
has been employed by Thomas H. Lee Company, an investment company, since 1988
and currently serves as a Managing Director. Mr. DiNovi is also Vice President
and Trustee of THL Equity Trust III, the general partner of the THL Equity
Advisors III Limited Partnership, which is the general partner of the Thoms H.
Lee Equity Fund III, L.P. and Vice President of Thomas H. Lee Advisors I and
T.H. Lee Mezzanine II, affiliates of ML-Lee Acquisition Fund, L.P., ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisitions Fund II (Retirement Accounts),
L.P., respectively. Mr. DiNovi also serves as a director of CelPage, Inc., Eye
Care Centers of America, Inc., Fisher Scientific International Inc. and The
Learning Company, Inc.
Selwyn Herson has served as a director since the Vistar Merger. Mr. Herson
is the Founder and Managing Director of The Windsor Park Management Group, an
investment banking and strategic consulting firm based in Los Angeles. Mr.
Herson has consulted for Belron International on a number of major projects. Mr.
Herson also serves as a Director of S&K Famous Brands, Inc. and several private
corporations.
Adrian F. Jones has served as a director since the Vistar Merger. Mr. Jones
is the Chief Financial Officer of Belron International which he joined in 1986.
Prior to joining Belron, Mr. Jones was a manager for Arthur Andersen LLP.
Seth W. Lawry has served as a director since December 1996. Since April
1994, Mr. Lawry has been employed by Thomas H. Lee Company, an investment
company, and currently serves as a Managing Director. Mr. Lawry is also Vice
President of THL Equity Trust III, the general partner of the THL Equity
Advisors III Limited Partnership, which is the general partner of the Thomas H.
Lee Equity Fund III, L.P. Mr. Lawry also serves as a director of Freedom
Securities Corporation and Syratech Corp. From September 1992 to March 1994, Mr.
Lawry served as an Associate at Morgan Stanley & Co. Incorporated, an investment
bank. From September 1990 to June 1992, Mr. Lawry attended Stanford Graduate
School of Business.
Thomas H. Lee has served as a Director since March 1998. Mr. Lee is Founder
and President of Thomas H. Lee Company, an investment company. Mr. Lee is also
Chairman of THL Equity Trust III, the general partner of the THL Equity Advisors
III Limited Partnership, which is the general partner of the Thomas H. Lee
Equity Fund III, L.P. Mr. Lee also serves as a director of Finlay Enterprises,
Inc., First
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<PAGE> 68
Security Services Corporation, Livent, Inc., Miller Import Corporation, Sondik
Supply Company and Vail Resorts, Inc.
Gary Lubner has served as a Director since March 1998. Mr. Lubner is
Managing Director of Autoglass Limited, the United Kingdom's leading automotive
glass repair and replacement company. Prior to his appointment as Managing
Director of Autoglass Limited in 1995, Mr. Lubner held various positions with
Plate Glass & Shatterprufe Industries Limited, South Africa's leading glass and
wood processor and distributor.
Ronnie Lubner has served as a director since the Vistar Merger. Mr. Lubner
is the Chairman and Chief Executive Officer of Plate Glass & Shatterprufe
Industries Limited which he joined in 1953. Mr. Lubner is also a director of
South African Breweries and Advanta Corporation.
John E. Mason has served as a director since the Vistar Merger. Mr. Mason
is the Chief Executive officer of Belron International which he joined in 1983
and an Executive Director of Plate Glass & Shatterprufe Industries Limited.
M. Louis Shakinovsky has served as a director since the Vistar Merger. Mr.
Shakinovsky is the Group Legal Services Director of Belron International and
Plate Glass & Shatterprufe Industries Limited which he joined in 1965.
Scott M. Sperling has served as a director since December 1996. Since July
1994, Mr. Sperling has served as a Managing Director of Thomas H. Lee Company.
Mr. Sperling is also Vice President of THL Equity Trust III, the general partner
of the THL Equity Advisors III Limited Partnership, which is the general partner
of the Thomas H. Lee Equity Fund III, L.P. Mr. Sperling also serves as a
director of Fisher Scientific International Inc., The Learning Company, Livent,
Inc. and The General Chemical Group Inc. Prior to joining Thomas H. Lee Company
in 1994, Mr. Sperling was managing partner of Aeneas Group, Inc., an investment
company and a wholly-owned subsidiary of Harvard Management Company, Inc.
Rodney Stansfield has served as a Director since March 1998. Mr. Stansfield
was recently appointed Chief Executive Officer of Glass South Africa. Prior to
joining Glass South Africa, Mr. Stansfield served as Chief Executive Officer of
Libbey-Owens-Ford Co. Mr. Stansfield also serves as a director of Plate Glass &
Shatterprufe Industries Limited.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee and a
Compensation Committee. The Compensation Committee makes recommendations
concerning the salaries and incentive compensation of employees of and
consultants to Safelite, and oversees and administers the Company's stock option
plans. Messrs. Barlow, DiNovi, Mason and Sperling are members of the
Compensation Committee. The Audit Committee is responsible for reviewing the
results and scope of audits and other services provided by Safelite's
independent auditors. Messrs. Jones, Lawry, Shakinovsky, and Staglin are members
of the Audit Committee.
DIRECTOR COMPENSATION
Directors that are neither employees of the Company nor of Thomas H. Lee
Company or Belron receive $1,000 for every Board meeting they attend. Such
directors are also eligible to receive options under the Company's 1996 and 1998
Stock Option Plans.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with each of Messrs.
Staglin, Barlow and Herron in connection with the THL Transactions and the
Vistar Merger. The employment agreements for Messrs. Barlow and Staglin were
amended on April 30, 1997, to reflect a change in their titles. Mr. Staglin
serves as Chairman of the Board with an annual base salary of at least $700,000
and a performance bonus determined by the Board of Directors of the Company. Mr.
Barlow serves as President and Chief
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<PAGE> 69
Executive Officer of the Company with a base salary of at least $700,000 and a
performance bonus determined by the Board of Directors of the Company. Mr.
Herron serves as Senior Vice President and Chief Financial Officer of the
Company with a base salary of at least $350,000 and an annual bonus to be
determined by the Board of Directors of the Company in accordance with an
executive bonus plan (the "Executive Bonus Plan"). Each of the foregoing
agreements provides for an initial term of three years with two year automatic
renewal periods, unless either party gives notice of its or his intent to
terminate the employment agreement at least 30 days, but not more than 60 days,
prior to the expiration of the original term or any renewal term. Each of the
agreements provides that in the event the executive is terminated due to death
or disability, (i) his base salary will continue for six months following the
date of termination, (ii) a pro rata portion of his bonus (based on days worked)
will be paid (unless the Board of Directors approves a greater amount) and (iii)
his additional benefits under his employment agreement will continue for 12
months following the date of termination. If the executive is terminated without
cause, (i) his base salary will continue for the greater of 24 months following
the date of termination and the remaining portion of the initial term of the
agreement, (ii) he will receive a pro rata portion of his bonus (unless the
Board of Directors approves a greater amount) and (iii) his additional benefits
will continue for 12 months following the date of termination. Each of these
agreements includes non-disclosure provisions, as well as non-competition
provisions covering the period of employment by the Company plus one year, but
in no event less than three years.
STOCK OPTION PLANS
1998 Stock Option Plan. The Company's 1998 Stock Option Plan (the "1998
Plan") provides for grants of options to acquire up to 410,000 shares of Class B
Non-Voting Common Stock. Incentive stock options may be granted to employees and
officers of the Company and non-qualified stock options may be granted to
consultants, directors, employees and officers of the Company.
The 1998 Plan is administered by the Board of Directors of the Company or a
committee thereof consisting of two or more directors. Subject to the provisions
of the 1998 Plan, the Board of Directors will have the authority to select
optionees and determine the terms of the options granted, including (i) the
number of shares subject to each option, (ii) when the option becomes
exercisable, (iii) the exercise price of the option (which in the case of an
incentive stock option cannot be less than the fair market value of the common
stock on the date of grant, or less than 110% of fair market value in the case
of employees or officers holding 10% or more of the voting stock of the
Company), (iv) the duration of the option and (v) the time, manner and form of
payment upon exercise of an option. At April 4, 1998, the Company had 407,500
options outstanding under the 1998 Plan and 2,500 options available for future
grant.
An option is not transferable by the optionee except by will or by the laws
of descent and distribution. Options are exercisable only while the optionee
remains in the employ of the Company or for a period of time thereafter. If an
optionee becomes disabled or dies while in the employ of the Company, the option
is exercisable prior to the last day of the third and sixth month, respectively,
following the date of termination of employment. If the optionee leaves the
employ of the Company for any other reason, the option terminates immediately
upon termination of employment; provided that the Board of Directors may extend
this period up to the original expiration date of such option. Options which are
exercisable following termination of employment are exercisable only to the
extent that the optionee was entitled to exercise such options on the date of
such termination.
1996 Stock Option Plan. The Company's 1996 Stock Option Plan (the "1996
Plan") provides for grants of options to acquire up to 175,000 shares of Class A
Common Stock. Incentive stock options may be granted to employees and officers
of the Company and non-qualified stock options may be granted to consultants,
directors, employees and officers of the Company.
The 1996 Plan is administered by the Board of Directors of the Company or a
committee thereof consisting of two or more directors. Subject to the provision
of the 1996 Plan, the Board of Directors will have the authority to select
optionees and determine the terms of the options granted, including (i) the
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<PAGE> 70
number of shares subject to each option, (ii) when the option becomes
exercisable, (iii) the exercise price of the option (which in the case of an
incentive stock option cannot be less than the fair market value of the Common
Stock on the date of grant, or less than 110% of fair market value in the case
of employees or officers holding 10% or more of the voting stock of the
Company), (iv) the duration of the option and (v) the time, manner and form of
payment upon exercise of an option. Prior to the Vistar Merger, vesting of
options to purchase 160,000 shares of Class A Voting Common Stock issued under
the plan was accelerated and all 160,000 options were exercised. The remaining
15,000 outstanding options were converted into the right to purchase an equal
number of Class B Non-Voting Common Stock in connection with the Vistar Merger.
At April 4, 1998, the Company had 15,000 options outstanding under the 1996 Plan
and no options available for future grants.
An option is not transferable by the optionee except by will or by the laws
of descent and distribution. Options are exercisable only while the optionee
remains in the employ of the Company or for a period of time thereafter. If an
optionee becomes disabled or dies while in the employ of the Company, the option
is exercisable prior to the last day of the third and sixth month, respectively,
following the date of termination of employment. If the optionee leaves the
employ of the Company for any other reason, the option terminates immediately
upon termination of employment; provided that the Board of Directors may extend
this period up to the original expiration date of such option. Options which are
exercisable following termination of employment are exercisable only to the
extent that the optionee was entitled to exercise such options on the date of
such termination.
1993 Restated Employee Stock Option Plan. The Company's 1993 Restated
Employee Stock Option Plan (the "1993 Restated Stock Option Plan") provides for
the grants of options to acquire up to 264,000 shares of Class A Common Stock,
in such amounts, on such terms and for such officers and other key employees as
the administrators of the 1993 Restated Stock Option Plan may select. Options
granted under the Plan are not intended to qualify as Incentive Stock Options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. The 1993 Restated Stock Option Plan is administered by a committee (the
"Committee"), consisting of one or more persons appointed by the Board of
Directors of the Company, and provides that all of the options shall have a per
share exercise price established by the Committee in its sole discretion at the
time an option is granted. All options currently outstanding under the 1993
Restated Stock Option Plan became fully vested and exercisable upon the closing
of the Vistar Merger. In connection with the Vistar Merger, options to purchase
54,853 shares of Class A Common Stock for $3.00 per share were exercised and
outstanding options were converted into options to purchase an equal number of
Class B Non-Voting Common Stock. At April 4, 1998, the Company had 2,190 options
to purchase Class B Non-Voting Common Stock under the 1993 Plan outstanding and
no options available for future grants.
Options granted under the 1993 Restated Stock Option Plan become fully
exercisable no later than the fifth anniversary of the date of grant and no
option may have a term in excess of 10 years from the date of grant. The stock
option agreements pursuant to which options have been granted under the 1993
Restated Stock Option Plan provide for acceleration of the options upon the
occurrence of a terminating event, which includes the Vistar Merger.
Options are exercisable only while the optionee remains an employee of the
Company, and the Company shall have the right, at its option upon termination of
an optionee's employment to redeem the exercisable portion of the option, or any
portion thereof as determined by the Company. If the Company elects not to
exercise its right to redeem the exercisable portion of the option, the
terminated optionee shall have the right to exercise any unredeemed portion of
the then exercisable options at any time within 90 days after the notification
date. Options which are exercisable following termination of employment are
exercisable only to the extent that the optionee was entitled to exercise such
options on the date of such termination. All options are non-transferable other
than by will or the laws of descent and distribution. The Company has the right
to terminate the option in the event the optionee engages in any prohibited
activity, including disclosure of confidential or proprietary knowledge obtained
during the course of employment, solicitation of employment after termination of
any person who at the time of the solicitation is employed by the Company,
publishing any statement or making any statement critical of the Company,
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engaging in any competitive activity during the optionee's employment or during
the three years following the optionee's termination or being convicted of a
crime against the Company or any of its affiliates.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by Safelite for services rendered for the three months ended
April 4, 1998 and the fiscal years ended January 3, 1998 and December 28, 1996,
to its Chief Executive Officer and its four most highly paid executive officers
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION PERIOD(2) SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION
--------------------------- --------- -------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Garen K. Staglin........................ 1998 $175,000 $ 34,500 -- 10,000 $ 3,643(4)
Chairman of the Board 1997 $700,000 $ 502,851 $57,977(3) 8,424 $ 75(4)
1996 $666,827 $2,230,000 $75,628(3) -- $ 5,246(4)
John F. Barlow.......................... 1998 $175,000 $ 34,500 -- 40,000 $ 3,621(5)
President and Chief 1997 $693,269 $ 472,274 -- 50,000 $ 3,453(5)
Executive Officer 1996 $573,798 $2,040,000 -- -- $ 5,024(5)
Douglas A. Herron....................... 1998 $ 96,250 $ 20,653 -- 17,500 $ 3,505(6)
Senior Vice President and 1997 $374,904 $ 222,278 -- 23,370 $ 1,479(6)
Chief Financial Officer 1996 $327,885 $ 691,713 -- -- $ 4,772(6)
Elizabeth A. Wolszon.................... 1998 $ 73,750 $ 15,825 -- 15,000 $ 3,200(7)
Senior Vice President 1997 $289,231 $ 163,602 -- 14,076 $ 1,270(7)
Marketing and Strategic 1996 $270,192 $ 430,703 -- -- $ 2,113(7)
Planning
Thomas M. Feeney........................ 1998 $ 71,250 $ 15,289 -- 15,000 $ 6,929(8)
Senior Vice President 1997 $274,904 $ 557,587 -- 27,220 $ 3,270(8)
Client Sales and Support 1996 $248,077 $ 366,860 -- -- $11,664(8)
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
have been omitted because the aggregate amount of such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonuses for the Named Executive Officers for such
year. Amounts presented reflect compensation earned in the period presented,
although payment may have been made in other periods.
(2) References to fiscal periods herein are as follows: three months ended April
4, 1998 ("1998"), year ended January 3, 1998 ("1997"), and year ended
December 28, 1996 ("1996").
(3) Includes $37,267 and $60,591, respectively, for compensation related to
reimbursement of certain expenses.
(4) Represents $3,200, $0 and $1,980, respectively, in Company contributions to
the 401(k) plan and $443, $75 and $3,266, respectively, in medical plan
benefits.
(5) Represents $3,200, $0 and $1,980, respectively, in Company contributions to
the 401(k) plan and $421, $3,453 and $3,044, respectively, in medical plan
benefits.
(6) Represents $3,200, $0 and $2,336, respectively, in Company contributions to
the 401(k) plan and $305, $1,270 and $2,436, respectively, in medical plan
benefits.
(7) Represents $3,200, $0 and $2,024, respectively, in Company contributions to
the 401(k) plan and $0, $1,270 and $89, respectively, in medical plan
benefits.
(8) Represents $3,200, $0 and $4,180, respectively, in Company contributions to
the 401(k) plan and $3,729, $3,270 and $7,484, respectively, in medical plan
benefits.
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The following table sets forth certain information with respect to stock
options granted during the three months ended April 4, 1998 and the fiscal year
ended January 3, 1998 to each of the executive officers named in the Summary
Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(1)
- ----------------------------------------------------------------------------------------- -------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE
FISCAL GRANTED IN FISCAL PRICE EXP.
NAME PERIOD(2) ($) PERIOD ($/SH)(4) DATE 5% ($) 10% ($)
---- --------- ---------- ---------- --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Garen K. Staglin........................ 1998 10,000 2.4% $19.00 3/26/08 $119,500 $ 302,811
Chairman of the Board 1997 8,424(3) 4.8% $13.40 2/14/07 $ 71,014 $ 179,937
John F. Barlow.......................... 1998 40,000 9.8% $19.00 3/26/08 $478,000 $1,211,200
President and Chief Executive 1997 50,000(3) 28.6% $13.40 2/14/07 $421,500 $1,068,000
Officer
Douglas A. Herron....................... 1998 17,500 4.3% $19.00 3/26/08 $209,125 $ 529,900
Senior Vice President and Chief 1997 23,370(3) 13.4% $13.40 2/14/07 $197,009 $ 499,183
Financial Officer
Elizabeth A. Wolszon.................... 1998 15,000 3.7% $19.00 3/26/08 $179,250 $ 454,200
Senior Vice President Marketing 1997 14,076(3) 8.0% $13.40 2/14/07 $118,661 $ 300,663
and Strategic Planning
Thomas M. Feeney........................ 1998 15,000 3.7% $19.00 3/26/08 $179,250 $ 454,200
Senior Vice President Client 1997 27,220(3) 15.6% $13.40 2/14/07 $229,465 $ 581,419
Sales and Support
</TABLE>
- ---------------
(1) The amounts under the columns labeled "5%($)" and "10%($)" are included by
the Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation, if
any, in the price of the Company's common stock. Such amounts are based on
the assumption that the option holders hold the options granted for their
full term. The actual value of the options will vary in accordance with the
market price of the Company's common stock.
(2) References to fiscal periods herein are as follows: three months ended April
4, 1998 ("1998") and year ended January 3, 1998 ("1997").
(3) Vesting of options granted was accelerated immediately prior to the Vistar
Merger.
(4) The exercise price of the options is the fair market value of the underlying
common stock at the date of the grant.
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<PAGE> 73
The following table sets forth certain information regarding the exercise
of stock options during the three months ended April 4, 1998 and the fiscal year
ended January 3, 1998, and the number and value of stock options held by the
executive officers named in the Summary Compensation Table as of January 3, 1998
and April 4, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS/SARS
SHARES FY-END (#) AT FY-END($)
FISCAL ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME PERIOD(1) ON EXERCISE(#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Garen K. Staglin............... 1998 -- -- 10,000 --
Chairman of the Board........ 1997 8,424 $156,686 -- --
John F. Barlow................. 1998 -- -- 40,000 --
President and Chief Executive 1997 50,000 $930,000 -- --
Officer
Douglas A. Herron.............. 1998 -- -- 17,500 --
Senior Vice President and 1997 23,370 $434,682 -- --
Chief Financial Officer
Elizabeth A. Wolszon........... 1998 -- -- 15,000 --
Senior Vice President 1997 14,076 $261,814 -- --
Marketing and Strategic
Planning
Thomas M. Feeney............... 1998 -- -- 15,000 --
Senior Vice President Client 1997 31,598 $633,254 -- --
Sales and Support
</TABLE>
- ---------------
(1) References to fiscal periods herein are as follows: as of and for the three
months ended April 4, 1998 ("1998") and as of and for the year ended January
3, 1998 ("1997").
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<PAGE> 74
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Voting Stock, Class B Non-Voting Stock and
Non-Voting Preferred Stock, as of April 4, 1998 by (i) each person (or group of
affiliated persons) known by the Company to be the beneficial owner of more than
5% of the outstanding common stock, (ii) each Director, (iii) the Company's
Chief Executive Officer and the Company's other named executive officers (as
determined in accordance with the rules of the Securities and Exchange
Commission), and (iv) all of the Company's executive officers and Directors as a
group. Except as indicated in the footnotes to this table, the Company believes
that the persons named in this table have sole voting and investment power with
respect to all the shares of common stock indicated.
<TABLE>
<CAPTION>
NO. OF
SHARES NO. OF SHARES NO. OF SHARES
OF CLASS A OF CLASS B OF NON-VOTING
VOTING % OF NON-VOTING % OF PREFERRED % OF
NAME OF BENEFICIAL OWNER STOCK(1) CLASS STOCK(1) CLASS STOCK(1) CLASS
------------------------ ---------- ----- ------------------- ----- ------------------ -----
<S> <C> <C> <C> <C> <C> <C>
Garen K. Staglin(2)(3)................. 72,101 2.1% 154,203 1.4% -- --
John F. Barlow(2)(4)................... 72,101 2.1% 184,203 1.7% -- --
Douglas A. Herron(2)(5)................ 21,649 * 60,797 * -- --
Elizabeth A. Wolszon(2)(6)............. 11,993 * 38,985 * -- --
Douglas R. Maehl(2)(6)................. 11,993 * 38,985 * -- --
James K. West(2)(6).................... 11,993 * 38,985 * -- --
Thomas M. Feeney(2)(6)................. 11,993 * 38,985 * -- --
Poe A. Timmons(2)(7)................... 6,505 * 18,011 * -- --
Anthony J. DiNovi(8)................... 1,447,080 42.4% 2,894,160 26.7% -- --
Seth W. Lawry(8)....................... 1,447,080 42.4% 2,894,160 26.7% -- --
Thomas H. Lee(8)....................... 1,447,080 42.4% 2,894,160 26.7% -- --
Scott M. Sperling(8)................... 1,447,080 42.4% 2,894,160 26.7% -- --
Gary Lubner............................ -- -- -- -- -- --
Ronnie Lubner.......................... -- -- -- -- -- --
M. Louis Shakinovsky................... -- -- -- -- -- --
John E. Mason.......................... -- -- -- -- -- --
Adrian F. Jones........................ -- -- -- -- -- --
Selwyn Herson.......................... -- -- -- -- -- --
Rodney Stansfield...................... -- -- -- -- -- --
All Directors and Executive Officers as
a Group (19 Persons)................. 1,667,408 50.5% 3,467,314 32.0% -- --
5% Stockholders:
Belron (USA) BV........................ 1,690,101 49.5% 4,487,123 43.1% 20,000 50.0%
Kellman Shareholders(9)(10)............ -- -- 2,472,648 23.8% 20,000 50.0%
Thomas H. Lee Equity Fund, III,
L.P.(11)............................. 1,241,479 36.7% 2,482,959 23.9% -- --
THL-CCI Limited Partnership(12)........ 128,782 3.8% 257,563 2.5% -- --
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes general voting power and/or
investment power with respect to securities. Shares of common stock subject
to options and warrants currently exercisable within 60 days of January 3,
1998 are deemed outstanding.
(2) The address of this stockholder is c/o Safelite Glass Corp., 1105 Schrock
Road, Columbus, Ohio 43229.
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<PAGE> 75
(3) Includes 54,076 shares of Class A Voting Stock, 108,152 shares of Class B
Non-Voting Stock and 10,000 options to purchase shares of Class B
Non-Voting Stock owned of record by a Charitable Remainder Unit Trust
established for the benefit of Mr. Staglin and his wife.
(4) Includes 11,087 shares of Class A Voting Stock and 22,173 shares of Class B
Non-Voting Stock owned of record by trusts established for the benefit of
Mr. Barlow's children. Also includes 40,000 options to purchase shares of
Class B Non-Voting Stock.
(5) Includes options to purchase 17,500 shares of Class B Non-Voting Stock.
(6) Includes options to purchase 15,000 shares of Class B Non-Voting Stock.
(7) Includes options to purchase 5,000 shares of Class B Non-Voting Stock.
(8) The address of this stockholder is c/o Thomas H. Lee Company, 75 State
Street, Boston, Massachusetts 02109. All such securities are owned by the
THL Equity Fund, THL-CCI Limited Partnership and Thomas H. Lee Foreign Fund
III, L.P. and may be deemed to be beneficially owned by Messrs. DiNovi,
Lawry and Sperling, officers of the Thomas H. Lee Company, pursuant to the
definition of beneficial ownership provided in footnote (1). Each of such
persons disclaims beneficial ownership of such shares.
(9) The Kellman Shareholders and their individual holdings consist of: (i)
Family Revocable Trust (2,225,141 shares of Class B Non-Voting Stock and
17,998 shares of Non-Voting Preferred Stock); (ii) Jack Kellman Gift Trust
U/A/D 12/16/91 (137,833 shares of Class B Non-Voting Stock and 1,114 shares
of Non-Voting Preferred Stock); (iii) Joseph Kellman 1995 Descendants Test
for the Family of Jack U/A/D 11/8/95 (13,716 shares of Class B Non-Voting
Stock and 111 shares of Non-Voting Preferred Stock); (iv) Joseph Kellman
1995 Descendants Trust for the Family of Richard U/A/D 11/8/95 (13,716
shares of Class B Non-Voting Stock and 111 shares of Non-Voting Preferred
Stock); (v) Joseph Kellman 1995 Descendants Trust for the Family of Celia
U/A/D 11/8/95 (13,716 shares of Class B Non-Voting Stock and 111 shares of
Non-Voting Preferred Stock); (vi) Joseph Kellman Gift Trust for the Family
of Jack U/A/D 11/8/95 (22,842 shares of Class B Non-Voting Stock and 185
shares of Non-Voting Preferred Stock); (vii) Joseph Kellman Gift Trust for
the Family of Richard U/A/D 11/8/95 (22,842 shares of Class B Non-Voting
Stock and 185 shares of Non-Voting Preferred Stock); and (viii) Joseph
Kellman Gift Trust for the Family of Celia U/A/D 11/8/95 (22,842 shares of
Class B Non-Voting Stock and 185 shares of Non-Voting Preferred Stock).
(10) Joseph Kellman is the Trustee of the Family Revocable Trust (which owns
2,225,141 shares of Class B Non-Voting Stock and 17,998 shares of
Non-Voting Preferred Stock). Joseph Kellman maintains a principal address
at 1000 North Lake Shore Drive, Apartment 47-B, Chicago, Illinois 60610.
Allan B. Muchin, Maurice Raizes and Marvin Zimmerman are the Trustees of
each of the other Kellman Shareholders listed above in footnote (6) (which
own an aggregate of 247,507 shares of Class B Non-Voting Stock and 2,002
shares of Non-Voting Preferred Stock). Messrs. Muchin, Raizes and Zimmerman
each maintain a principal business address at c/o Katten, Muchin & Zavis,
525 West Monroe Street, Suite 1600, Chicago, Illinois 60661, and each
disclaims beneficial ownership of such shares.
(11) THL Equity Advisors III Limited Partnership ("Advisors"), the general
partner of the THL Equity Fund and Thomas H. Lee Foreign Fund III, LP., THL
Equity Trust III ("Equity Trust"), the general partner of Advisors, Thomas
H. Lee, Messrs., DiNovi and Sperling and other managing directors of Thomas
H. Lee Company, as Trustees of Equity Trust, and Thomas H. Lee as sole
shareholder of Equity Trust, may be deemed to be beneficial owners of the
shares held by the THL Equity Fund and Thomas H. Lee Foreign Fund III, L.P.
(which owns 76,819 shares of Class A Voting Stock and 153,638 shares of
Class B Non-Voting Stock). Each of such persons maintains a principal
business address at c/o Thomas H. Lee Company, 75 State Street, Suite 2600,
Boston, MA 02109. Each of such persons disclaims beneficial ownership of
such shares.
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<PAGE> 76
(12) THL Investment Management Corp., the general partner of THL-CCI Limited
Partnership, and Thomas H. Lee, as director and sole shareholder of THL
Investment Management Corp., may also be deemed to be beneficial owners of
the shares held by THL-CCI Limited Partnership. Each of such persons
maintains a principal business address at c/o Thomas H. Lee Company, 75
State Street, Suite 2600, Boston, MA 02109. Each of such persons disclaims
beneficial ownership of such shares.
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<PAGE> 77
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the THL Transactions, the Company entered into a
Management Agreement with Thomas H. Lee Company pursuant to which the Company
agreed to pay Thomas H. Lee Company a closing fee of $5.0 million in connection
with the THL Transactions and an annual fee of $500,000 for each of five
successive years, for management services to the Company. Such management
services consisted of on-going operational, financial, accounting and strategic
planning analysis and advice. Following the initial five year term of such
agreement, such agreement was to automatically continue for successive one year
terms unless any party thereto, at least ninety days prior to the end of any
term, provided all other parties thereto with notice of the intent to terminate
the agreement.
The Company also entered into employment agreements with each of Messrs.
Staglin, Barlow and Herron in connection with the THL Transactions. See
"Employment Agreements." Each of the Company's executive officers is also
entitled to participate in stock option plans maintained by the Company. See
"Management -- Stock Option Plans." Members of management of the Company
received a transaction bonus in connection with THL Transactions of
approximately $7 million. Of such amount, Mr. Staglin received $2,175,000, Mr.
Barlow received $2,040,000, Mr. Herron received $435,000, Mr. Feeney received
$183,500, Mr. Maehl received $229,000, Ms. Wolszon received $229,000, Mr. West
received $229,000 and Ms. Timmons received $160,000.
The Company entered into a stockholders agreement (the "Stockholders'
Agreement") with THL, the Named Executive Officers and certain other management
stockholders of the Company in connection with the THL Transactions. Pursuant to
the Stockholders' Agreement, the stockholders party thereto were required to
vote their shares of Class A Common Stock to elect a Board of Directors of the
Company consisting of certain directors designated by THL and certain management
directors. THL had the right to elect a majority of the Board of Directors. The
Stockholders' Agreement also granted THL the right to require the Company to
effect the registration of shares of Class A Common Stock THL held for sale to
the public, subject to certain conditions and limitations. In addition, under
the terms of the Stockholders' Agreement, if the Company proposed to register
any of its securities under the Securities Act of 1933, as amended, whether for
its own account or otherwise, the stockholder parties thereto were entitled to
notice of such registration and were entitled to include their shares therein,
subject to certain conditions and limitations. All fees, costs and expenses of
any registration effected on behalf of such stockholders under the Stockholders'
Agreement (other than underwriting discounts and commissions) were to be paid by
the Company.
Upon consummation of the Vistar Transactions, the Stockholders' Agreement
was terminated and superseded by a Shareholders Agreement entered into among the
Company and the Vistar Shareholders (consisting of Belron and the Kellman
Shareholders and the respective permitted transferees thereof), the THL
Shareholders (consisting of the Thomas H. Lee Equity Fund III, L.P. ("Equity
Fund"), Thomas H. Lee Foreign Fund III, L.P. ("Foreign Fund"), THL-CCI Investors
Limited Partnership ("THL-CCI") and Big Bend Investments, L.P. and the permitted
transferees thereof) and certain members of the Company's management (the
"Management Shareholders") (and the permitted transferees thereof). See
"Security Ownership of Certain Beneficial Owners and Management." The
Shareholders Agreement was amended by Amendment No. 1 to the Shareholders
Agreement, dated as of March 26, 1998. Unless otherwise noted, references herein
to the Shareholders Agreement shall mean the Shareholders Agreement, as amended.
The Shareholders Agreement provides for the composition of the Board of
Directors of the Company to be designated one half by certain Vistar
Shareholders and one half by certain THL Shareholders.
At the closing of the Vistar Transactions, the Company and certain of its
shareholders (including Equity Fund, Foreign Fund, THL-CCI, Belron, the Kellman
Shareholders and certain management Shareholders) entered into a Registration
Agreement (the "Registration Agreement"), which gives such persons so-called
"demand" and "piggy-back" rights to require the Company to effect the
registration of shares of Registerable Securities (as defined in the
Registration Agreement) they hold for sale to the public, subject to certain
conditions and limitations. All fees, costs and expenses of any registration
75
<PAGE> 78
effected on behalf of such shareholders under the Registration Agreement (other
than underwriting discounts and commission) will be paid by the Company.
Thomas H. Lee Company received $4.0 million in fees upon consummation of
the Vistar Merger. In addition, Belron received fees totaling $3.0 million upon
consummation of the Vistar Merger. The Company also paid $2.7 million in
advisory fees to The Windsor Park Management Group as consideration for services
provided to Vistar in connection with the Vistar Merger. Selwyn Herson, who
became a director of the Company after consummation of the Vistar Merger, is an
affiliate of The Windsor Park Management Group. At the closing of the Vistar
Merger, the Company entered into an Amended and Restated Management Agreement
with Thomas H. Lee Company, and an Amended and Restated Management Agreement
with Belron (together, the "Management Agreements"), pursuant to which the
Company agreed to pay to each of Thomas H. Lee Company and Belron, for
management services provided to the Company, an annual fee of $1.0 million. Such
management services consist of on-going operational, financial, accounting and
strategic planning analysis and advice. The Management Agreements will continue
in full force and effect, unless and until terminated by mutual consent of the
respective parties thereto, for so long as Thomas H. Lee Company or Belron, as
applicable (or any successor thereto or permitted assignee thereof, as the case
may be) continues to carry on the business of providing management services of
the type described in the respective Management Agreements; provided, however,
that (i) either party to a Management Agreement may terminate such Management
Agreement following a material breach of the terms thereof by the other party
thereto and a failure to cure such breach within 30 days following written
notice thereof and (ii) each of the Management Agreements shall automatically
terminate upon the sale in an initial public offering registered under the
Securities Act of shares of the Company's common stock.
In connection with the closing of the Vistar Transactions, certain members
of management of the Company received bonuses aggregating $1.0 million. Of such
amount, Mr. Staglin received $212,000, Mr. Barlow received $212,000, Mr. Herron
received $109,886, Mr. Feeney received $81,344, Mr. Maehl received $74,209, Ms.
Wolszon received $84,198, Mr. West received $78,490 and Ms. Timmons received
$57,084. In addition, prior to consummation of the Distribution, vesting of
certain stock options to purchase an aggregate of 160,000 shares of the
Company's Class A Common Stock, previously granted to Mr. Staglin (8,424
options), Mr. Barlow (50,000 options), Mr. Herron (23,370 options), Mr. Feeney
(27,220 options), Mr. Maehl (14,076 options), Ms. Wolszon (14,076 options), Mr.
West (14,076 options), and Ms. Timmons (8,758 options) under the Company's
existing stock option plans, was accelerated, which permitted option holders to
exercise those options and participate in the Distribution with respect to the
shares of the Company's stock subject thereto. The acceleration of this vesting
created a charge of approximately $3.0 million. See "Executive
Compensation -- Option/SAR Grants in Last Fiscal Year."
Certain former members of management of Vistar received transaction bonuses
totaling approximately $5.2 million. In addition, certain former members of
Vistar management will and have received severance payments, subject to the
terms and conditions of their employment agreements.
In connection with consummation of the Vistar Merger, the Company forgave
all payments owed to Vistar by Joseph Kellman, formerly a Vistar Shareholder and
currently a Safelite Shareholder, under a promissory note with an outstanding
principal and interest amount due of approximately $3.5 million, and all
payments owed to the Company by certain members of management under notes with
outstanding amounts aggregating approximately $470,000. The total amount of
loans made to executive officers which were forgiven were as follows: Mr.
Staglin, $152,851; Mr. Barlow, $122,274; Mr. Herron, $29,778; Mr. Feeney,
$3,237; Ms. Wolszon, $16,102; Mr. Maehl, $16,102; and Mr. West, $15,440.
76
<PAGE> 79
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Safelite consists of 4,960,0000 shares of
Safelite Class A Common Stock ("Class A Voting Stock"), $0.01 par value per
share, 11,000,000 shares of Safelite Class B Common Stock ("Class B Non-Voting
Stock" and, together with the Class A Voting Stock, the "Common Stock"), $0.01
par value per share, and 40,000 shares of 8% Preferred Stock, $.01 par value per
share (the "8% Preferred Stock").
The following summary of certain provisions of the Common Stock and
Non-Voting Preferred Stock does not purport to be complete and is subject to,
and qualified in its entirety by, the provisions of the Company's Restated
Certificate of Incorporation (the "Restated Certificate of Incorporation") and
by the provisions of applicable law.
COMMON STOCK
Except as otherwise provided below, all shares of Class A Voting Stock and
Class B Non-Voting Stock are identical in all respects and entitle the holders
thereof to the same rights, preferences and privileges, subject to the same
qualifications, limitations and restrictions, as set forth in the Restated
Certificate of Incorporation.
Dividends. As and when dividends are declared or paid with respect to
shares of Common Stock, whether in cash, property or securities of the Company,
the holders of Class A Voting Stock and the holders of Class B Non-Voting Stock
are entitled to receive such dividends pro rata at the same rate per share of
each class of Common Stock; provided that (i) if dividends are declared or paid
in shares of Common Stock, the dividends payable on shares of Class A Voting
Stock are payable in shares of Class A Voting Stock and the dividends payable on
shares of Class B Non-Voting Stock are payable in shares of Class B Non-Voting
Stock, and (ii) if the dividends consist of other voting securities of the
Company, the Company will pay to each holder of Class B Non-Voting Stock
dividends consisting of non-voting securities (except as otherwise required by
law) of the Company which are otherwise identical to the voting securities and
which are convertible into such voting securities on the same terms as the Class
B Non-Voting Stock is convertible into the Class A Voting Stock.
Dissolution, Liquidation or Winding-Up. In the event of any dissolution,
liquidation or winding-up of the affairs of the Company, whether voluntary or
involuntary, after payment or provision for payment of the debts and other
liabilities of the Company and of the amounts to which the holders of any
outstanding shares of any capital stock ranking senior in preference to the
Common Stock are entitled, including, without limitation, the holders of
Non-Voting Preferred Stock, the holders of the Class A Voting Stock and the
holders of the Class B Non-Voting shall be entitled to participate pro rata at
the same rate per share of each class of Common Stock in all distributions to
the holders of the Common Stock in any liquidation, dissolution or winding-up of
the Company. The Board of Directors of the Company, in good faith, shall
determine the fair market value, as of the date of distribution, of any property
(other than cash) distributed in the event of any dissolution, liquidation or
winding-up of the affairs of the Company and such fair market value shall be the
amount received in such dissolution, liquidation or winding-up by the
stockholders by reason of the distribution of the property). Any such
determination made by the Board of Directors of the Company shall be final and
binding on the Company and all holders of Common Stock.
Voting. Except as otherwise provided below or as otherwise required by
applicable law, the holders of Class A Voting Stock are entitled to one vote per
share on all matters to be voted on by the Company's stockholders and, except as
otherwise required by law, the holders of Class B Non-Voting Stock have no right
to vote on any matters to be voted on by the Company's stockholders.
Conversion of the Class B Non-Voting Stock. Any holder of shares of Class
B Non-Voting Stock has the right to exchange such holder's shares of Class B
Non-Voting Stock as follows: (i) any time on or after the Triggering Day (as
defined below), all shares of Class B Non-Voting Stock held by any person shall
be exchangeable, on a one-for-one basis, for shares of Class A Voting Stock, and
(ii) upon or any time after the sale, which is not a Permitted Transfer (as
defined below), to any person, such shares of
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<PAGE> 80
Class B Non-Voting Stock which have been so sold shall be exchangeable for
shares of Class A Voting Stock. The terms "Triggering Day" and "Permitted
Transfer" have the respective meanings set forth in the Shareholders Agreement
entered into in connection with the Vistar Transactions, which is filed as an
Exhibit to the Registration Statement. See "Certain Relationships and Related
Transactions." The conversion of Class B Non-Voting Stock to Class A Voting
Stock could result in a Change of Control (as defined in the Indenture).
The rights, preferences and privileges of holders of the Common Stock are
subject to, and may be adversely affected by, the rights of holders of shares of
the Non-Voting Preferred Stock and any other preferred stock that the Company
may designate in the future.
PREFERRED STOCK
The Non-Voting Preferred Stock is an accumulating perpetual preferred
stock. The Non-Voting Preferred Stock was part of the merger consideration
issued pursuant to the Vistar Transactions.
Dividends. The Company will pay cumulative semi-annual dividends on the
Non-Voting Preferred Stock if, when and as declared by the Board of Directors of
the Company, and to the extent permitted under the General Corporation Law of
the State of Delaware, which shall accrue on a daily basis (computed on the
basis of a 360-day year and actual days elapsed) at the rate per annum of eight
percent (8%) per share of Non-Voting Preferred Stock calculated as a percentage
of $1,000 (plus accrued and unpaid dividends), compounded semiannually, from and
including the effective date of the Vistar Merger until the redemption of
Non-Voting Preferred Stock (with payment being calculated through the date on
which payment shall be tendered to the holders of Non-Voting Preferred Stock).
This dividend rate will automatically increase to (i) fourteen percent (14%) per
annum upon the Occurrence of a Redemption Event (defined below), (ii) fifteen
percent (15%) per annum on the first annual anniversary date of such Redemption
Event and (iii) sixteen percent (16%) per annum on the second anniversary date
of such Redemption Event if the Company elects not to redeem Non-Voting
Preferred Stock upon the occurrence of such Redemption Event. Such dividends
will accrue and be cumulative whether or not they have been declared and whether
or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends. The date on which the Company initially
issues any shares of Non-Voting Preferred Stock will be deemed to be its "date
of issuance" regardless of the number of times transfer of such shares of
Non-Voting Preferred Stock is made on the stock records of the Company, and
regardless of the number of certificates which may be issued to evidence such
shares of Non-Voting Preferred Stock. A "Redemption Event" shall mean (i) an
underwritten initial public offering of the Company's capital stock pursuant to
a registration statement effected under the Securities Act or (ii) the
occurrence of a Change in Control under the terms of the Indenture. If at any
time the Company distributes less than the total amount of dividends then
accrued with respect to Non-Voting Preferred Stock, such payment will be
distributed among the holders of Non-Voting Preferred Stock so that an equal
amount will be paid (as nearly as possible) with respect to each outstanding
share of Non-Voting Preferred Stock.
As a result of restrictions contained in the Indenture, dividends are not
payable in respect of the Non-Voting Preferred Stock unless such payment is in
compliance with the Limitation on Restricted Payments covenant contained in the
Indenture. The accrual of dividends, however, is not subject to restriction in
the Indenture.
So long as any shares of Non-Voting Preferred Stock remain outstanding,
neither the Company nor any Subsidiary (which shall mean any Company,
association or other business entity of which the Company directly or indirectly
owns at the time more than fifty percent (50%) of the outstanding voting
securities or equity interests) will redeem, purchase or otherwise acquire any
other equity security of the Company junior to Non-Voting Preferred Stock in
right to payment outstanding on the date of the Restated Certificate of
Incorporation or thereafter outstanding, including, without limitation, the
Common Stock (all such securities collectively, the "Junior Securities"), nor
will the Company declare or pay any cash dividend (including accrued dividends)
or make any distribution of assets other than shares of
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<PAGE> 81
Junior Securities upon any Junior Securities; provided that nothing in the
Restated Certificate of Incorporation shall prohibit the Company from acquiring
Common Stock of the Company pursuant to contractual rights approved by the Board
of Directors of the Company.
Liquidation, Dissolution or Winding-Up. In the event of a Liquidity Event
(as defined below), before any distribution or payment may be made with respect
to the Junior Securities, holders of each share of Non-Voting Preferred Stock
shall be entitled to be paid out of the assets of the Company available for
distribution to holders of the Company's capital stock of all classes, whether
such assets are capital, surplus, or capital earnings, an amount in cash equal
to $1,000 per share of Non-Voting Preferred Stock (which amount, together with
the other shares and per share numbers used in the Restated Certificate of
Incorporation shall be subject to equitable adjustment whenever there shall
occur a stock split, combination, reclassification or other similar event
involving the class or series of stock in question), plus accrued dividends from
the date of issuance thereof up to and including the date full payment shall be
tendered to the holders of Non-Voting Preferred Stock with respect to such
Liquidity Event (the "Liquidation Amount"). The term "Liquidity Event" shall
mean a liquidation, dissolution or winding-up of the Company, whether voluntary
or involuntary. If, upon any such Liquidity Event, the assets of the Company
available for distribution to its stockholders shall be insufficient to permit
payment to the holders of Non-Voting Preferred Stock of the full amount of the
Liquidation Amount to which they are entitled to be paid, the holders of shares
of Non-Voting Preferred Stock shall share ratably in any distribution of assets
according to the amounts which would be payable with respect to the shares of
Non-Voting Preferred Stock held by them upon such distribution if all amounts
payable on or with respect to said shares were paid in full. After the payment
of the Liquidation Amount shall have been made in full to the holders of
Non-Voting Preferred Stock, or funds necessary for such payment shall have been
set aside by the Company in trust for the accounts of holders of Non-Voting
Preferred Stock so as to be available for such payments, the holders of
Non-Voting Preferred Stock shall be entitled to no further participation in the
distribution of the assets of the Company, and the remaining assets of the
Company legally available for distribution to its stockholders shall be
distributed among the holder of other classes of securities of the Company in
accordance with their respective terms. The Liquidation Amount shall be paid in
cash to the extent the Company has cash available. Whenever a distribution
provided for above is payable in property other than cash, the value of such
distribution shall be the fair market value of such property as determined in
good faith by the Company's Board of Directors. As a result of restrictions
contained in the Indenture, distributions are not payable in respect of the
Non-Voting Preferred Stock unless such distributions are in compliance with the
Limitation on Restricted Payments covenant contained in the Indenture.
Voting. Except as otherwise required by law, the holders of Non-Voting
Preferred Stock shall have no right to vote on any matters to be voted on by the
Company's stockholders.
Mandatory Redemption. The Non-Voting Preferred Stock is not mandatorily
redeemable.
Optional Redemption. The Company may redeem Non-Voting Preferred Stock at
its option, in whole or in part, at $1,000 per share plus accrued dividends from
the date of issuance thereof up to and including the date full payment shall be
tendered to holders of Non-Voting Preferred Stock with respect to such
redemption (the "Redemption Price"), at any time (the "Redemption Date"). If, at
any time, the Company redeems less than all of the outstanding shares of
Non-Voting Preferred Stock, such redemption will be made from the holders of
Non-Voting Preferred Stock on a pro rata basis based on the number of shares of
Non-Voting Preferred Stock held by each stockholder. The terms of the Bank
Credit Agreement and the Indenture restrict the Company's ability to redeem
shares of the Non-Voting Preferred Stock.
Ranking. The Non-Voting Preferred Stock, with respect to dividend and
redemption rights and rights upon liquidation, dissolution and winding up, ranks
prior to all other series of preferred stock of the Company and all classes of
common stock of the Company. No preferred stock or other class of equity
securities of the Company ranking senior to or pari passu with the Non-Voting
Preferred Stock, with
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respect to dividends or redemption payments or upon dissolution, liquidation or
winding up, may be created without the consent of the holders of the Non-Voting
Preferred Stock, as described below.
Restrictions and Limitations. The Company shall not amend the Restated
Certificate of Incorporation without the approval, by vote or written consent,
by the holders of at least a majority of the then outstanding shares of
Non-Voting Preferred Stock, voting together as a separate class, if such
amendment would amend any of the rights, preferences, privileges of or
limitations provided for in the Restated Certificate of Incorporation for the
benefit of any shares of Non-Voting Preferred Stock. Without limiting the
generality of the preceding sentence, the Company will not amend the Restated
Certificate of Incorporation without the approval by the holders of at least a
majority of the then outstanding shares of Non-Voting Preferred Stock, voting
separately as a separate class, if such amendment would: (i) change the relative
seniority rights of holders of Non-Voting Preferred Stock as to the payment of
dividends in relation to the holders of any other capital stock of the Company;
(ii) reduce the amount payable to the holders of Non-Voting Preferred Stock upon
the voluntary or involuntary liquidation, dissolution or winding-up of the
Company, or change the relative seniority of the liquidation preferences of the
holders of Non-Voting Preferred Stock to the rights upon liquidation of the
holders of other capital stock of the Company, or change the dividend rights of
the holders of Non-Voting Preferred Stock; (iii) cancel or modify the redemption
rights provided for in the Restated Certificate of Incorporation; or (iv) cancel
or modify the rights of the holders of Non-Voting Preferred Stock provided for
in the section of the Restated Certificate of Incorporation entitled
"Restrictions and Limitations."
No Reissuance of Preferred Stock. No share or shares of Non-Voting
Preferred Stock acquired by the Company by reason of redemption, purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Company shall be authorized to issue. The
Company may from time to time take such appropriate corporate action as may be
necessary to reduce the authorized number of shares of Non-Voting Preferred
Stock accordingly.
CERTAIN CHARTER AND BY-LAW PROVISIONS
The Restated Certificate of Incorporation of the Company provides that no
director shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for (i) any
breach of the director's duty of loyalty to the Company or its stockholders;
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) acts or omissions in respect of certain
unlawful dividends and payments or stock redemptions or repurchases; or (iv) any
transaction from which such director derives improper personal benefit. The
effect of this provision is to eliminate the rights of the Company and its
stockholders through stockholders' derivative suits on behalf of the Company to
recover monetary damages against a director for breach of the fiduciary duty of
care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in the situations described in clauses (i) through
(iv) above. The limitations summarized above, however, do not affect the ability
of the Company or its stockholders to seek non-monetary based remedies, such as
an injunction or rescission, against a director for breach of his fiduciary duty
nor would such limitations limit liability under the Federal Securities Laws.
The Company's Amended and Restated Bylaws provide that the Company shall, to the
full extent permitted by the Delaware General Corporation Law as currently in
effect, indemnify and may advance expenses to, each of its currently acting and
former directors, officers, employees and agents arising in connection with
their acting in such capacities.
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DESCRIPTION OF OTHER INDEBTEDNESS
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Bank Credit Agreement. The Chase Manhattan
Bank ("Chase") has provided the Company with senior secured credit facilities
(referred to herein as the Bank Credit Agreement) in an aggregate principal
amount of $450 million under which $350 million was borrowed under the Term Loan
Facility (as defined below) in connection with the Vistar Transactions and $41.3
million of a total of $100 million of commitments available (less outstanding
letters of credit of $17.6 million) under the Revolving Credit Facility was
borrowed at April 4, 1998.
Structure. The Bank Credit Agreement consists of (a) a term loan facility
in an aggregate principal amount of $350 million (the "Term Loan Facility"),
consisting of three tranches in principal amounts of $150 million (the "Tranche
A Term Loan"), $100 million (the "Tranche B Term Loan"), and $100 million (the
"Tranche C Term Loan"), respectively, and (b) a revolving credit facility
providing for revolving loans to the Company and the issuance of letters of
credit for the account of the Company in an aggregate principal amount
(including the aggregate stated amount of letters of credit and the aggregate
reimbursement and other obligations in respect thereof) at any time not to
exceed $100 million (the "Revolving Credit Facility").
Availability. The availability of the Bank Credit Agreement is subject to
various conditions precedent typical for bank loans, and Chase's commitments to
provide the Bank Credit Agreement are also subject to, among other things, the
absence of any material adverse change with respect to the Company in particular
or the financial, banking or capital markets in general. The full amount of the
Term Loan Facility was drawn at the time of the Vistar Transactions and, subject
to limited exceptions, amounts repaid or prepaid under the Term Loan Facility
may not be reborrowed.
Repayment. The Tranche A Term Loan and the Revolving Credit Facility will
mature on the sixth anniversary of the initial borrowing under the Bank Credit
Agreement (such initial borrowing date referred to hereinafter as the
"Closing"). The Tranche B Term Loan will mature on the seventh anniversary of
the Closing. The Tranche C Term Loan will mature on the eighth anniversary of
the Closing. The Term Loan Facility is subject to the following amortization
schedule:
<TABLE>
<CAPTION>
REPAYMENT AMOUNTS
---------------------------------------
TRANCHE A TRANCHE B TRANCHE C
DATE TERM LOAN TERM LOAN TERM LOAN
---- ----------- ----------- -----------
<S> <C> <C> <C>
Last business day in September, December 1999..... $ 5,000,000 $ 250,000 $ 250,000
Last business day in March, June, September and
December 2000................................... 5,000,000 250,000 250,000
Last business day in March, June, September and
December 2001................................... 7,500,000 250,000 250,000
Last business day in March, June, September and
December 2002................................... 10,000,000 250,000 250,000
Last business day in March, June, September
2003............................................ 12,500,000 12,062,500 250,000
December 17, 2003................................. 12,500,000 -- --
Last business day in December 2003................ -- 12,062,500 250,000
Last business day in March, June, September and
December 2004................................... -- 12,062,500 11,937,500
December 17, 2004................................. -- 12,062,500 --
Last business day in December 2004................ -- -- 11,937,500
Last business day in March, June and September
2005............................................ -- 11,937,500
December 17, 2005................................. -- -- 11,937,500
</TABLE>
In addition, the Bank Credit Agreement is subject to mandatory principal
prepayment and commitment reductions (to be applied to the Term Loan Facility)
in an amount equal to, subject to certain
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exceptions, (a) 100% of the net cash proceeds of (i) certain debt and equity
offerings by the Company or any of its subsidiaries and (ii) certain asset sales
or other dispositions and (b) 50% of the Company's excess operating cash flow
(as defined in the Bank Credit Agreement).
Security. The Bank Credit Agreement is secured by security interests in
and pledges of or liens on substantially all the assets of the Company and its
subsidiaries, including pledges of all the capital stock of, or other equity
interests in, certain subsidiaries of the Company.
Guarantee. Each of the Subsidiary Guarantors has guaranteed the Company's
indebtedness under the Bank Credit Agreement and, pursuant to the Second
Supplemental Indenture, dated as of December 18, 1997, each of the Subsidiary
Guarantors has unconditionally guaranteed, on a senior subordinated basis,
jointly and severally, the Notes.
Interest. At the Company's election, the interest rates per annum
applicable to the loans under the Bank Credit Agreement are fluctuating rates of
interest measured by reference to either (a) an adjusted London inter-bank
offered rate ("LIBOR") plus a borrowing margin or (b) an alternate base rate
("ABR") (equal to the higher of Chase's published prime rate and the Federal
Funds effective rate plus 1/2 of 1% per annum) plus a borrowing margin. The
borrowing margins applicable to the Tranche A Term Loan and loans under the
Revolving Credit Facility are 1.00% per annum for ABR loans and 2.00% per annum
for LIBOR loans. The borrowing margins applicable to the Tranche B Term Loan are
1.25% per annum for ABR loans and 2.25% per annum for LIBOR loans. The borrowing
margins applicable to the Tranche C Term Loan are 1.50% per annum for ABR loans
and 2.50% per annum for LIBOR loans. All of the forgoing margins are subject to
reduction based upon the achievement by the Company of certain financial
performance thresholds. Amounts under the Bank Credit Agreement not paid when
due bear interest at a default rate equal to 2.00% per annum above the rate
otherwise applicable.
Covenants. The Bank Credit Agreement contains a number of covenants that,
among other things, restrict the ability of the Company to dispose of assets,
incur additional indebtedness, incur guarantee obligations, prepay other
indebtedness or amend other debt instruments, pay dividends, create liens on
assets, make investments, loans or advances, make acquisitions, create
subsidiaries, engage in mergers or consolidations, change the business conducted
by the Company, make capital expenditures, or engage in certain transactions
with affiliates and otherwise restrict certain corporate activities. In
addition, under the Bank Credit Agreement, the Company is required to comply
with specified financial ratios and minimum tests, including minimum interest
coverage ratios and maximum leverage ratios.
The Bank Credit Agreement also contains provisions that limit the Company's
ability to amend or modify the Indenture and the Company's ability to prepay or
refinance the Notes without the consent of the lenders under the Bank Credit
Agreement.
Events of Default. The Bank Credit Agreement contains customary events of
default including non-payment of principal, interest or fees, violation of
covenants, inaccuracy of representations or warranties in any material respect,
cross default and cross acceleration to certain other indebtedness, bankruptcy,
material judgments and liabilities, the occurrence of certain ERISA events,
failure or invalidity of security or guarantees and change of control.
During 1996, the Company purchased workers' compensation, automobile and
product liability coverage for the period December 20, 1996 through December 31,
1999. The cost of this insurance was partially financed by approximately $13.7
million in premium financing, payable in monthly installments, including
interest of 6.67% to 6.99%, of $514,000 in 1997 and $416,000 in 1998 and 1999.
Under the terms of the financing, if the Company cancels its insurance policies
for any reason, corresponding unearned premium refunds would be applied directly
against the outstanding principal balance. At April 4, 1998, the outstanding
principal balance of this premium financing was approximately $7.2 million.
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DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued under the Indenture, dated as of December
20, 1996, among the Company, SGC Franchising Corp. (a former subsidiary of the
Company) and Fleet National Bank, as trustee, as amended by the First
Supplemental Indenture, dated as of December 12, 1997, between the Company and
State Street Bank and Trust Company, as successor trustee to Fleet National Bank
(the "Trustee"), and the Second Supplemental Indenture, dated as of December 18,
1997, among the Company, the Subsidiary Guarantors and the Trustee (the
"Indenture"). References to the Notes include the Initial Notes and the Exchange
Notes unless the context otherwise requires. Upon the issuance of the Exchange
Notes, if any, or the effectiveness of a Shelf Registration Statement, the
Indenture will be subject 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 subject to, and is qualified in
its entirety by reference to, the Trust Indenture Act, and to all of the
provisions of the Indenture, including the definitions of certain terms therein
and those terms made a part of the Indenture by reference to the Trust Indenture
Act, as in effect on the date of the Indenture. The definitions of certain
capitalized terms used in the following summary are set forth below under
"Certain Definitions." For purposes of this section, references to the "Company"
include only the Company and not its subsidiaries.
The Notes will be unsecured obligations of the Company, ranking subordinate
in right of payment to all Senior Indebtedness of the Company.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as Paying Agent and Registrar for the Notes. The Notes may be presented
for registration of transfer and exchange at the offices of the Registrar, which
initially will be the Trustee's corporate trust office. The Company may change
any Paying Agent and Registrar without notice to holders of the Notes (the
"Holders"). The Company will pay principal (and premium, if any) on the Notes at
the Trustee's corporate office in New York, New York. At the Company's option,
interest may be paid at the Trustee's corporate trust office or by check mailed
to the registered address of Holders.
Any Initial Notes that remain outstanding after the completion of the
Exchange Offer, together with the Exchange Notes issued in connection with the
Exchange Offer, will be treated as a single class of securities under the
Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $100 million and
will mature on December 15, 2006. Interest on the Notes will accrue at the rate
of 9 7/8% per annum and will be payable semiannually in cash on each June 15 and
December 15 commencing on June 15, 1997, to the Persons who are registered
Holders at the close of business on the June 1 and December 1 immediately
preceding the applicable interest payment date. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
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REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after December
15, 2001, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on December 15 of the year
set forth below, plus, in each case, accrued interest to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001........................................................ 104.9375%
2002........................................................ 103.2917
2003........................................................ 101.6458
2004 and thereafter......................................... 100.0000
</TABLE>
Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to December 15, 1999, the Company may, at its option, use the
net cash proceeds of one or more Equity Offerings (as defined below) to redeem
up to $35 million of the aggregate principal amount of Notes originally issued
at a redemption price equal to 109.875% of the principal amount thereof plus
accrued interest to the date of redemption; provided that at least $65 million
of the original principal amount of Notes remains outstanding immediately after
any such redemption. In order to effect the foregoing redemption with the
proceeds of any Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Equity Offering. "Equity
Offering" means an offering of Qualified Capital Stock of the Company.
SELECTION AND NOTICE
In case of a partial redemption, selection of the Notes or portions thereof
for redemption shall be made by the Trustee by lot, pro rata or in such manner
as it shall deem appropriate and fair and in such manner as complies with any
applicable legal requirements; provided, however, that if a partial redemption
is made with the proceeds of an Equity Offering, selection of the Notes or
portion thereof for redemption shall be made by the Trustee only on a pro rata
basis, unless such method is otherwise prohibited. Notes may be redeemed in part
in multiples of $1,000 principal amount only. Notice of redemption will be sent,
by first class mail, postage prepaid, at least 30 days and not more than 60 days
prior to the date fixed for redemption to each Holder whose Notes are to be
redeemed at the last address for such Holder then shown on the registry books.
If any Note is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after any redemption date, interest will cease to
accrue on the Notes or part thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the redemption
price pursuant to the Indenture.
RANKING OF NOTES
The indebtedness evidenced by the Notes will be unsecured Senior
Subordinated Indebtedness of the Company, will be subordinated in right of
payment, as set forth in the Indenture, to all existing and future Senior
Indebtedness of the Company, will rank pari passu in right of payment with all
existing and future Senior Subordinated Indebtedness of the Company and will be
senior in right of payment to all existing and future Subordinated Obligations
of the Company. The Notes will also effectively be subordinated to any Secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness, and to all Indebtedness of its Subsidiaries. However, payment
from the money or the proceeds of U.S. government obligations held in any
defeasance trust described under "-- Legal Defeasance and Covenant Defeasance"
below is not subordinated to any Senior Indebtedness or subject to the
restrictions described above if the deposit to such trust which is used to fund
such payment was permitted at the time of such deposit.
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As of April 4, 1998, the Company had approximately $503.6 million of Senior
Indebtedness outstanding (excluding unused commitments) all of which would have
been Secured Indebtedness (excluding $17.6 million of outstanding letters of
credit). Although the Indenture contains limitations on the amount of additional
Indebtedness which the Company and its Restricted Subsidiaries may incur, under
certain circumstances the amount of such Indebtedness could be substantial and,
in any case, such Indebtedness may be Senior Indebtedness or Secured
Indebtedness. See "-- Certain Covenants -- Limitation on Incurrence of
Additional Indebtedness" below.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior in right of payment to the Notes in accordance with the provisions of the
Indenture. The Notes will in all respects rank pari passu in right of payment
with all other Senior Subordinated Indebtedness of the Company. The Company has
agreed in the Indenture that it will not incur, directly or indirectly, any
Indebtedness which is expressly subordinate in right of payment to Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
Without limiting the foregoing, unsecured Indebtedness is not deemed to be
subordinate or junior to Secured Indebtedness merely because it is unsecured.
The Company may not pay principal of, premium (if any) or interest on, or
any other amount in respect of, the Notes or make any deposit pursuant to the
provisions described under "-- Legal Defeasance and Covenant Defeasance" below
and may not otherwise purchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when
due in cash or Cash Equivalents or (ii) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, the default has been cured or waived and
any such acceleration has been rescinded or such Senior Indebtedness has been
paid in full in cash or Cash Equivalents. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the holders of the
Designated Senior Indebtedness with respect to which either of the events set
forth in clause (i) or (ii) of the immediately preceding sentence has occurred
and is continuing.
In addition, during the continuance of any default (other than a default
described in clause (i) or (ii) of the first sentence of the immediately
preceding paragraph) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not pay the
Notes for a period (a "Payment Blockage Period") commencing upon the receipt by
the Trustee (with a copy to the Company) of written notice (a "Blockage Notice")
of such default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice, (ii) because the default giving rise
to such Blockage Notice is no longer continuing or (iii) because such Designated
Senior Indebtedness has been repaid in full in cash or Cash Equivalents).
Notwithstanding the provisions described in the immediately preceding
paragraph, unless any of the events described in clause (i) or (ii) of the first
sentence of the second immediately preceding paragraph is then occurring, the
Company may resume payments on the Notes after the end of such Payment Blockage
Period, including any missed payments. Not more than one Blockage Notice may be
given in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness during such period. However, if
any Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than the Bank Indebtedness, a
Representative of holders of Bank Indebtedness may give another Blockage Notice
within such period. In no event, however, may the total number of days during
which any Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360 consecutive day period.
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Upon any payment or distribution of the assets or securities of the Company
upon a total or partial liquidation or dissolution or reorganization of or
similar proceeding relating to the Company or its property or in a bankruptcy,
insolvency, receivership or similar proceeding relating to the Company or its
property, or in an assignment for the benefit of creditors or any marshaling of
the assets and liabilities of the Company, the holders of Senior Indebtedness
will be entitled to receive payment in full in cash or Cash Equivalents of the
Senior Indebtedness before the holders of the Notes are entitled to receive any
payment and, until the Senior Indebtedness is paid in full in cash or Cash
Equivalents, any payment or distribution to which holders of the Notes would be
entitled but for the subordination provisions of the Indenture will be made to
holders of the Senior Indebtedness as their interests may appear. If a payment
or distribution is made to holders of the Notes that due to the subordination
provisions should not have been made to them, such holders of the Notes are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five business days after such holders or
the Representative of the holders of Designated Senior Indebtedness receive
notice of such acceleration and, thereafter, may pay the Notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the holders of the Notes, and
creditors of the Company who are not holders of Senior Indebtedness or of Senior
Subordinated Indebtedness (including the Notes) may recover less, ratably, than
holders of Senior Indebtedness and may recover more than the holders of Senior
Subordinated Indebtedness.
GUARANTEES
The Indenture provides that, after the Issue Date, the Company will cause
each Restricted Subsidiary of the Company that guarantees payment of the Bank
Indebtedness (each, a "Subsidiary Guarantor") to execute and deliver to the
Trustee a supplemental indenture pursuant to which such Restricted Subsidiary
will guarantee (each, a "Guarantee") payment of the Notes. The Subsidiary
Guarantors are all of the Company's current Restricted Subsidiaries. Each of the
Subsidiary Guarantors has guaranteed the Bank Indebtedness under the Bank Credit
Agreement and, pursuant to the Second Supplemental Indenture, dated as of
December 18, 1997, among the Company, the Subsidiary Guarantors and the Trustee,
each of the Subsidiary Guarantors has guaranteed payment of the Notes. See
"Certain Covenants -- Future Guarantees."
Each Subsidiary Guarantor unconditionally guarantees, on a senior
subordinated basis, jointly and severally, to each Holder and the Trustee, the
full and prompt performance of the Company's obligations under the Indenture and
the Notes, including the payment of principal of and interest on the Notes. The
Guarantees will be subordinated to Guarantor Senior Indebtedness on the same
basis as the Notes are subordinated to Senior Indebtedness. The obligations of
each Subsidiary Guarantor are limited to the maximum amount which, after giving
effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under its Guarantee or pursuant to its
contribution obligations under the Indenture, will result in the obligations of
such Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law. Each Subsidiary
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Subsidiary Guarantor in an amount pro
rata, based on the Adjusted Net Assets (as defined in the Indenture) of each
Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into, liquidate,
dissolve or sell its assets to the Company or another Subsidiary Guarantor that
is a Wholly Owned Restricted Subsidiary of the Company without limitation, or
with other Persons upon the terms and conditions set forth in the
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Indenture. See "Certain Covenants -- Merger, Consolidation and Sale of Assets."
In the event that (i) either all of the Capital Stock of a Subsidiary Guarantor
is sold by the Company (whether by merger, stock purchase or otherwise) or all
or substantially all of the assets of a Subsidiary Guarantor are sold by such
Subsidiary Guarantor and such sale complies with the provisions set forth in
"Certain Covenants -- Limitation on Asset Sales" or (ii) the lenders under the
Bank Credit Agreement release a Subsidiary Guarantor of all guarantees under the
Bank Credit Agreement and release all Liens on the property and assets of such
Subsidiary Guarantor relating to the Bank Indebtedness, then in each case the
Subsidiary Guarantor's Guarantee will be released.
Separate financial statements of the Subsidiary Guarantors are not included
herein because the Subsidiary Guarantors are jointly and severally liable with
respect to the Company's obligations pursuant to the Exchange Notes, and the
aggregate net assets, earnings and equity of the Subsidiary Guarantors and the
Company are substantially equivalent to the net assets, earnings and equity of
the Company on a consolidated basis.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control
Triggering Event, each Holder will have the right to require that the Company
purchase all or a portion of such Holder's Notes pursuant to the offer described
below (the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued interest to the date of purchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control
Triggering Event, the Company covenants to (i) repay in full and terminate all
commitments under the Bank Indebtedness or offer to repay in full and terminate
all commitments under all Bank Indebtedness and to repay the Bank Indebtedness
owed to each holder of Bank Indebtedness which has accepted such offer or (ii)
obtain the requisite consents under the Bank Credit Agreement to permit the
repurchase of the Notes as provided below. The Company shall first comply with
the covenant in the immediately preceding sentence before it shall be required
to repurchase Notes pursuant to the provisions described below. The Company's
failure to comply with this covenant shall constitute an Event of Default
described in clause (iii) and not in clause (ii) under "Events of Default"
below.
Within 30 days following the date upon which the Change of Control
Triggering Event occurred, the Company must send, by first class mail, a notice
to each Holder, with a copy to the Trustee, which notice shall govern the terms
of the Change of Control Offer. Such notice shall state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 45 days from
the date such notice is mailed, other than as may be required by law (the
"Change of Control Payment Date"). Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third business day prior to the Change of
Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing.
The definition of Change of Control includes a phrase relating to the sale,
lease, exchange or other transfer of "all or substantially all" of the Company's
assets as such phrase is defined in the Revised Model Business Corporation Act.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise definition of the phrase under
applicable law. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company, and
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therefore it may be unclear as to whether a Change of Control has occurred and
whether the Holders have the right to require the Company to repurchase such
Notes.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control
Triggering Event. Restrictions in the Indenture described herein on the ability
of the Company and its Restricted Subsidiaries to incur additional Indebtedness,
to grant Liens on their properties, to make Restricted Payments and to make
Asset Sales may also make more difficult or discourage a takeover of the
Company, whether favored or opposed by the management of the Company.
Consummation of any such transaction in certain circumstances may require
redemption or repurchase of the Notes, and there can be no assurance that the
Company or the acquiring party will have sufficient financial resources to
effect such redemption or repurchase. Such restrictions and the restrictions on
transactions with Affiliates may, in certain circumstances, make more difficult
or discourage any leveraged buyout of the Company or any of its Subsidiaries by
the management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Indenture may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Restricted Payments. The Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock) on or in respect of shares
of Capital Stock of the Company to holders of such Capital Stock, (b) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the Company
or any warrants, rights or options to purchase or acquire shares of any class of
such Capital Stock, other than the exchange of such Capital Stock for Qualified
Capital Stock, or (c) make any Investment (other than Permitted Investments)
(each of the foregoing actions set forth in clauses (a), (b) and (c) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an Event of
Default shall have occurred and be continuing, (ii) the Company is not able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant or (iii) the aggregate amount of Restricted Payments made
subsequent to the Issue Date shall exceed the sum of: (w) 50% of the cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of the Company earned subsequent to the Issue
Date and on or prior to the date the Restricted Payment occurs (the "Reference
Date") (treating such period as a single accounting period); plus (x) 100% of
the aggregate net cash proceeds received by the Company from any Person (other
than a Subsidiary of the Company) from the issuance and sale subsequent to the
Issue Date and on or prior to the Reference Date of Qualified Capital Stock of
the Company (including Capital Stock issued upon the conversion of convertible
Indebtedness or in exchange for outstanding Indebtedness); plus (y) without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock (excluding any net cash proceeds
from such equity contribution to the extent used to redeem Notes in accordance
with the optional redemption provisions of the Notes); plus (z) to the extent
that any Investment (other than a Permitted Investment) that was made after the
Issue Date is sold for cash or
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otherwise liquidated or repaid for cash, the lesser of (A) the cash received
with respect to such sale, liquidation or repayment of such Investment (less the
cost of such sale, liquidation or repayment, if any) and (B) the initial amount
of such Investment.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice; (2) if no Event of Default shall have
occurred and be continuing as a consequence thereof, the acquisition of any
shares of Capital Stock of the Company, either (i) solely in exchange for shares
of Qualified Capital Stock of the Company, or (ii) through the application of
net proceeds of a substantially concurrent sale (other than to a Subsidiary of
the Company) of shares of Qualified Capital Stock of the Company; (3) payments
for the purpose of and in an amount equal to the amount required to permit the
Company to redeem or repurchase shares of its Capital Stock or options in
respect thereof, in each case in connection with the repurchase provisions under
employee stock option or stock purchase agreements or other agreements to
compensate management employees; provided that such redemptions or repurchases
pursuant to this clause (3) shall not exceed $2 million (which amount shall be
increased by the amount of any cash proceeds to the Company from (x) sales of
its Capital Stock to management employees subsequent to the Issue Date and (y)
any "key-man" life insurance policies which are used to make such redemptions or
repurchases) in the aggregate; (4) the payment of fees and compensation as
permitted under clause (i) of paragraph (b) of the "Transactions with
Affiliates" covenant; (5) so long as no Default or Event of Default shall have
occurred and be continuing, payments not to exceed $100,000 in the aggregate, to
enable the Company to make payments to holders of its Capital Stock in lieu of
issuance of fractional shares of its Capital Stock; (6) repurchases of Capital
Stock deemed to occur upon the exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof; (7) payments made on the
Issue Date pursuant to the Recapitalization Agreement and (8) payment of the
Distribution. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, (a) amounts expended (to the extent such expenditure is in
the form of cash or other property other than Qualified Capital Stock) pursuant
to clauses (1), (2) and (3) of this paragraph shall be included in such
calculation, provided that such expenditures pursuant to clause (3) shall not be
included to the extent of cash proceeds received by the Company from any "key
man" life insurance policies and (b) amounts expended pursuant to clauses 2 (i),
(4), (5), (6), (7) and (8) shall be excluded from such calculation.
The Indenture will not permit the payment of dividends in respect of the
Non-Voting Preferred Stock unless the Company exercises its optional right to
redeem the Non-Voting Preferred Stock; provided that the payment of such
dividends will only be permitted if such payment is in compliance with the other
provisions of the "Limitation on Restricted Payments" covenant.
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of any such Indebtedness, the Company or any Subsidiary Guarantor may
incur Indebtedness if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage
Ratio of the Company is greater than 2.0 to 1.0.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable
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transaction at such time on an arm's-length basis from a Person that is not an
Affiliate; provided, however, that for a transaction or series of related
transactions with an aggregate value of $2 million or more, at the Company's
option (i) such determination shall be made in good faith by a majority of the
disinterested members of the Board of the Directors of the Company or (ii) the
Board of Directors of the Company or any such Restricted Subsidiary party to
such Affiliate Transaction shall have received a favorable opinion from a
nationally recognized investment banking firm that such Affiliate Transaction is
on terms not materially less favorable than those that might reasonably have
been obtained in a comparable transaction at such time on an arm's-length basis
from a Person that is not an Affiliate; provided, further, that for a
transaction or series of related transactions with an aggregate value of $5
million or more, the Board of Directors of the Company shall have received a
favorable opinion from a nationally recognized investment banking firm that such
Affiliate Transaction is on terms not materially less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate.
(b) The foregoing restrictions shall not apply to (i) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors or senior
management; (ii) transactions exclusively between or among the Company and any
of its Wholly Owned Restricted Subsidiaries or exclusively between or among such
Wholly Owned Restricted Subsidiaries, provided such transactions are not
otherwise prohibited by the Indenture; (iii) transactions effected as part of a
Qualified Receivables Transaction; (iv) any agreement as in effect as of the
Issue Date or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) in any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; (v) Restricted Payments permitted by
the Indenture; and (vi) payments made by the Company to, and agreements entered
into by the Company with, Affiliates in connection with the Vistar Merger.
Limitation on Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens
of any kind against or upon any of its property or assets, or any proceeds
therefrom, unless (i) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the Notes, the Notes are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date and any
extensions, renewals or replacements thereof; (B) Liens securing Senior
Indebtedness and Guarantor Senior Indebtedness; (C) Liens securing the Notes and
the Guarantees; (D) Liens of the Company or a Wholly Owned Restricted Subsidiary
on assets of any Subsidiary of the Company; (E) Liens securing Indebtedness
which is incurred to refinance Indebtedness which has been secured by a Lien
permitted under the Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens do not extend to
or cover any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced; and (F) Permitted
Liens.
Prohibition on Incurrence of Senior Subordinated Debt. Neither the Company
nor any Subsidiary Guarantor will incur or suffer to exist Indebtedness that is
senior in right of payment to the Notes or such Subsidiary Guarantor's Guarantee
and subordinate in right of payment to any other Indebtedness of the Company or
such Subsidiary Guarantor, as the case may be.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on or
in respect of its Capital Stock; (b) make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other Restricted
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Restricted Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable law;
(2) the Indenture; (3) non-assignment
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provisions of any contract or any lease entered into in the ordinary course of
business; (4) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to the Company or any Restricted Subsidiary of
the Company, or the properties or assets of any such Person, other than the
Person or the properties or assets of the Person so acquired; (5) agreements
existing on the Issue Date (including, without limitation, the Bank Credit
Agreement and the Recapitalization Agreement); (6) restrictions on the transfer
of assets subject to any Lien permitted under the Indenture imposed by the
holder of such Lien; (7) restrictions imposed by any agreement to sell assets
permitted under the Indenture to any Person pending the closing of such sale;
(8) any agreement or instrument governing Capital Stock of any Person that is
acquired after the Issue Date; (9) Indebtedness or other contractual
requirements of a Receivables Entity in connection with a Qualified Receivables
Transaction; provided that such restrictions apply only to such Receivables
Entity; or (10) an agreement effecting a refinancing, replacement or
substitution of Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clause (2), (4) or (5) above; provided, however, that
the provisions relating to such encumbrance or restriction contained in any such
refinancing, replacement or substitution agreement are no less favorable to the
Company or the Holders in any material respect as determined by the Board of
Directors of the Company than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause (2), (4) or (5).
Limitation on Preferred Stock of Subsidiaries. The Company will not permit
any of its Restricted Subsidiaries to issue any Preferred Stock (other than to
the Company or to a Wholly Owned Restricted Subsidiary of the Company) or permit
any Person (other than the Company or a Wholly Owned Restricted Subsidiary of
the Company) to own any Preferred Stock of any Restricted Subsidiary of the
Company.
Merger, Consolidation and Sale of Assets. The Company will not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another Person or Persons
unless (i) either (A) the Company shall be the survivor of such merger or
consolidation or (B) the surviving Person is a corporation existing under the
laws of the United States, any state thereof or the District of Columbia and
such surviving Person shall expressly assume all the obligations of the Company
under the Notes and the Indenture; (ii) immediately after giving effect to such
transaction (on a pro forma basis, including any Indebtedness incurred or
anticipated to be incurred in connection with such transaction and including
adjustments that are (i) directly attributable to such transaction and (ii)
factually supportable), the Company or the surviving Person is able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant; (iii) immediately before and immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be incurred
in connection with the Transactions), no Default or Event of Default shall have
occurred and be continuing; (iv) each Subsidiary Guarantor, unless it is the
other party to the Transactions, shall have by supplemental indenture confirmed
that after consummation of such transaction its Guarantee shall apply, as such
Guarantee applied on the date it was granted under the Indenture to the
obligations of the Company under the Indenture and the Notes, to the obligations
of the Company or such Person, as the case may be, under the Indenture and the
Notes; and (v) the Company has delivered to the Trustee an officers' certificate
and opinion of counsel, each stating that such consolidation, merger or transfer
complies with the Indenture, that the surviving Person agrees to be bound
thereby, and that all conditions precedent in the Indenture relating to such
transaction have been satisfied. For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company. Notwithstanding the foregoing clauses (ii) and (iii) of the
preceding sentence, (a) any Restricted Subsidiary of the Company may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company and (b) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction.
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The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, the surviving entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture and the Notes with the same effect as if such surviving entity had
been named as such; provided that solely for purposes of computing amounts
described in clause (iii) of the first paragraph of the covenant "Limitation on
Restricted Payments" above, any such surviving entity to the Company shall only
be deemed to have succeeded to and be substituted for the Company with respect
to periods subsequent to the effective time of such merger, consolidation,
combination or transfer of assets.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of its Guarantee and
the Indenture in connection with any transaction complying with the provisions
of "-- Limitation on Asset Sales" or as otherwise provided in the Indenture)
will not, and the Company will not cause or permit any Subsidiary Guarantor to,
consolidate with or merge with or into any Person other than the Company or any
other Subsidiary Guarantor unless: (i) the entity formed by or surviving any
such consolidation or merger (if other than the Subsidiary Guarantor) or to
which such sale, lease, conveyance or other disposition shall have been made is
a corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia; (ii) such entity assumes by
supplemental indenture all of the obligations of the Subsidiary Guarantor on the
Guarantee; (iii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and (iv) immediately
after giving effect to such transaction and the use of any net proceeds
therefrom, on a pro forma basis, including adjustments that are (i) directly
attributable to such transaction and (ii) factually supportable, the Company
could satisfy the provisions of clause (ii) of the first paragraph of this
covenant.
Limitation on Asset Sales. The Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 75% of the consideration
received by the Company or such Restricted Subsidiary, as the case may be, from
such Asset Sale shall be cash or Cash Equivalents and is received at the time of
such disposition; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or such Restricted
Subsidiary's Guarantee, if any) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are immediately converted
by the Company or any such Restricted Subsidiary into cash or Cash Equivalents
(to the extent of the cash or Cash Equivalents received) shall be deemed to be
cash for purposes of this provision; and (iii) upon the consummation of an Asset
Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof
either (A) to prepay any Senior Indebtedness or Guarantor Senior Indebtedness
and, in the case of any Senior Indebtedness under any revolving credit facility,
effect a permanent reduction in the availability under such revolving credit
facility, (B) to reinvest in Productive Assets, or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Directors of the Company or of such Restricted Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the immediately preceding
sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of
Net Cash Proceeds which have not been applied on or before such Net Proceeds
Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of
the immediately preceding sentence (each a "Net Proceeds Offer Amount") shall be
applied by the Company or such Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment
Date") not less than 30 nor more than 45 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a pro rata basis that amount of
Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and unpaid interest
thereon,
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if any, to the date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any Restricted Subsidiary of
the Company, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$5 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating
to such initial Net Proceeds Offer Amount from all Asset Sales by the Company
and its Restricted Subsidiaries aggregates at least $5 million, at which time
the Company or such Restricted Subsidiary shall apply all Net Cash Proceeds
constituting all Net Proceeds Offer Amounts that have been so deferred to make a
Net Proceeds Offer (the first date the aggregate of all such deferred Net
Proceeds Offer Amounts is equal to $5 million or more shall be deemed to be a
"Net Proceeds Offer Trigger Date").
Notwithstanding the two immediately preceding paragraphs, the Company and
its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Productive Assets and (ii) such
Asset Sale is for at least fair market value (as determined in good faith by the
Company's Board of Directors); provided that any consideration not constituting
Productive Assets received by the Company or any of its Restricted Subsidiaries
in connection with any Asset Sale permitted to be consummated under this
paragraph shall constitute Net Cash Proceeds and shall be subject to the
provisions of the two preceding paragraphs; provided, that at the time of
entering into such transaction or immediately after giving effect thereto, no
Default or Event of Default shall have occurred or be continuing or would occur
as a consequence thereof.
Each Net Proceeds Offer will be mailed to the record Holders as shown on
the register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Notes in whole or in part in integral multiples of $1,000
in exchange for cash. To the extent Holders properly tender Notes in an amount
exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be
purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer
shall remain open for a period of 20 business days or such longer period as may
be required by law. To the extent that the aggregate amount of Notes tendered
pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the
Company may use any remaining Net Proceeds Offer Amount for general corporate
purposes.
Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer
Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Future Guarantees. The Company will not permit any of its Restricted
Subsidiaries, directly or indirectly, to incur, guarantee or secure through the
granting of Liens the payment of the Bank Indebtedness or any refunding or
refinancing thereof, in each case unless such Restricted Subsidiary, the Company
and the Trustee execute and deliver a supplemental indenture evidencing such
Restricted Subsidiary's Guarantee, such Guarantee to be a senior subordinated
unsecured obligation of such Restricted Subsidiary. Neither the Company nor any
such Subsidiary Guarantor shall be required to make a notation on the Notes or
the Guarantees to reflect any such subsequent Guarantee. Nothing in this
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covenant shall be construed to permit any Restricted Subsidiary of the Company
to incur Indebtedness otherwise prohibited by the "Limitation on Incurrence of
Additional Indebtedness" covenant. Thereafter, such Restricted Subsidiary shall
be a Subsidiary Guarantor for all purposes of the Indenture.
Conduct of Business. The Company and its Restricted Subsidiaries will not
engage in any businesses which are not the same, similar, related or ancillary
to the businesses in which the Company and its Restricted Subsidiaries are
engaged on the Issue Date.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due and
payable and the default continues for a period of 30 days (whether or not such
payment shall be prohibited by the subordination provisions of the Indenture);
(ii) the failure to pay the principal on any Notes, when such principal becomes
due and payable, at maturity, upon redemption or otherwise (including the
failure to make a payment to purchase Notes tendered pursuant to a Change of
Control Offer or a Net Proceeds Offer) (whether or not such payment shall be
prohibited by the subordination provisions of the Indenture); (iii) a default in
the observance or performance of any other covenant or agreement contained in
the Indenture which default continues for a period of 30 days after the Company
receives written notice specifying the default (and demanding that such default
be remedied) from the Trustee or the Holders of at least 25% of the outstanding
principal amount of the Notes; (iv) the failure to pay at final maturity (giving
effect to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary (other
than a Receivables Entity) of the Company, or the acceleration of the final
stated maturity of any such Indebtedness if the aggregate principal amount of
such Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final maturity or which
has been accelerated, aggregates $10 million or more at any time; (v) one or
more judgments in an aggregate amount in excess of $10 million shall have been
rendered against the Company or any of its Significant Subsidiaries and such
judgments remain undischarged, unpaid or unstayed for a period of 60 days after
such judgment or judgments become final and non-appealable, and in the event
such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment which is not promptly stayed; (vi)
certain events of bankruptcy affecting the Company or any of its Significant
Subsidiaries; and (vii) any of the Guarantees of the Subsidiary Guarantors that
are also Significant Subsidiaries of the Company ceases to be in full force and
effect or any of such Guarantees is declared to be null and void and
unenforceable or any of such Guarantees is found to be invalid or any of such
Subsidiary Guarantors denies its liability under its Guarantee (other than by
reason of release of such Subsidiary Guarantor in accordance with the terms of
the Indenture).
Upon the happening of any Event of Default specified in the Indenture, the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the principal of and accrued interest on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration", and the
same shall become immediately due and payable. If an Event of Default with
respect to bankruptcy proceedings of the Company occurs and is continuing, then
such 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 of Notes.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in principal amount of the Notes may rescind and
cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type
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described in clause (vi) or (vii) of the description above of Events of Default,
the Trustee shall have received an officers' certificate and an opinion of
counsel that such Event of Default has been cured or waived. The holders of a
majority in principal amount of the Notes may waive any existing Default or
Event of Default under the Indenture, and its consequences, except a default in
the payment of the principal of or interest on any Notes.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
shall 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 Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Subsidiary Guarantors discharged with
respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, except for (i) the rights of
holders of the Notes to receive payments in respect of the principal of,
premium, if any, and interest on the Notes when such payments are due, (ii) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes cash in U.S. dollars, non-callable U.S. government
obligations, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the Notes on the
stated date for payment thereof or on the applicable redemption date, as the
case may be; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the holders of the Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
with respect to the Indenture resulting from the incurrence of Indebtedness, all
or a portion of which will be used to decrease the Notes
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concurrently with such incurrence); (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under the Indenture or any other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee
an officers' certificate stating that the deposit was not made by the Company
with the intent of preferring the holders of the Notes over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; (vii) the Company shall
have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent provided for or relating to
the Legal Defeasance or the Covenant Defeasance have been complied with; (viii)
the Company shall have delivered to the Trustee an opinion of counsel to the
effect that (A) the trust funds will not be subject to any rights of holders of
Indebtedness of the Company other than the Notes and (B) assuming no intervening
bankruptcy of the Company between the date of deposit and the 91st day following
the deposit and that no Holder of the Notes is an insider of the Company, after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; and (ix) certain other customary
conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has delivered to the Trustee an officers' certificate and
an opinion of counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Subsidiary Guarantors and the Trustee,
without the consent of the Holders of the Notes, may amend the Indenture for
certain specified purposes, including curing ambiguities, defects or
inconsistencies, so long as such change does not, in the opinion of the Trustee,
adversely affect the rights of any of the Holders in any material respect. In
formulating its opinion on such matters, the Trustee will be entitled to rely on
such evidence as it deems appropriate, including, without limitation, solely on
an opinion of counsel. Other modifications and amendments of the Indenture may
be made with the consent of the Holders of a majority in principal amount of the
then outstanding Notes issued under the Indenture, except that, without the
consent of each holder of the Notes affected thereby, no amendment may: (i)
reduce the amount of Notes whose holders must consent to an amendment; (ii)
reduce the rate of or change or have the effect of changing the time for payment
of interest, including defaulted interest, on any Notes; (iii) reduce the
principal of or change or have the effect of changing the fixed maturity of any
Notes, or change the date on which any Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor; (iv) make any
Notes payable in money other than that stated in the Notes; (v) make any change
in provisions of the Indenture protecting the right of each holder of a Note to
receive payment of principal of and interest on such Note on or after the due
date thereof or to bring suit to enforce such payment, or permitting holders of
a majority in principal amount of the Notes to waive Defaults or Events of
Default (other than Defaults
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or Events of Default with respect to the payment of principal of or interest on
the Notes); (vi) amend, change or modify in any material respect the obligation
of the Company to make and consummate a Change of Control Offer in the event of
a Change of Control Triggering Event or make and consummate a Net Proceeds Offer
with respect to any Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto; (vii) modify the subordination
provisions (including the related definitions) of the Indenture to adversely
affect the holders of Notes in any material respect; or (viii) release any
Subsidiary Guarantor that is a Significant Subsidiary of the Company from any of
its obligations under its Guarantee or the Indenture otherwise than in
accordance with the terms of the Indenture.
ADDITIONAL INFORMATION
The Indenture provides that the Company will deliver to the Trustee within
15 days after the filing of the same with the Commission, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company and
the Subsidiary Guarantors will also comply with the other provisions of Trust
Indenture Act, sec.314(a).
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the definition of other terms
used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness (i) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or (ii) assumed in connection with the acquisition of assets from
such Person, in each case whether or not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition. Acquired Indebtedness shall be
deemed to have been incurred, with respect to clause (i) of the preceding
sentence, on the date such Person becomes a Restricted Subsidiary of the Company
and, with respect to clause (ii) of the preceding sentence, on the date of
consummation of such acquisition of assets.
"Affiliate" means a Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Company. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, no Person (other than the Company or
any Subsidiary of the Company) in whom a Receivables Entity makes an Investment
in connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.
"all or substantially all" shall have the meaning given such phrase in the
Revised Model Business Corporation Act.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person which
constitute all or substantially all of the assets of such Person, any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
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"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or
(b) any other property or assets of the Company or any Restricted Subsidiary of
the Company other than in the ordinary course of business; provided, however,
that Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $1 million, (ii) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted under "Merger, Consolidation and Sale of
Assets," (iii) the sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof, (iv) the factoring of accounts
receivable arising in the ordinary course of business pursuant to arrangements
customary in the industry, (v) the licensing of intellectual property, (vi)
disposals or replacements of obsolete equipment in the ordinary course of
business, (vii) the sale, lease, conveyance, disposition or other transfer by
the Company or any Restricted Subsidiary of assets or property to one or more
Wholly Owned Restricted Subsidiaries in connection with Investments permitted
under the "Limitations on Restricted Payments" covenant, (viii) sales of
accounts receivable and related assets of the type specified in the definition
of "Qualified Receivables Transaction" to a Receivables Entity for the fair
market value thereof, including cash in an amount at least equal to 75% of the
book value thereof as determined in accordance with GAAP, and (ix) transfers of
accounts receivable and related assets of the type specified in the definition
of "Qualified Receivables Transaction" (or a fractional undivided interest
therein) by a Receivables Entity in a Qualified Receivables Transaction. For the
purposes of clause (viii), Purchase Money Notes shall be deemed to be cash.
"Bank Credit Agreement" means the Credit Agreement to be dated as of the
Issue Date, among the Company, the other borrowers thereto from time to time, if
any, the lenders party thereto from time to time and The Chase Manhattan Bank,
as agent, together with the related documents thereto (including, without
limitation, any guarantee agreements, promissory notes and collateral
documents), in each case as such agreements may be amended, supplemented or
otherwise modified from time to time, or refunded, refinanced, restructured,
replaced, renewed, repaid or extended from time to time (whether with the
original agents and lenders or other agents and lenders or otherwise, and
whether provided under the original Bank Credit Agreement or other credit
agreements or otherwise).
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable under or in respect of the Bank
Credit Agreement and any related notes, collateral documents, letters of credit
and guarantees, including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Restricted Subsidiary of the
Company whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
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 or other equivalents (however
designated) of corporate stock, including each class of common stock and
preferred stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
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"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances (or, with respect to foreign
banks, similar instruments) maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200 million; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons (other than the Principal or
its Related Parties) for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of the Indenture); (ii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture); (iii) any Person or Group
(other than the Principal or its Related Parties) shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company or (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Change of Control Triggering Event" means the occurrence of a Change of
Control and the failure of the Notes to have a Minimum Rating on the 30th day
after the occurrence of such Change of Control.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period, (B) Consolidated Interest Expense and (C) Consolidated
Non-cash Charges.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence of any
Indebtedness of such Person or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof) occurring during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Indebtedness and also
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including any Consolidated EBITDA (including any pro forma expense and cost
reductions that are (i) directly attributable to such transaction and (ii)
factually supportable) attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during
the Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period, (iii) with respect to any such Four Quarter Period
commencing prior to the Recapitalization, the Recapitalization (including any
pro forma expense and cost reductions related thereto that are (i) directly
attributable to such transaction and (ii) factually supportable) shall be deemed
to have taken place on the first day of such Four Quarter Period and (iv) any
asset sales or asset acquisitions (including any Consolidated EBITDA (including
any pro forma expense and cost reductions that are (i) directly attributable to
such transaction and (ii) factually supportable) attributable to the assets
which are the subject of the asset acquisition or asset sale during the Four
Quarter Period) that have been made by any Person that has become a Restricted
Subsidiary of the Company or has been merged with or into the Company or any
Restricted Subsidiary of the Company during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date that would have constituted Asset Sales or Asset
Acquisitions had such transactions occurred when such Person was a Restricted
Subsidiary of the Company or subsequent to such Person's merger into the
Company, as if such asset sale or asset acquisition (including the incurrence,
assumption or liability for any Indebtedness or Acquired Indebtedness in
connection therewith) occurred on the first day of the Four Quarter Period;
provided that to the extent that clause (ii) or (iv) of this sentence requires
that pro forma effect be given to an asset sale or asset acquisition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed for which financial information is
available. If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write-off of debt issuance costs in connection with
the Transactions) plus (ii) the product of (x) the amount of all dividend
payments on any series of Preferred Stock of such Person (other than dividends
paid in Qualified Capital Stock) times (y) a fraction, the numerator of which is
one and the denominator of which is one minus the then current effective
consolidated Federal, state and local tax rate of such Person expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication, (i) the aggregate of all cash and
non-cash interest expense with respect to all outstanding Indebtedness of such
Person and its Restricted Subsidiaries, including the net costs associated with
Interest Swap Obligations, for such period determined on a consolidated basis in
conformity with GAAP, and (ii) the interest component of Capitalized Lease
Obligations paid, accrued
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and/or scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of the Company means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (a) gains and losses from Asset
Sales (without regard to the $1 million limitation set forth in the definition
thereof) or abandonments or reserves relating thereto and the related tax
effects according to GAAP and an increase in the valuation allowance relating to
deferred tax assets recorded in the fourth quarter of 1996 attributable to the
Transactions, (b) gains and losses due solely to fluctuations in currency values
and the related tax effects according to GAAP, (c) items classified as
extraordinary, unusual or nonrecurring gains and losses, and the related tax
effects according to GAAP, (d) the net income (or loss) of any Person acquired
in a pooling of interests transaction accrued prior to the date it becomes a
Restricted Subsidiary of the Company or is merged or consolidated with the
Company or any Restricted Subsidiary of the Company, (e) the net income of any
Restricted Subsidiary of the Company to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is restricted by contract, operation of law or otherwise, (f) only for purposes
of clause (iii) (w) of the first paragraph of the "Limitation on Restricted
Payments" covenant, any amounts included pursuant to clause (iii) (z) of the
first paragraph of such covenant, (g) the net loss of any Person other than a
Restricted Subsidiary of the Company, (h) the net income of any Person, other
than a Restricted Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or a Restricted Subsidiary of the Company by
such Person unless, in the case of a Restricted Subsidiary of the Company who
receives such dividends or distributions, such Restricted Subsidiary is subject
to clause (e) above, (i) one time non-cash compensation charges, including any
arising from existing stock options resulting from any merger or
recapitalization transaction, (j) bonus payments to be paid to senior management
of the Company in connection with the Transactions in an aggregate amount
(together with the bonus payments made under clause (k)) not to exceed $7.0
million and (k) bonus payments to be paid to senior management following the
Closing (but no later than February 28, 1997) in an aggregate amount not to
exceed $400,000 and, together with the amounts paid under clause (j) not to
exceed $7.0 million in the aggregate.
"Consolidated Non-cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges which
require an accrual of or a reserve for cash charges for any future period).
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date, (ii) was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Principal or its Affiliates or was
nominated by the Principal or its Affiliates or any designees of the Principals
or their Affiliates on the Board of Directors.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof, are committed to lend up to, at least $25
million and is specifically designated by the Company in the instrument
evidencing or governing such
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Senior Indebtedness or another writing as "Designated Senior Indebtedness" for
purposes of the Indenture.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control Triggering Event), matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except, in
each case, upon the occurrence of a Change of Control Triggering Event) on or
prior to the final maturity date of the Notes.
"Distribution" means a dividend of up to $67.2 million on the Company's
outstanding Class A Common Stock, a dividend of approximately $4.7 million
representing accrued and unpaid dividends on the Company's 8% Cumulative
Preferred Stock and a redemption of the Company's 8% Cumulative Preferred Stock
for an amount equal to approximately $58.2 million, in each case to be paid no
more than five business days prior to the Vistar Merger.
"fair market value" means, unless otherwise specified, with respect to any
asset or property, the price which could be negotiated in an arm's-length, free
market transaction, for cash, between a willing seller and a willing and able
buyer, neither of whom is under undue pressure or compulsion to complete the
Transactions. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and shall be evidenced by a
resolution of the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date, including, without limitation, those
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.
"Guarantor Senior Indebtedness" means, with respect to any Subsidiary
Guarantor, (i) any Indebtedness of such Subsidiary Guarantor under the Bank
Credit Agreement or in respect of Bank Indebtedness and (ii) all Indebtedness of
such Subsidiary Guarantor, including in the case of both (i) and (ii) interest
thereon (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to such Subsidiary Guarantor whether
or not a claim for post-filing interest is allowed in such proceedings), whether
outstanding on the Issue Date or thereafter incurred, 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 not superior in right of payment
to the Guarantee of such Subsidiary Guarantor; provided, however, that Guarantor
Senior Indebtedness shall not include (1) any obligation of such Subsidiary
Guarantor to a Subsidiary of such Subsidiary Guarantor or to any Subsidiary of
the Company, (2) any liability for Federal, state, local or other taxes owed or
owing by such Subsidiary Guarantor, (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 of such Subsidiary Guarantor which is expressly subordinate in
right of payment to any other Indebtedness of such Subsidiary Guarantor, (5) any
obligations with respect to any Capital Stock or (6) that portion of any
indebtedness incurred in violation of the "Limitation on Incurrence of
Additional Indebtedness" covenant (but, as to any such obligation, no such
violation shall be deemed to exist for purposes of this clause (6) if the
holder(s) of such obligation or their representative and the Trustee shall have
received an Officers' Certificate of such Subsidiary Guarantor to the effect
that the incurrence of such Indebtedness does not (or, in the case of revolving
credit Indebtedness, that the incurrence of the entire committed amount thereof
at the date on which the initial borrowing thereunder is made would not) violate
such provisions of the Indenture).
"Indebtedness" means with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all obligations of
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such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business), (v) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below, (vii) all
obligations of any other Person of the type referred to in clauses (i) through
(vi) which are secured by any lien on any property or asset of such Person but
which obligations are not assumed by such Person, the amount of such obligation
being deemed to be the lesser of the fair market value of such property or asset
or the amount of the obligation so secured, (viii) all obligations under
currency swap agreements and interest swap agreements of such Person and (ix)
all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, (x) the "maximum fixed repurchase price" of any Disqualified Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital Stock
and (y) any transfer of accounts receivable or other assets which constitute a
sale for purposes of GAAP shall not constitute Indebtedness hereunder.
"Interest Swap Obligations" means the obligations of any Person, pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of the "Limitation on
Restricted Payments" covenant, (i) "Investment" shall include and be valued at
the fair market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary and (ii) the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments by
the Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
(including tax sharing payments) in connection with such Investment or any other
amounts received in respect of such Investment; provided that no such payment of
dividends or distributions or receipt of any such other amounts shall reduce the
amount of any Investment if such payment of dividends or distributions or
receipt of any such amounts would be included in Consolidated Net Income. If the
Company or any Restricted Subsidiary of the Company sells or otherwise disposes
of any Common Stock of any direct or indirect Restricted Subsidiary of the
Company such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, 100% (or 80% in the case of
clause (ix) of the definition of "Permitted Investments") of the outstanding
Common Stock of such Restricted Subsidiary, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
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"Issue Date" means the date of original issuance of the Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Minimum Rating" means either (i) a rating of at least BBB- (or equivalent
successor rating) by S&P and (ii) a rating of at least Baa3 (or equivalent
successor rating) by Moody's.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Subsidiaries from such Asset Sale net of (a) out-of-
pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Senior Indebtedness that is required
to be repaid in connection with such Asset Sale, (d) any portion of cash
proceeds which the Company determines in good faith should be reserved for
post-closing adjustments, it being understood and agreed that on the day that
all such post-closing adjustments have been determined, the amount (if any) by
which the reserved amount in respect of such Asset Sale exceeds the actual
post-closing adjustments payable by the Company or any of its Subsidiaries shall
constitute Net Cash Proceeds on such date; provided that, in the case of the
sale by the Company of an asset constituting an Investment (other than a
Permitted Investment), the "Net Cash Proceeds" in respect of such Asset Sale
shall not include the lesser of (x) the cash received with respect to such Asset
Sale and (y) the initial amount of such Investment, less, in the case of clause
(y), all amounts (up to an amount not to exceed the initial amount of such
Investment) received by the Company with respect to such Investment, whether by
dividend, sale, liquidation or repayment, in each case prior to the date of such
Asset Sale.
"Non-Voting Preferred Stock" means the Company's 8% Non-Voting Preferred
Stock, $0.01 par value per share, to be issued by the Company as partial merger
consideration in the Vistar Merger.
"Permitted Indebtedness" means, without duplication, (i) the Notes and the
Guarantees, (ii) Indebtedness incurred pursuant to the Bank Credit Agreement in
an aggregate principal amount at any time outstanding not to exceed $450 million
(A) less the aggregate amount of Indebtedness of a Receivables Entity in a
Qualified Receivables Transaction, (B) less the amount of all mandatory
principal payments actually made by the Company in respect of term loans
thereunder (excluding (1) any such payments to the extent refinanced at the time
of payment under a replaced Bank Credit Agreement and (2) any such payments
relating to the Sale of Excluded Assets in an aggregate amount not to exceed $30
million) and (C) in the case of a revolving facility, reduced by any required
permanent repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder, (iii) other Indebtedness of the Company and
its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount
of any scheduled amortization payments or mandatory prepayments when actually
paid or permanent reductions thereon, (iv) Interest Swap Obligations of the
Company or any of its Restricted Subsidiaries covering Indebtedness of the
Company or any of its Restricted Subsidiaries; provided that any Indebtedness to
which any such Interest Swap Obligations correspond is otherwise permitted to be
incurred under the Indenture; provided, further, that such Interest Swap
Obligations are entered into, in the judgment of the Company, to protect the
Company and its Restricted Subsidiaries from fluctuation in interest rates on
their respective outstanding Indebtedness, (v) Indebtedness under Currency
Agreements, (vi) intercompany Indebtedness owed by the Company to any Wholly
Owned Restricted Subsidiary of the Company or by any Restricted Subsidiary of
the Company to the Company or any Wholly Owned Restricted Subsidiary of the
Company, (vii) Acquired Indebtedness of the Company or any Restricted Subsidiary
of the Company to the extent the Company could have incurred such Indebtedness
in accordance with the "Limitation on Incurrence of Additional Indebtedness"
covenant on
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the date such Indebtedness became Acquired Indebtedness; provided that, in the
case of Acquired Indebtedness of a Restricted Subsidiary of the Company, such
Acquired Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary of the Company,
(viii) guarantees by the Company and its Wholly Owned Restricted Subsidiaries of
each other's Indebtedness; provided that such Indebtedness is permitted to be
incurred under the Indenture, including, with respect to guarantees by Wholly
Owned Restricted Subsidiaries of the Company, the covenant entitled "Future
Guarantees," (ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or other similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business; provided that such Indebtedness is extinguished within five business
days of its incurrence, (x) any refinancing, modification, replacement, renewal,
restatement, refunding, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness, including any
additional Indebtedness incurred to pay interest or premiums required by the
instruments governing such existing or future Indebtedness as in effect at the
time of issuance thereof ("Required Premiums") and fees in connection therewith;
provided that any such event shall not (1) result in an increase in the
aggregate principal amount of Permitted Indebtedness (except to the extent such
increase is a result of a simultaneous incurrence of additional Indebtedness (A)
to pay Required Premiums and related fees or (B) otherwise permitted to be
incurred under the Indenture) of the Company and its Restricted Subsidiaries and
(2) create Indebtedness with a Weighted Average Life to Maturity at the time
such Indebtedness is incurred that is less than the Weighted Average Life to
Maturity at such time of the Indebtedness being refinanced, modified, replaced,
renewed, restated, refunded, deferred, extended, substituted, supplemented,
reissued or resold (except that this subclause (2) will not apply in the event
the Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or resold was
originally incurred in reliance upon clause (vi) or (xvi) of this definition);
provided that no Restricted Subsidiary of the Company that is not a Subsidiary
Guarantor may refinance any Indebtedness pursuant to this clause (x) other than
its own Indebtedness, (xi) Indebtedness (including Capitalized Lease
Obligations) incurred by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount outstanding not
to exceed $5 million at the time of any incurrence thereof (which amount may,
but need not, be incurred in whole or in part under the Bank Credit Agreement),
(xii) the incurrence by a Receivables Entity of Indebtedness in a Qualified
Receivables Transaction that is not recourse to the Company or any Subsidiary of
the Company (except for Standard Securitization Undertakings), (xiii)
Indebtedness incurred by the Company or any of its Restricted Subsidiaries
constituting reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, including, without limitation, letters of
credit in respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations regarding workers'
compensation claims, (xiv) Indebtedness arising from agreements of the Company
or a Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Restricted Subsidiary of the Company, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition, provided that the maximum assumable liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds actually received
by the Company and its Restricted Subsidiaries in connection with such
disposition, (xv) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary of
the Company in the ordinary course of business, (xvi) Indebtedness of Vistar
constituting Capitalized Lease Obligations in an aggregate principal amount not
to exceed $2.0 million and other Indebtedness of Vistar constituting unsecured
Indebtedness in an aggregate principal amount not to exceed $8.0 million, in
each case which is assumed by the Company upon consummation of the Vistar
Merger, and (xvii) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $10 million at any
one time outstanding (which amount may, but need not, be incurred in whole or in
part under the Bank Credit Agreement).
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"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Wholly Owned Restricted Subsidiary
of the Company (whether existing on the Issue Date or created thereafter) and
Investments in the Company by any Restricted Subsidiary of the Company; provided
that, in the case of an Investment by the Company or any Restricted Subsidiary
of the Company in any Wholly Owned Restricted Subsidiary of the Company, such
Wholly Owned Restricted Subsidiary is not restricted from making dividends or
similar distributions by contract, operation of law or otherwise; (ii) cash and
Cash Equivalents; (iii) Investments existing on the Issue Date and Investments
made on the Issue Date pursuant to the Recapitalization Agreement; (iv) loans
and advances to employees and officers of the Company and its Restricted
Subsidiaries not in excess of $1 million at any one time outstanding; (v)
accounts receivable created or acquired in the ordinary course of business; (vi)
Currency Agreements and Interest Swap Obligations entered into in the ordinary
course of the Company's or its Restricted Subsidiaries' businesses and otherwise
in compliance with the Indenture; (vii) 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; (viii) guarantees by the Company or any of its Restricted
Subsidiaries of Indebtedness otherwise permitted to be incurred by the Company
or any of its Restricted Subsidiaries under the Indenture; (ix) Investments by
the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (A) such Person becomes a Wholly-Owned Restricted
Subsidiary of the Company or (B) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company; (x) additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (x) that are at the time outstanding, not exceeding $2 million at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value), plus an amount equal to (A) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Subsidiary of the Company)
from the issuance and sale subsequent to the Issue Date of Qualified Capital
Stock of the Company (including Qualified Capital Stock issued upon the
conversion of convertible Indebtedness or in exchange for outstanding
Indebtedness or as capital contributions to the Company (other than from a
Subsidiary)) and (B) without duplication of any amounts included in clause
(x)(A) above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock, that in
the case of amounts described in clause (x)(A) or (x)(B) are applied by the
Company within 180 days after receipt, to make additional Permitted Investments
under this clause (x) (such additional Permitted Investments being referred to
collectively as "Stock Permitted Investments"); (xi) any Investment by the
Company or a Wholly Owned Subsidiary of the Company in a Receivables Entity or
any Investment by a Receivables Entity in any other Person in connection with a
Qualified Receivables Transaction; provided that any Investment in a Receivables
Entity is in the form of a Purchase Money Note or an equity interest; (xii)
Investments received by the Company or its Restricted Subsidiaries as
consideration for asset sales, including Asset Sales; provided in the case of an
Asset Sale, such Asset Sale is effected in compliance with the "Limitation on
Asset Sales" covenant. Any net cash proceeds that are used by the Company or any
of its Restricted Subsidiaries to make Stock Permitted Investments pursuant to
clause (x) of this definition shall not be included in subclauses(x) and (y) of
clause (iii) of the first paragraph of the covenant described under the caption
"Certain Covenants -- Limitation on Restricted Payments."
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business
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for sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary of the Company acquired in the
ordinary course of business; provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or
any Restricted Subsidiary of the Company other than the property and assets
so acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment, or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements;
(xiii) Liens securing Acquired Indebtedness incurred in reliance on
clause (vii) of the definition of Permitted Indebtedness; provided that
such Liens do not extend to or cover any property or assets of the Company
or of any of its Restricted Subsidiaries other than the property or assets
that secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary of
the Company;
(xiv) Liens on assets transferred to a Receivables Entity or on assets
of a Receivables Entity, in either case incurred in connection with a
Qualified Receivables Transaction;
(xv) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and its
Restricted Subsidiaries;
(xvi) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(xvii) Liens on property of a Person existing at the time such Person
is acquired by, or such Person is merged into or consolidated or
amalgamated with, the Company or any Restricted Subsidiary of the Company;
provided that such Liens were not created in contemplation of such
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acquisition, merger, consolidation or amalgamation and do not extend to any
assets other than those of the Person acquired by, or merged into or
consolidated or amalgamated with, the Company or any Restricted Subsidiary
of the Company.
(xviii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods; and
(xix) Liens existing on the Issue Date, together with any Liens
securing Indebtedness incurred in reliance on clause (x) of the definition
of Permitted Indebtedness in order to refinance the Indebtedness secured by
Liens existing on the Issue Date; provided that the Liens securing the
refinancing Indebtedness shall not extend to property other than that
pledged under the Liens securing the Indebtedness being refinanced.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Principal" means Thomas H. Lee Company.
"Productive Assets" means assets (including Capital Stock) of a kind used
or usable in the businesses of the Company and its Restricted Subsidiaries as,
or related to such business, conducted on the date of the relevant Asset Sale.
"Purchase Money Note" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from the Company or any
Subsidiary of the Company in connection with a Qualified Receivables Transaction
to a Receivables Entity, which note shall be repaid from cash available to the
Receivables Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts owing to such
investors and amounts paid in connection with the purchase of newly generated
receivables.
"Qualified Capital Stock" means any stock that is not Disqualified Capital
Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any or its Subsidiaries may sell, convey or
otherwise transfer to (a) a Receivables Entity (in the case of a transfer by the
Company or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Receivables Entity), or may grant a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Entity" means a Wholly Owned Subsidiary of the Company (or
another Person in which the Company or any Subsidiary of the Company makes an
Investment and to which the Company or any Subsidiary of the Company transfers
accounts receivable and related assets) which engages in no activities other
than in connection with the financing of accounts receivable and which is
designated by the Board of Directors of the Company (as provided below) as a
Receivables Entity (a) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (i) is guaranteed by the Company or any
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to Standard Securitization
Undertakings or (iii) subjects any property or asset of the Company or any
Subsidiary of the Company, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings, (b) with which neither the Company nor
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any Subsidiary of the Company has any material contract, agreement, arrangement
or understanding other than on terms no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable, and (c) to which
neither the Company nor any Subsidiary of the Company has any obligation to
maintain or preserve such entity's financial condition or cause such entity to
achieve certain levels of operating results. Any such designation by the Board
of Directors of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Redemption Event" shall mean (i) an underwritten initial public offering
of the common stock of the Company or (ii) a Change of Control.
"Related Party" means Thomas H. Lee Company and any Affiliate of Thomas H.
Lee Company.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such Designated Senior Indebtedness in respect of any Designated
Senior Indebtedness.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Sale of Excluded Assets" means an individual Asset Sale which results in
net proceeds of no less than $10 million and relates exclusively to property,
plant and equipment existing on the Issue Date, together with improvements,
repairs, modifications and additions thereon in the ordinary course of business.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. and its successors.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Indebtedness" means (i) the Bank Indebtedness and (ii) all
Indebtedness of the Company, including interest thereon (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Restricted Subsidiary of the
Company whether or not a claim for post-filing interest is allowed in such
proceedings), whether outstanding on the Issue Date or thereafter incurred,
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 not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary 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 of the Company which is expressly subordinate in right of payment
to any other Indebtedness of the Company, including any Senior Subordinated
Indebtedness and any Subordinated Obligations, (5) any obligations with respect
to any Capital Stock or (6) that portion of any Indebtedness incurred in
violation of the Indenture provisions set forth under "Limitation on Incurrence
of Additional Indebtedness" (but, as to any such obligation, no such violation
shall be deemed to exist for
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purposes of this clause (6) if the holders(s) of such obligation or their
representative and the Trustee shall have received an Officers' Certificate of
the Company to the effect that the incurrence of such Indebtedness does not (or,
in the case of revolving credit Indebtedness, that the incurrence of the entire
committed amount thereof at the date on which the initial borrowing thereunder
is made would not) violate such provisions of the Indenture).
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes and is not by its express terms subordinate in
right of payment to any Indebtedness of the Company which is not Senior
Indebtedness.
"Significant Subsidiary" means, as of any date of determination, for any
Person, each Restricted Subsidiary of such Person which (i) for the most recent
fiscal year of such Person accounted for more than 10% of consolidated revenues
or consolidated net income of such Person or (ii) as at the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of such Person.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which are reasonably customary in an accounts receivable transaction.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) which is expressly
subordinate in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided that (x) the Company certifies to the
Trustee that such designation complies with the "Limitation on Restricted
Payments" covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation and treating all Indebtedness of such Unrestricted Subsidiary
as being incurred on such date, the Company is able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"Vistar Merger Agreement" means that certain Merger Agreement, dated as of
October 10, 1997, by and between Vistar, Inc. and the Company.
"Vistar Merger" means the merger contemplated by the Vistar Merger
Agreement.
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"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities (other
than directors' qualifying shares or an immaterial amount of shares required to
be owned by other Persons pursuant to applicable law) are owned by such Person
or any Wholly Owned Restricted Subsidiary of such Person.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form. The Exchange Notes initially will each be represented by a
single, permanent global certificate in definitive, fully registered form (the
"Global Note") and will be deposited with the Trustee as custodian for DTC and
registered in the name of a nominee of DTC.
The Global Note. Upon the issuance of the Global Note, DTC or its
custodian will credit, on its internal system, the respective principal amount
of Exchange Notes, of the individual beneficial interests represented by such
global securities to the respective accounts of persons who have accounts with
such depositary. Such accounts initially will be designated by or on behalf of
the Initial Purchasers. Ownership of beneficial interests in the Global Note
will be limited to persons who have accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of that
ownership will be effected only through records maintained by DTC or its nominee
(with respect to interests of participants) and the records of participants
(with respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Note for
all purposes under the Indenture and the Exchange Notes. No beneficial owner of
an interest in the Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture.
Payments of the principal of, premium (if any) and interest on, the Global
Note, will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. Neither the Company, the Trustee nor any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants will be governed by standing instructions and customary
practice, as is now the case with securities held for the accounts of customers
registered in the names of nominees for such customers. Such payments will be
the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a certificated note for any reason,
including to sell Exchange Notes to persons in states which require physical
delivery of such Exchange Notes, or to pledge such Exchange Notes, such holder
must transfer its interest in the Global Note, in accordance with the normal
procedures of DTC and the procedures set forth in the Indenture.
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DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Note is credited
and only in respect of such portion of the aggregate principal amount of
Exchange Notes as to which such participant or participants has or have given
such direction. However, if there is an Event of Default under the Exchange
Notes, DTC will exchange the Global Note for certificated notes, which it will
distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
issuer organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Notes. If DTC is at any time unwilling or unable to continue
as a depositary for the Global Note and a successor depositary is not appointed
by the Issuer within 90 days, Certificated Notes will be issued in exchange for
the Global Note.
DESCRIPTION OF THE INITIAL NOTES
The terms of the Initial Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Exchange Notes for which they may be exchanged pursuant to this Exchange Offer,
except that the Initial Notes are not freely transferable by holders thereof and
were issued subject to certain covenants regarding registration as provided
therein and in the Exchange and Registration Rights Agreement (which covenants
will, except as provided therein, terminate and be of no further force or effect
upon completion of this Exchange Offer). See "Exchange and Registration Rights
Agreement."
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
The Company and the Initial Purchasers entered into the Exchange and
Registration Rights Agreement prior to the issuance of the Exchange Notes
offered hereby. Pursuant to the Exchange and Registration Rights Agreement, the
Company agreed to (i) file with the Commission on or prior to 60 days after the
date of issuance of the Initial Notes (the "Issue Date") a registration
statement on Form S-1 or Form S-4, if the use of such forms is then available
(the "Exchange Offer Registration Statement"), relating to a registered exchange
offer (the "Exchange Offer") for the Initial Notes under the Securities Act and
(ii) use its reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 135 days
after the Issue Date. As soon as practicable after the effectiveness of the
Exchange Offer Registration Statement, the Company will offer to the holders of
the Notes who are not prohibited by any law or policy of the Commission from
participating in the Exchange Offer the opportunity to exchange their Initial
Notes for the Exchange Notes, identical in all material respects to the Initial
Notes (except that the Exchange Notes will not contain terms with respect to
transfer restrictions) that would be registered under the Securities Act. The
Company will keep the Exchange Offer open for not less than 30 days (or longer,
if required by applicable law) after the date notice of the Exchange Offer is
mailed to the holders of the Initial Notes. If (i) applicable interpretations of
the staff of the Commission do not permit the Company to effect the Exchange
Offer as contemplated thereby or (ii) any holder either (A) is not eligible to
participate in the Exchange Offer or (B) participates in the Exchange Offer and
does not receive freely transferrable Exchange Notes in exchange for tendered
Initial Notes, the Company will file with the Commission a shelf registration
statement (the "Shelf Registration Statement") to cover resales of Transfer
Restricted Securities by such holders who satisfy certain conditions relating
to, among other things, the provision of information in connection with the
Shelf Registration Statement. For purposes of the foregoing, "Transfer
Restricted Securities" means each Initial Note until (i) the date on which such
Initial Note has been exchanged for a freely transferable Exchange Note in the
Exchange Offer, (ii) the date on which such Initial Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Initial Note is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
The Company has agreed to use its reasonable best efforts to have the
Exchange Offer Registration Statement and, if applicable, a Shelf Registration
Statement (each a "Registration Statement") declared effective by the Commission
as promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will commence
the Exchange Offer and will use its best efforts to consummate the Exchange
Offer as promptly as practicable, but in any event prior to 165 days after the
Issue Date. If applicable, the Company will use its best efforts to keep the
Shelf Registration Statement effective for a period of three years after the
Issue Date, subject to certain exceptions, including suspending the
effectiveness thereof for certain valid business reasons. If (i) the applicable
Registration Statement is not filed with the Commission on or prior to 60 days
after the Issue Date, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective
within 135 days after the Issue Date (or in the case of a Shelf Registration
Statement required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 45 days after
publication of the change in law or interpretation), (iii) the Exchange Offer is
not consummated on or prior to 165 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 135 days after the
Issue Date (or in the case of a Shelf Registration Statement required to be
filed in response to a change in law or the applicable interpretations of
Commission's staff, if later, within 45 days after publication of the change in
law or interpretation), but shall thereafter cease to be effective (at any time
that the Company is obligated to maintain the effectiveness thereof) without
being succeeded within 60 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will generally be obligated to pay
liquidated damages to each holder of Transfer Restricted Securities, during the
period of such Registration Default, in an amount equal to $0.192 per week per
$1,000 principal amount of the Initial Notes constituting Transfer Restricted
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Securities held by such holder until the applicable Registration Statement is
filed or declared effective, the Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All accrued
liquidated damages shall be paid to holders in the same manner as interest
payments on the Initial Notes on semi-annual payment dates which correspond to
interest payment dates for the Initial Notes. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease.
The Exchange and Registration Rights Agreement also provides that the
Company (i) shall make available for a period of 90 days after the consummation
of the Exchange Offer a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any such
Exchange Notes and (ii) shall pay all expenses incident to the Exchange Offer
(including the expenses of one counsel to the holders of the Initial Notes) and
will indemnify certain holders of the Initial Notes (including any
broker-dealer) against certain liabilities, including liabilities under the
Securities Act. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act, and will be bound by the provisions of the
Exchange and Registration Rights Agreement (including certain indemnification
rights and obligations).
Each holder of the Initial Notes that wishes to exchange such Initial Notes
for Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Exchange Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or if it is an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
If a holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If a holder is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
Holders of the Initial Notes will be required to make certain
representations to the Company (as described above) in order to participate in
the Exchange Offer, and will be required to deliver information to be used in
connection with the Shelf Registration Statement in order to have their Initial
Notes included in the Shelf Registration Statement and benefit from the
provisions regarding liquidated damages set forth in the preceding paragraphs. A
holder who sells Initial Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Exchange and
Registration Rights Agreement which are applicable to such a holder (including
certain indemnification obligations).
For so long as the Initial Notes are outstanding, the Company will continue
to provide to holders of the Notes and to prospective purchasers of the Initial
Notes the information required by paragraph (d)(4) of Rule 144A under the
Securities Act ("Rule 144A"). The Company will provide a copy of the Exchange
and Registration Rights Agreement to prospective purchasers of Initial Notes
identified to the Company by an Initial Purchaser upon request.
The foregoing description of the Exchange and Registration Rights Agreement
is a summary only, does not purport to be complete and is qualified in its
entirety by reference to all provisions of the Exchange and Registration Rights
Agreement.
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INCOME TAX CONSIDERATIONS
Holders of the Notes should consult their own tax advisors with respect to
their particular circumstances and with respect to the effects of state, local
or foreign tax laws to which they may be subject.
The Company believes, based upon the opinion of Hutchins, Wheeler &
Dittmar, A Professional Corporation, that the following summary fairly describes
the material United States federal income tax consequences expected to apply to
the exchange of Initial Notes for Exchange Notes and the ownership and
disposition of Exchange Notes under currently applicable law. The discussion
does not cover all aspects of federal taxation that may be relevant to, or the
actual tax effect that any of the matters described herein will have on,
particular holders, and does not address state, local, foreign or other tax
laws. Further, the federal income tax treatment of a holder of the Initial Notes
and the Exchange Notes may vary depending on the holder's particular situation.
Certain holders (including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, taxpayers subject to the alternative
minimum tax and foreign persons) may be subject to special rules not discussed
below. The description assumes that holders of the Initial Notes and the
Exchange Notes will hold the Initial Notes and the Exchange Notes as "capital
assets" (generally, property held for investment purposes) within the meaning of
Section 1221 of the Code.
THE EXCHANGE
An exchange of Initial Notes for Exchange Notes will be treated as a
"non-event" for federal income tax purposes because the Exchange Notes will not
be considered to differ materially in kind or extent from the Initial Notes. As
a result, no federal income tax consequences will result to holders exchanging
Initial Notes for Exchange Notes.
THE EXCHANGE NOTES
Interest Payments on the Exchange Notes. The Initial Notes were not issued
with original issue discount. The stated interest on the Initial Notes and
Exchange Notes should be considered to be "qualified stated interest" and,
therefore, will be includible in a holder's gross income (except to the extent
attributable to accrued interest at the time of purchase) as ordinary income for
federal income tax purposes in accordance with a holder's tax method of
accounting.
Tax Basis. A holder's adjusted tax basis (determined by taking into
account accrued interest at the time of purchase) in an Exchange Note received
in exchange for an Initial Note will equal the cost of the Initial Note to such
holder, increased by the amounts of market discount previously included in
income by the holder and reduced by any principal payments received by such
holder with respect to the Exchange Notes and by amortized bond premium. A
holder's adjusted tax basis in an Exchange Note purchased by such holder will be
equal to the price paid for such an Exchange Note (determined by taking into
account accrued interest at the time of purchase), increased by market discount
previously included in income by the holder and reduced by any principal
payments received by such holder with respect to an Exchange Note and by
amortized bond premium. See "Market Discount and Bond Premium" below.
Sale, Exchange or Retirement. Upon the sale, exchange or retirement of an
Exchange Note, a holder will recognize taxable gain or loss, if any, equal to
the difference between the amount realized on the sale, exchange or retirement
and such holder's adjusted tax basis in such Exchange Note. Such gain or loss
will be a capital gain or loss (except to the extent of any accrued market
discount), and will be a long-term capital gain or loss if the Exchange Note has
been held for more than one year at the time of such sale, exchange or
retirement.
Market Discount and Bond Premium. Holders should be aware that the market
discount provisions of the Code may affect the Exchange Notes. These rules
generally provide that a holder who purchases Exchange Notes for an amount which
is less than their principal amount will be considered to have purchased the
Exchange Notes at a "market discount" equal to the amount of such difference.
Such
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holder will be required to treat any gain realized upon the disposition of the
Exchange Note as interest income to the extent of the market discount that is
treated as having accrued during the period that such holder held such Exchange
Note, unless an election is made to include such market discount in income on a
current basis. A holder of an Exchange Note who acquires the Exchange Note at a
market discount and who does not elect to include market discount in income on a
current basis may also be required to defer the deduction of a portion of the
interest on any indebtedness incurred or continued to purchase or carry the
Exchange Note until the holder disposes of such Exchange Note in a taxable
transaction.
If a holder's tax basis in an Exchange Note immediately after acquisition
exceeds the stated redemption price at maturity of such Exchange Note, such
holder may be eligible to elect to deduct such excess as amortizable bond
premium pursuant to Section 171 of the Code.
Purchasers of the Exchange Notes should consult their own tax advisors as
to the application to such purchasers of the market discount and bond premium
rules.
HOLDERS OF THE INITIAL NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING OR
DISPOSING OF THE INITIAL NOTES AND THE EXCHANGE NOTES, INCLUDING THE APPLICATION
OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND POSSIBLE FUTURE CHANGES IN
SUCH FEDERAL TAX LAWS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
issued by a broker-dealer in connection with resales of Exchange Notes received
in exchange for Initial Notes where such Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 90 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until 1998, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
Safelite by Hutchins, Wheeler & Dittmar, A Professional Corporation, Boston,
Massachusetts.
INDEPENDENT AUDITORS
The consolidated balance sheets of Safelite Glass Corp. and its
subsidiaries as of December 28, 1996, January 3, 1998 and April 4, 1998 and the
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended January 3, 1998 and the
three months ended April 4, 1998 included in this Prospectus have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report
herein, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The consolidated balance sheets of Vistar, Inc. and its subsidiaries as of
March 31, 1996 and 1997, and the consolidated statements of earnings (loss),
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1997 included in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
117
<PAGE> 120
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
FINANCIAL STATEMENTS OF SAFELITE GLASS CORP. AND
SUBSIDIARIES:
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets -- December 28, 1996, January 3,
1998 and April 4, 1998.................................... F-3
Consolidated Statements of Operations -- Years Ended
December 30, 1995, December 28, 1996 and January 3, 1998
and Three Months Ended March 27, 1997 and April 4, 1998... F-4
Consolidated Statements of Stockholders' Equity
(Deficit) -- Years Ended December 30, 1995, December 28,
1996 and January 3, 1998 and Three Months Ended April 4,
1998...................................................... F-5
Consolidated Statements of Cash Flows -- Years Ended
December 30, 1995, December 28, 1996 and January 3, 1998
and Three Months Ended March 27, 1997 and April 4, 1998... F-6
Notes to Consolidated Financial Statements.................. F-7
FINANCIAL STATEMENTS OF VISTAR, INC. AND SUBSIDIARIES:
Report of Independent Public Accountants.................... F-24
Consolidated Balance Sheets -- March 31, 1996 and 1997...... F-25
Consolidated Statements of Earnings (Loss) -- Years Ended
March 31, 1995, 1996 and 1997 and Nine Months Ended
December 21, 1996 and December 19, 1997................... F-26
Consolidated Statements of Stockholders' Equity -- Years
Ended March 31, 1995, 1996 and 1997 and Nine Months Ended
December 19, 1997......................................... F-27
Consolidated Statements of Cash Flows -- Years Ended March
31, 1995, 1996 and 1997 and Nine Months Ended December 21,
1996 and December 19, 1997................................ F-28
Notes to Consolidated Financial Statements.................. F-29
</TABLE>
F-1
<PAGE> 121
INDEPENDENT AUDITORS' REPORT
Safelite Glass Corp.:
We have audited the accompanying consolidated balance sheets of Safelite
Glass Corp. and subsidiaries ("Company") as of December 28, 1996, January 3,
1998, and April 4, 1998, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the years ended December 30,
1995, December 28, 1996 and January 3, 1998, and for the three months ended
April 4, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Safelite Glass Corp. and
subsidiaries at December 28, 1996, January 3, 1998, and April 4, 1998, and the
results of their operations and their cash flows for the years ended December
30, 1995, December 28, 1996 and January 3, 1998, and the three months ended
April 4, 1998, in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE LLP
Dayton, Ohio
June 25, 1998
F-2
<PAGE> 122
SAFELITE GLASS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 31,188 $ 7,404 $ 10,254
Accounts receivable, net.................................. 29,647 54,927 62,000
Refundable taxes.......................................... 7,600
Inventories............................................... 42,454 48,133 50,535
Prepaid expenses.......................................... 6,684 6,505 11,382
Deferred income taxes..................................... 7,862 24,613 18,416
-------- -------- --------
Total current assets............................... 125,435 141,582 152,587
PROPERTY, PLANT AND EQUIPMENT -- Net........................ 40,119 63,820 61,994
INTANGIBLE ASSETS -- Net.................................... 17,832 292,004 292,325
OTHER ASSETS................................................ 18,970 23,821 24,873
DEFERRED INCOME TAXES....................................... 13,890 36,827 44,576
-------- -------- --------
TOTAL ASSETS....................................... $216,246 $558,054 $576,355
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.......................................... $ 23,703 $ 45,313 $ 43,480
Current portion -- long-term debt......................... 5,418 6,425 5,941
Accrued expenses:
Payroll and related items............................... 17,359 14,768 9,669
Self-insurance reserves................................. 9,086 7,987 7,018
Taxes................................................... 6,376 4,537 546
Accrued interest........................................ 685 1,949 8,695
Restructuring........................................... 561 20,007 22,390
Other................................................... 5,664 10,787 14,529
-------- -------- --------
Total current liabilities.......................... 68,852 111,773 112,268
LONG-TERM DEBT -- Less current portion...................... 258,322 473,499 497,645
OTHER LONG-TERM LIABILITIES:
Self-insurance reserves................................... 6,512 5,758 4,895
Pension................................................... 7,733 4,098 671
Restructuring............................................. 1,128 6,846 8,983
Other..................................................... 2,231 2,954 304
-------- -------- --------
Total other long-term liabilities.................. 17,604 19,656 14,853
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock issued, 8%, $100 par value at December 28,
1996 and $0.01 thereafter............................... 58,250 1 1
Class A Common Stock issued, $0.01 par value.............. 53 38 38
Class B Common Stock issued, $0.01 par value.............. 1 104 104
Additional paid-in capital................................ 182,368 324,794 324,878
Accumulated deficit....................................... (356,555) (357,761) (362,077)
Other..................................................... (12,649) (14,050) (11,355)
-------- -------- --------
Total stockholders' deficit........................ (128,532) (46,874) (48,411)
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT................. $216,246 $558,054 $576,355
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 123
SAFELITE GLASS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
---------------------------------------- ----------------------
DECEMBER 30, DECEMBER 28, JANUARY 3, MARCH 29, APRIL 4,
1995 1996 1998 1997 1998
------------ ------------ ---------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SALES:
Installation and related
services..................... $315,642 $380,142 $430,290 $ 95,249 $201,684
Wholesale....................... 56,500 58,183 53,014 12,544 12,108
-------- -------- -------- -------- --------
Total sales............. 372,142 438,325 483,304 107,793 213,792
COST OF SALES..................... 261,693... 299,623 331,658 75,758 155,545
-------- -------- -------- -------- --------
GROSS MARGIN...................... 110,449 138,702 151,646 32,035 58,247
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES......... 93,486 107,350 111,815 25,993 46,467
RESTRUCTURING EXPENSES............ 6,311 2,865 3,791
LOSS ON THE SALE OF LEAR
SIEGLER......................... 5,418
OTHER OPERATING EXPENSES.......... 7,558 5,704 3,079
-------- -------- -------- -------- --------
OPERATING INCOME.................. 10,652 23,794 25,844 6,042 4,910
INTEREST EXPENSE.................. (6,000) (6,726) (27,517) (6,357) (10,987)
INTEREST INCOME................... 2,890 2,094 1,254 279 138
-------- -------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAX
(PROVISION) BENEFIT AND MINORITY
INTEREST........................ 7,542 19,162 (419) (36) (5,939)
INCOME TAX (PROVISION) BENEFIT.... (157) 17,605 6,842 (59) 1,623
MINORITY INTEREST................. (1,059) (10,199)
-------- -------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS...................... 6,326 26,568 6,423 (95) (4,316)
DISCONTINUED OPERATIONS........... 1,706
EXTRAORDINARY ITEM -- Early
extinguishment of debt, net of
tax benefit..................... (500) (2,835)
-------- -------- -------- -------- --------
NET INCOME (LOSS)................. $ 6,326 $ 27,774 $ 3,588 $ (95) $ (4,316)
======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 124
SAFELITE GLASS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
OTHER
PREFERENTIAL --------
AND CLASS A CLASS B ADDITIONAL
PREFERRED PREFERRED COMMON COMMON PAID-IN ACCUMULATED TREASURY
STOCK STOCK STOCK STOCK CAPITAL DEFICIT STOCK
--------- ------------ ------- ------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994........ $ 32 $11 $ 1 $ 393,562 $(390,655) $ (732)
Purchase of 5,256 shares of Class
A Treasury Stock................. 5 (5)
Net income........................ 6,326
Minimum pension liability
adjustment, net of tax...........
------------ --- ---- --------- --------- -------
BALANCE, DECEMBER 30, 1995........ 32 11 1 393,567 (384,329) (737)
Issuance of 4,209,689 shares of
Class A Common Stock net of
issuance costs of $6,502......... 42 49,866
Issuance of 582,498 shares of
preferred stock.................. 58,250
Redemption of preferential common
stock............................ (32) (293,107)
Contributed capital............... 21,314
Purchase of 353,557 shares of
Class A Treasury Stock........... (4,720)
Exercise of 6,080 stock options... 63
Net income........................ 27,774
Purchase of minority interest..... 10,665
Minimum pension liability
adjustment, net of tax...........
------------ --- ---- --------- --------- -------
BALANCE, DECEMBER 28, 1996........ 58,250 53 1 182,368 (356,555) (5,457)
Purchase of 1,000 shares of Class
A Common Stock................... (11)
Stock options exercised........... 2 5,273
Dividend ($12.99 per share)....... (67,194)
Preferred stock redemption,
including payment of accumulated
dividends of $4,794.............. (58,250) (4,794)
Elimination of stock subscription
receivable.......................
Reverse stock split (1 for 3)..... (34) 34
Stock dividend (2 shares of Class
B Common Stock for each share of
Class A Common Stock)............ 34 (34)
Issuance of 1,690,101 shares of
Class A Common Stock and
6,959,771 shares of Class B
Common Stock..................... 17 69 164,348
Issuance of 40,000 shares of
preferred stock.................. $ 1 39,999
Net income........................ 3,588
Minimum pension liability
adjustment, net of tax...........
---- ------------ --- ---- --------- --------- -------
BALANCE, JANUARY 3, 1998.......... 1 38 104 324,794 (357,761) (5,468)
Issuance of 4,378 shares of Class
B Common Stock................... 84
Net loss.......................... (4,316)
Minimum pension liability
adjustment, net of tax...........
---- ------------ --- ---- --------- --------- -------
BALANCE, APRIL 4, 1998............ $ 1 $ $38 $104 $ 324,878 $(362,077) $(5,468)
==== ============ === ==== ========= ========= =======
<CAPTION>
OTHER
------------------------
STOCK MINIMUM COMP.
SUBSCRIPTION PENSION INCOME
RECEIVABLE LIABILITY TOTAL (LOSS)
------------ --------- --------- -------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994........ $(372) $(1,631) $ 216
Purchase of 5,256 shares of Class
A Treasury Stock.................
Net income........................ 6,326 $ 6,326
Minimum pension liability
adjustment, net of tax........... (7,156) (7,156) (7,156)
----- ------- --------- -------
BALANCE, DECEMBER 30, 1995........ (372) (8,787) (614) $ (830)
=======
Issuance of 4,209,689 shares of
Class A Common Stock net of
issuance costs of $6,502......... 49,908
Issuance of 582,498 shares of
preferred stock.................. 58,250
Redemption of preferential common
stock............................ (293,139)
Contributed capital............... 21,314
Purchase of 353,557 shares of
Class A Treasury Stock........... (4,720)
Exercise of 6,080 stock options... (4) 59
Net income........................ 27,774 $27,774
Purchase of minority interest..... 10,665
Minimum pension liability
adjustment, net of tax........... 1,971 1,971 1,971
----- ------- --------- -------
BALANCE, DECEMBER 28, 1996........ (376) (6,816) (128,532) $29,745
=======
Purchase of 1,000 shares of Class
A Common Stock................... (11)
Stock options exercised........... 5,275
Dividend ($12.99 per share)....... (67,194)
Preferred stock redemption,
including payment of accumulated
dividends of $4,794.............. (63,044)
Elimination of stock subscription
receivable....................... 376 376
Reverse stock split (1 for 3).....
Stock dividend (2 shares of Class
B Common Stock for each share of
Class A Common Stock)............
Issuance of 1,690,101 shares of
Class A Common Stock and
6,959,771 shares of Class B
Common Stock..................... 164,434
Issuance of 40,000 shares of
preferred stock.................. 40,000
Net income........................ 3,588 $ 3,588
Minimum pension liability
adjustment, net of tax........... (1,766) (1,766) (1,766)
----- ------- --------- -------
BALANCE, JANUARY 3, 1998.......... (8,582) (46,874) $ 1,822
=======
Issuance of 4,378 shares of Class
B Common Stock................... 84
Net loss.......................... (4,316) $(4,316)
Minimum pension liability
adjustment, net of tax........... 2,695 2,695 2,695
----- ------- --------- -------
BALANCE, APRIL 4, 1998............ $ $(5,887) $ (48,411) $(1,621)
===== ======= ========= =======
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 125
SAFELITE GLASS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
---------------------------------------- -----------------------
DECEMBER 30, DECEMBER 28, JANUARY 3, MARCH 29, APRIL 4,
1995 1996 1998 1997 1998
------------ ------------ ---------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 6,326 $ 27,774 $ 3,588 $ (95) $ (4,316)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Extraordinary item-early extinguishment of debt......... 500 2,835
Depreciation and amortization........................... 7,621 8,031 8,700 2,003 6,377
Loss on sale of subsidiary.............................. 5,418
Change in equity from exercise of stock options......... 2,976
Minority interest....................................... 862 10,199
Deferred income taxes................................... (19,715) (6,887) 59 (1,552)
Loss on disposition of assets........................... 654 258 324 346
Gain from discontinued operations....................... (1,706)
Changes in operating assets and liabilities:
Accounts receivable................................... (5,011) 2,379 560 (1,217) (7,073)
Inventories........................................... (5,159) (704) (145) (690) (2,402)
Accounts payable...................................... (2,120) 4,277 1,852 (3,937) (1,833)
Accrued expenses...................................... (25,939) 1,615 (2,288) (10,643) (5,099)
Other................................................. 12,696 (11,179) (18,478) 1,754 (42)
Cash flows provided by (used in) discontinued
operations............................................ (21,604) 3,975 (3,940)
-------- --------- --------- -------- --------
Net cash flows provided by (used in) operating
activities........................................ (10,070) 125 2,430 (16,706) (15,594)
-------- --------- --------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (11,986) (12,843) (13,856) (4,233) (2,425)
Proceeds from sale of fixed assets........................ 1,243 87 87 5 28
Acquisition of intangibles................................ (392) (30) (30) (2,821)
Sale of subsidiary........................................ (3,407)
Purchases of short-term investments....................... (47,479) (29,570)
Maturities of short-term investments...................... 23,500 64,224
Cash paid in Vistar transaction (net of cash acquired).... (68,224)
-------- --------- --------- -------- --------
Net cash flows provided by (used in) investing
activities........................................ (34,722) 21,506 (85,430) (4,258) (5,218)
-------- --------- --------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common and preferred stock.................... 108,217 7
Redemption of preferential common stock................... (293,139)
Purchase of treasury stock................................ (5) (4,720) (11)
Payments on long-term borrowings.......................... (7,500) (47,500) (166,996) (1,316) (2,219)
Proceeds from long-term borrowings........................ 263,740 350,000
Borrowings (payments) on revolver, net.................... 12,700 (21,500) 15,368 7,600 25,881
Capitalized debt issuance costs........................... (9,323) (11,206)
Exercise of stock options................................. 2,299
Dividends paid............................................ (71,988)
Redemption of preferred stock............................. (58,250)
-------- --------- --------- -------- --------
Net cash flows provided by (used in) financing
activities........................................ 5,195 (4,225) 59,216 6,291 23,662
-------- --------- --------- -------- --------
NET INCREASE (DECREASE) IN CASH............................. (39,597) 17,406 (23,784) (14,673) 2,850
CASH AT BEGINNING OF PERIOD................................. 53,379 13,782 31,188 31,188 7,404
-------- --------- --------- -------- --------
CASH AT END OF PERIOD....................................... $ 13,782 $ 31,188 $ 7,404 $ 16,515 $ 10,254
======== ========= ========= ======== ========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest.................................... $ 6,051 $ 5,127 $ 29,550 $ 2,936 $ 3,857
======== ========= ========= ======== ========
Cash paid for income taxes................................ $ 109 $ 350 $ 492 $ 203 $ 123
======== ========= ========= ======== ========
Contributed capital....................................... $ 21,314
=========
Common and preferred stock issued in merger............... $ 204,434
=========
Common stock issued as compensation....................... $ 84
========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 126
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998 AND
THREE MONTHS ENDED MARCH 29, 1997 (UNAUDITED) AND APRIL 4, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business -- Safelite Glass Corp. and subsidiaries (the
"Company" or "Safelite") are engaged principally in the manufacture,
distribution and installation of replacement automotive glass and related
insurance claims processing. The Company is the largest automotive glass
replacement and repair company in the United States. Currently, approximately
95% of the Company's sales represent installation and related services with the
balance representing sales to wholesale customers. On December 19, 1997, the
Company acquired Vistar, Inc. ("Vistar"), the second largest automotive glass
replacement and repair company in the United States (see Note 4). At April 4,
1998, the combined company had two manufacturing facilities, 74 warehouses, 47
dispatch command centers/central telephone units and 809 service center
locations across the United States.
Basis of Accounting -- The consolidated financial statements have been
prepared on the basis of accounting principles generally accepted in the United
States of America and all amounts are expressed in U.S. dollars. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Principles of Consolidation -- The consolidated financial statements
include the accounts of Safelite Glass Corp. and its wholly-owned subsidiaries
which, as discussed herein, include the accounts of Lear Siegler Holdings Corp.
("Lear Siegler") through September 12, 1997 (see Notes 2 and 3).
Fiscal Year -- Prior to 1998, the Company used a 52 or 53 week fiscal year
that ended on the Saturday nearest December 31. In May 1998, the Company changed
its fiscal year to a 52 or 53 week fiscal year that ends on the Saturday closest
to March 31. The footnote references to year ends are as follows: December 30,
1995 ("1995"), December 28, 1996 ("1996") and January 3, 1998 ("1997"). The
footnote references to the three months ended information are as follows: April
4, 1998 ("1998") and March 29, 1997 ("1997").
Interim Financial Statements -- In the opinion of management, the unaudited
consolidated financial statements for the three months ended March 29, 1997,
reflect all adjustments, consisting of normal recurring accruals, which are
necessary to present fairly the financial position and results of operations for
the period then ended.
Cash and Cash Equivalents -- The Company considers all short-term
investments which have a purchased term of three months or less to be cash
equivalents. The carrying amount approximates fair value because of the short
maturity of those instruments.
Concentration of Credit Risk -- Approximately 38% at December 28, 1996, 58%
at January 3, 1998 and 57% at April 4, 1998, of trade accounts receivable are
due from insurance companies in connection with sales to individual customers.
The balance of trade accounts receivable is due primarily from wholesale and
other commercial customers. The number and relative financial strength of the
insurance companies limit the Company's exposure to credit risk for insurance
related receivables. During the three months ended 1998, $25,779 or 12% of total
sales for the period were to a single insurance customer. The diversity and wide
geographic dispersion limits the credit risk of receivables from wholesale and
other commercial customers. The Company also performs ongoing credit evaluations
of the financial condition of its wholesale and other commercial customers which
reduces its exposure to loss. The Company maintains reserves for potential
uncollectible accounts.
F-7
<PAGE> 127
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories -- The Company accounts for inventories, which are primarily
finished goods, at the lower of standard cost, which approximates actual cost
determined utilizing the first in, first out method, or market. Valuation
allowances for obsolete and slow moving inventories were $1,621, $1,704 and
$1,723 at December 28, 1996, January 3, 1998, and April 4, 1998, respectively.
Property, Plant and Equipment -- Property, plant and equipment are recorded
at cost. Depreciation is provided using the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements.................................. 25 years
Leasehold improvements...................................... 5-10 years
Information technology equipment............................ 3-5 years
Other equipment and furniture............................... 3-7 years
</TABLE>
Intangible Assets -- Intangible assets consist principally of trademarks
and goodwill which are being amortized using the straight-line method over their
estimated useful lives of five to forty years.
Debt Issuance Costs -- Debt issuance costs are amortized over the life of
the related debt.
Long-Lived Assets -- Long-lived assets, certain identifiable intangibles
and goodwill related to those assets to be held and used, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable from undiscounted future cash
flows.
Revenue Recognition -- Revenue from auto glass installation and related
services is recognized when the service is performed. Revenue from the
distribution of auto glass to wholesale customers is recognized when the product
is shipped.
Cost of Sales -- Cost of sales includes product and distribution costs as
well as installation labor, occupancy and vehicle expenses.
Advertising Costs -- The Company expenses all advertising costs. The costs
of yellow pages advertising are expensed at the time the yellow pages phone book
is published. Total advertising expense was $5,910, $7,123 and $7,367 in 1995,
1996 and 1997, respectively. Total advertising expense for the three months
ended 1997 (unaudited) and 1998 was $1,807 and $2,298, respectively.
Other Operating Expenses -- Other operating expenses in 1996 consist of
$6,858 in management transaction bonuses related to the THL Transaction and
estimated costs (primarily severance) of $700 to exit the activities of Lear
Siegler (see Note 2). Other operating expenses in 1997 include $1,000 of
management transaction bonuses, $2,976 related to the acceleration of vesting of
certain management stock options, and $470 related to forgiveness of certain
officer loans made in connection with the Vistar Merger (see Note 4). Also
included in other operating expenses in 1997 are costs related to obtaining
bondholder consent to the Vistar Merger of $1,258 (see Note 10). Other operating
expenses of $3,079 in the three months ended 1998 consist of costs associated
with the integration of corporate systems, moving, relocation and other expenses
associated with the Vistar Merger.
Interest Rate Swaps -- The Company uses settlement accounting to account
for its interest rate swap agreements.
Comprehensive Income -- At April 4, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." Components of comprehensive income are net
income and the change in minimum pension liability net of income tax effect.
Other -- The following Statements of Financial Accounting Standards (SFAS)
were issued by the Financial Accounting Standards Board and will be adopted by
the Company during the fiscal year ending April 3, 1999. The impact of adopting
these statements has not been determined.
F-8
<PAGE> 128
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," was issued in June 1997. This statement establishes standards for
the way that business enterprises report information about operating segments.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Post-Retirement Benefits," was issued in February 1998 and revises the current
disclosure requirements for employers' pensions and other retiree benefits.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued in June 1998. The statement requires derivatives to be
recorded on the balance sheet as assets or liabilities, measured at fair value.
Gains or losses resulting from changes in fair value of the derivatives are
recorded depending upon whether the instruments meet the criterion for hedge
accounting. This statement is effective for fiscal years beginning after June
15, 1999. The impact of adopting this statement has not been determined.
Reclassifications -- Certain reclassifications have been made to conform
balances with the 1998 presentation.
2. THE THL TRANSACTIONS
Prior to December 20, 1996, the Company was an indirect subsidiary of Lear
Siegler. The transactions described below, which occurred on December 20, 1996,
were pursuant to a Recapitalization Agreement and Plan of Merger and Stock
Purchase Agreement dated November 8, 1996 (collectively, the "THL
Transactions"). As a result of the THL Transactions, Safelite's preferential
common shares were converted into the right to receive cash, and Thomas H. Lee
Equity Fund III, L.P., together with certain of its affiliates and certain other
investors (collectively "THL"), obtained 88% of Safelite's common stock. Certain
existing shareholders, primarily Safelite management, retained the remaining
interest. The Agreement also provided for Safelite's acquisition (through a
newly formed subsidiary) of substantially all of the outstanding common stock of
Lear Siegler, its former parent. Significant components of the transactions were
as follows:
(1) THL acquired 169,000 shares of Safelite Class A Common Stock from
certain selling shareholders for aggregate consideration of approximately
$2,265. Subsequent to this transaction, all remaining common stock, except
for 626,910 shares of Class A Common Stock and 17,991 shares of Class B
Common Stock owned by existing shareholders (primarily management), was
owned by LSNWY, a wholly-owned subsidiary of Lear Siegler.
(2) THL capitalized Lite Acquisition Corp. with $56,410 of common
equity and $58,250 of preferred equity. Lite Acquisition Corp. was then
merged with and into Safelite with Safelite surviving the merger
("Merger").
Upon effecting the Merger:
(i) each share of Safelite Class A Common Stock outstanding prior
to the Merger was converted into the right to receive $13.40 or, at the
election of the holder thereof, to remain outstanding and unaffected by
the Merger (LSNWY and certain other shareholders and option holders
elected to sell their shares and received in the aggregate $4,154 and
$507, respectively);
(ii) each share of Safelite Class B Common Stock outstanding prior
to the Merger was converted into the right to receive cash equal to
$0.01;
F-9
<PAGE> 129
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(iii) each share of Safelite Preferential Common Stock outstanding
prior to the Merger was converted into the right to receive cash, the
aggregate amount of which was approximately $293,139;
(iv) each share of Lite Acquisition Corp.'s common stock
outstanding prior to the Merger was converted into one share of Safelite
Class A Common Stock; and
(v) each share of Lite Acquisition Corp.'s preferred stock
outstanding prior to the Merger was converted into one share of Safelite
8% Preferred Stock.
(3) Immediately following the Merger, the Company borrowed $150,000
under a new senior credit facility, issued $100,000 in senior subordinated
notes and retired $41,875 in existing bank facility debt (see Note 10).
(4) In the final step of the transactions, Safelite, through a new
wholly-owned subsidiary, L.S. Acquisition Corp., acquired substantially all
of the outstanding capital stock of Lear Siegler (including all shares of
Lear Siegler preference stock) for a demand promissory note with a
principal amount equal to the consideration received by LSNWY in the
Merger, which amount was approximately $297.3 million. Lear Siegler was
merged with and into L.S. Acquisition Corp. with L.S. Acquisition Corp.
surviving the Merger and changing its name to Lear Siegler Holdings Corp.,
making Lear Siegler a wholly-owned subsidiary of the Company. On the
closing date of the transactions, all of the consideration received by
LSNWY in the Merger was distributed to L.S. Acquisition Corp. which was
used to repay the note delivered in connection with the purchase of Lear
Siegler's capital stock.
The THL Transactions were accounted for as a recapitalization of Safelite
and in accordance with the provisions of FASB Technical Bulletin No. 85-5.
Accordingly, the stock held by the former minority shareholders of Safelite was
treated as if it was acquired by Lear Siegler. The carrying value of the
minority interest exceeded the fair value of the minority shares acquired by
approximately $5,800. Inventory was increased by $1,600 and non-current assets
were reduced by $7,400 to allocate this fair value adjustment.
Prior to the THL Transactions, Lear Siegler operated as a holding company
whose principal activity was to oversee its discontinued operations. The Lear
Siegler activities did not provide future benefit to Safelite; thus on December
20, 1996, management of Safelite adopted a formal plan to exit the activities of
Lear Siegler. Accordingly, severance, lease termination and related costs of
$700 to close Lear Siegler's office located in New Jersey were accrued in
accordance with Emerging Issues Task Force Statement No. 94-3. This amount was
included in other operating expenses for 1996.
In connection with the THL Transactions, certain selling shareholders
agreed to reimburse the Company should the Company be required to pay tax
liabilities of Lear Siegler arising from disputes with various taxing
authorities. Additional paid-in capital of $21,314, the amount of tax
liabilities recorded by Lear Siegler, was recorded to reflect the assumption of
the tax liabilities by the selling shareholders.
3. SALE OF LEAR SIEGLER
On September 12, 1997, the Company sold all of the issued and outstanding
shares of the capital stock of Lear Siegler (the "Lear Siegler Stock") to BPLSI
Investment Company, a Delaware corporation (the "Purchaser"), pursuant to a
Stock Purchase Agreement by and among Lear Siegler, the Company, the Purchaser,
and James F. Matthews (the President of Lear Siegler and the sole stockholder of
the Purchaser).
The net book value of Lear Siegler on the sale date was $5,500, which was
comprised of $3,500 in cash, $13,400 in other assets and $11,400 in liabilities.
F-10
<PAGE> 130
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The sale price of the Lear Siegler Stock was $100 in cash and a promissory
note delivered by the Purchaser to the Company. The promissory note provides
that the Purchaser must pay to the Company an amount equal to 50% of the net
proceeds realized, directly or indirectly, by Lear Siegler from the liquidation
or other disposition, if any, of the assets belonging to Lear Siegler or its
direct or indirect subsidiaries which were seized by the Cuban government when
Fidel Castro came to power, or from settlement of any claims relating thereto
(the "Cuban Assets") if the Purchaser receives dividends or other distributions
from Lear Siegler. Due to certain restrictions in the documents governing the
December 20, 1996 recapitalization of Safelite, no payments are anticipated
under the promissory note for six years. The promissory note will remain in full
force and effect until the earlier of (a) June 21, 2017, or (b) after six years,
such time as all of the Cuban Assets have been liquidated or otherwise disposed
of, and Lear Siegler is permitted to distribute the net proceeds thereof, and
the Company receives 50% of such net proceeds plus interest from the date of
disposition to the date of payment. Due to the wholly-contingent nature of the
ability of Lear Siegler or any of its subsidiaries to realize any proceeds from
the liquidation or other disposition of any of the Cuban Assets, there can be no
assurance that the Purchaser will make any payments to the Company under the
promissory note. Accordingly, the Company has recorded this promissory note at a
net book value of zero, and a loss of $5,418 related to the sale.
4. THE VISTAR TRANSACTIONS
On December 19, 1997, the Company merged with Vistar, with the Company as
the corporation surviving the merger (the "Vistar Merger"). The Company's merger
with Vistar has been accounted for as a purchase transaction, with results of
Vistar included in the Company's financial statements from the acquisition date.
Prior to the Vistar Merger, the Company paid a dividend on its outstanding
shares of Class A Common Stock in the aggregate amount of $67,194 and paid a
dividend on its outstanding shares of 8% Cumulative Preferred Stock equal to the
accrued and unpaid dividends thereon in the aggregate amount of $4,794
(collectively, the "Dividend"), and redeemed all outstanding shares of its 8%
Cumulative Preferred Stock at an aggregate redemption price of $58,250 (the
"Redemption" and, together with the Dividend, the "Distribution"). Subsequent to
the Distribution and immediately prior to the consummation of the Vistar Merger,
the Company effected a 1 for 3 reverse stock split (the "Stock Split") of its
Class A Common Stock, which was reclassified as Class A Voting Common Stock
("Class A Voting Stock"), reclassified its Class B Common Stock as Class B
Non-Voting Stock ("Class B Non-Voting Stock"), and paid a dividend on each share
of Class A Voting Stock outstanding after the Stock Split in the form of two
shares of Class B Non-Voting Stock. The Company also authorized the creation of
a new series of preferred stock, designated as Non-Voting 8% Preferred Stock
(the "Non-Voting Preferred Stock"). The Non-Voting Preferred Stock is an
accumulating perpetual preferred stock. As a result of restrictions contained in
the indenture governing its 9 7/8% Senior Subordinated Notes due 2006 (the
"Indenture"), dividends are not payable in respect of the Non-Voting Preferred
Stock unless such payment is in compliance with the "Limitation on Restricted
Payments" covenant contained in the Indenture. Cumulative undeclared preference
dividends were $131 and $798 as of January 3, 1998 and April 4, 1998,
respectively. The Non-Voting Preferred Stock is not mandatorily redeemable.
Unlike the 8% Cumulative Preferred Stock, however, the Non-Voting Preferred
Stock is redeemable by the Company, at its option, at any time (provided that
the Company is in compliance with the "Limitation on Restricted Payments"
covenant).
The purchase price paid by the Company to the holders of Vistar's
outstanding capital stock (the "Vistar Shareholders") in exchange for all of the
outstanding capital stock of Vistar consisted of 1,690,101 shares of Class A
Voting stock (valued at $19.01 a share), 6,959,771 shares of Class B Non-Voting
Stock (valued at $19.01 a share), 40,000 shares of Non-Voting Preferred Stock
($40,000 aggregate liquidation preference) and $65,000 cash (collectively, the
"Merger Consideration"). The aggregate purchase price was $269,434. As a result
of the Vistar Merger, the holders of the Company's
F-11
<PAGE> 131
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
outstanding capital stock immediately prior to the Vistar Merger (the "Safelite
Shareholders") retained ownership of 50.5% of the outstanding Class A Voting
Stock and became the owners of approximately 33% of the outstanding Class B
Non-Voting stock (including shares subject to exercisable options to acquire
Class B Non-Voting Stock) and the Vistar Shareholders became the owners of 49.5%
of the outstanding Class A Voting Stock, approximately 67% of the outstanding
Class B Non-Voting Stock and 100% of the outstanding Non-Voting Preferred Stock.
In connection with the Vistar Merger, substantially all of the Safelite
Shareholders and all of the Vistar Shareholders entered into a Shareholders
Agreement (the "Shareholders Agreement"), which established certain rights and
restrictions with respect to the management of the Company and transfers of the
Class A Voting Stock and the Class B Non-Voting Stock, and a Registration
Agreement providing for certain rights to cause the Company to register the
Class A Voting Stock and the Class B Non-Voting Stock under the Securities Act
of 1933, as amended.
Fees and expenses paid in connection with the Vistar Merger totaled
approximately $14,550. Of these total fees and expenses, approximately $3,000,
$3,010 and $2,737 were paid to THL, Belron International (a former Vistar
shareholder) and The Windsor Park Management Group, respectively. The Windsor
Park Management Group is affiliated with an individual who became a director of
the Company subsequent to the Vistar Merger. Also in connection with the Vistar
Merger, THL amended its existing management agreement with the Company to remove
any future obligations of the Company to pay transaction fees and to set the
annual management fee payable thereunder at $1,000. Belron International entered
into an Amended and Restated Management Agreement with the Company to replace
its existing management agreement with Vistar, pursuant to which Belron will
continue to receive a management fee of $1,000 per year. Each of such agreements
with THL and Belron International will terminate upon consummation of an initial
public offering of the Company's common stock. The Company also paid THL $1,000
in connection with the debt refinancing.
Payment of the Distribution, the cash portion of the Merger Consideration,
the refinancing of Vistar's senior credit financing and the fees and expenses of
the transaction were financed through borrowings made pursuant to a refinancing
of the Company's existing senior credit facility (see Note 10).
The excess purchase price over the fair value of identifiable net assets
acquired has been allocated to goodwill. Goodwill of $278,041 recorded in the
transaction will be amortized over 30 years using the straight-line method. The
allocation of the purchase price to the net assets acquired is preliminary with
respect to certain amounts, pending the results of certain studies which have
not yet been completed.
The following summary was prepared to illustrate the pro forma results of
operations as if the Vistar acquisition had occurred at the beginning of the
fiscal years presented without the benefit of any synergies. Included in the pro
forma presentation is the impact of certain purchase adjustments directly
attributable to the acquisition which are expected to have a continuing impact.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
1996 1997 MARCH 29, 1997
-------- -------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Net sales.................................... $828,439 $902,665 $199,170
Income (loss) from continuing operations
before extraordinary charge................ 4,835 (9,035) (5,316)
Net income (loss)............................ 6,041 (11,870) (5,316)
</TABLE>
The pro forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would have
occurred had the Vistar acquisition been consummated as of the beginning of the
fiscal years presented, nor is it necessarily indicative of future operating
results. The pro forma financial information does not reflect any synergies that
may be achieved
F-12
<PAGE> 132
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
from the combined operations. Included in pro forma net income are adjustments
to conform the accounting practices of the companies which decreased net income
by $287 in 1996 and increased net income by $46 in 1997.
As a result of the Merger, the Company intends to consolidate redundant
overhead in both field and corporate operations, eliminate redundant service
center locations and eliminate redundant sales and marketing force activities.
At January 3, 1998 and April 4, 1998, the Company had partially completed its
evaluation of redundant locations and activities and recorded the following
accrual as part of its purchase accounting for Vistar:
<TABLE>
<CAPTION>
THREE MONTHS
1997 ENDED 1998
------- ------------
<S> <C> <C>
Closing of Vistar service center locations.................. $ 1,734 $1,472
Vistar field and corporate severance........................ 13,556 1,873
Elimination of redundant Vistar corporate functions......... 5,559
------- ------
$20,849 $3,345
======= ======
</TABLE>
Prior to December 1998, the Company expects to complete its
market-by-market analysis of overlapping field locations and administrative
activities of both Vistar and the Company. Costs associated with additional
consolidation of Vistar functions and activities will be recorded as an
adjustment to the initial purchase allocation. The costs associated with closing
Safelite locations will be expensed when the decision as to which facilities to
close is made. Management estimates the aggregate of all merger related closing
and consolidation costs will range from $37,000 to $42,000.
5. RESTRUCTURING EXPENSES
Prior to 1990, the Company grew through acquisitions and internal service
center openings. In 1991, a new management team developed a strategic plan to
focus the Company on its primary insurance customers. The plan called for growth
to be achieved by increasing the Company's share of the auto glass replacement
market through enhanced relationships with insurance companies and other large
volume clients. Automated solutions to address insurance claims processing costs
were and are an integral part of management's marketing strategy. An additional
element of the Company's strategic plan was a market-by-market review of its
distribution and service center configuration, and the Company's customer
service capabilities. The objective was to restructure local markets as required
to maximize service quality and capacity at lower costs.
During 1993 and 1994, the Company refined its overall market based approach
with the development and testing of centralized Dispatch Command Center/Central
Telephone Units (DCC/CTU). These facilities serve as local market "hubs" which
connect service centers, vans, central telephone units, warehouses and
distribution centers and provide "real time" data for scheduling, billing, sales
and inventory management. The success of the DCC/CTU concept led the Company in
1995 to restructure its field operations by closing approximately 100 service
centers and reorganizing field management. The 1995 provision for this
restructuring of $6,311 consists principally of planned service center closing
costs of $5,605 and field management reorganization costs of $706.
As described in Note 4, at January 3, 1998 and April 4, 1998, the Company
had partially completed its review of redundant corporate and field operations
which resulted from its acquisition of Vistar. Accordingly, restructuring
provisions for $2,865 and $3,791, respectively, were recorded in each period.
The January 3, 1998, provision consisted of $415 related to Safelite service
center closings and $2,450 related to Safelite employee severance. The April 4,
1998, provision consisted of $2,491 related to Safelite service center closings
and $1,300 related to Safelite employee severance. The Company
F-13
<PAGE> 133
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expects to complete its merger related restructuring review by December 1998 and
anticipates that further restructuring provisions will be taken in its fiscal
year ending March 1999.
The following summarizes the reserve activity:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
--------------------------- ---------------------
1995 1996 1997 1997 1998
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Beginning balance.............. $ $ 5,098 $ 1,689 $1,689 $26,853
Restructuring liabilities
acquired -- Vistar........... 2,438
Restructuring Merger accrual... 20,849 3,345
Restructuring provision........ 6,311 2,865 3,791
Used for intended purpose...... (1,213) (3,409) (988) (264) (2,616)
------- ------- ------- ------ -------
Ending balance................. $ 5,098 $ 1,689 $26,853 $1,425 $31,373
======= ======= ======= ====== =======
</TABLE>
6. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Trade receivables............................. $31,748 $ 70,755 $ 74,622
Less allowance for uncollectible accounts..... (2,101) (15,828) (12,622)
------- -------- --------
Net........................................... $29,647 $ 54,927 $ 62,000
======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
--------------------------- ---------------------
1995 1996 1997 1997 1998
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Allowance for uncollectible
accounts:
Balance, beginning of period... $ 2,301 $ 2,413 $ 2,101 $2,101 $15,828
Provision...................... 1,354 1,015 1,469 618 1,319
Vistar Merger.................. 14,002
Charge-offs.................... (1,242) (1,327) (1,744) (587) (4,525)
------- ------- ------- ------ -------
Balance, end of period......... $ 2,413 $ 2,101 $15,828 $2,132 $12,622
======= ======= ======= ====== =======
</TABLE>
7. PROPERTY, PLANT & EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Land.......................................... $ 4,672 $ 5,569 $ 5,569
Buildings and leaseholds...................... 33,336 43,148 47,333
Equipment and furniture....................... 52,764 71,950 81,186
-------- -------- --------
Total............................... 90,772 120,667 134,088
Less accumulated depreciation (50,653) (56,847) (72,094)
-------- -------- --------
Net........................................... $ 40,119 $ 63,820 $ 61,994
======== ======== ========
</TABLE>
F-14
<PAGE> 134
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Depreciation expense was $6,851, $7,239 and $7,622 for the years ended
1995, 1996 and 1997, respectively. Depreciation expense for the three months
ended 1997 (unaudited) and 1998 was $1,822 and $3,876, respectively.
8. INTANGIBLE AND OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Trademarks.................................... $24,168 $ 24,264 $ 24,264
Goodwill...................................... 853 276,096 278,918
Non-compete agreements........................ 46 76 76
------- -------- --------
Total............................... 25,067 300,436 303,258
Less accumulated amortization................. (7,235) (8,432) (10,933)
------- -------- --------
Net........................................... $17,832 $292,004 $292,325
======= ======== ========
</TABLE>
Amortization expense in 1995, 1996 and 1997 was $770, $792 and $1,078,
respectively. Amortization expense for the three months ended 1997 (unaudited)
and 1998 was $181 and $2,501, respectively.
9. LEASES
The Company leases many of its vehicles and service center locations under
operating leases. Most of the service center location leases provide renewal
options.
Future minimum rental commitments under non-cancelable operating leases for
facilities (including closed service centers), vehicles and equipment at April
4, 1998, are as follows:
<TABLE>
<S> <C>
Year:
1998...................................................... $ 46,349
1999...................................................... 38,092
2000...................................................... 26,423
2001...................................................... 14,147
2002...................................................... 6,879
Thereafter................................................ 7,328
--------
Total............................................. $139,218
========
</TABLE>
For 1995, 1996 and 1997, rent expense under all operating leases was
$24,028, $25,180 and $28,585, respectively. Rent expense for the three months
ended 1997 (unaudited) and 1998 was $6,674 and $14,164, respectively.
10. LONG-TERM DEBT
At December 28, 1996, the Company had a credit facility consisting of (a) a
term loan facility of $150,000, (a $75,000 "Tranche A Term Loan" and a $75,000
"Tranche B Term Loan") and (b) a revolving credit facility, including letters of
credit, which provided up to a maximum of $30,000. The rate of interest on these
borrowings was based on the prime rate or Eurodollar rate, at the Company's
option. A commitment fee of 1/2% per annum was required on the unused portion
of the credit facility.
In connection with the Vistar Merger, a new credit facility was entered
into which consists of (a) a term loan facility in an aggregate principal amount
of $350,000 (the "Term Loan Facility"), consisting of
F-15
<PAGE> 135
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
three tranches in principal amounts of $150,000 (the "Tranche A Term Loan"),
$100,000 (the "Tranche B Term Loan"), and $100,000 (the "Tranche C Term Loan"),
respectively, and (b) a revolving credit facility, including letters of credit,
which provides up to $100,000 (the "Revolving Credit Facility"). The Tranche A
Term Loan and the Revolving Credit Facility mature on September 30, 2003, the
Tranche B Term Loan and the Tranche C Term Loan mature on September 30, 2004 and
September 30, 2005, respectively.
In addition, the new credit facility is subject to mandatory principal
prepayment and commitment reductions (to be applied to the Term Loan Facility)
in an amount equal to, subject to certain exceptions, (a) 100% of the net cash
proceeds of (i) certain debt and equity offerings by the Company or any of its
subsidiaries, and (ii) certain asset sales or other dispositions, and (iii) 50%
of the Company's excess cash flow (as defined). Borrowings under the facility
are collateralized by substantially all assets of the Company. The rate of
interest on these borrowings is based on the prime rate, or LIBOR, at the
Company's option. At April 4, 1998, the interest rates in effect were 7.125%,
7.125%, 7.625% and 7.875% on the Revolver, Tranche A, Tranche B and Tranche C
Term Loans, respectively.
The credit facility contains a number of covenants that, among other
things, restrict the ability of the Company and its subsidiaries to dispose of
assets, incur additional indebtedness, incur guarantee obligations, prepay other
indebtedness or amend other debt instruments, pay dividends, create liens on
assets, make investments, loans or advances, make acquisitions, create
subsidiaries, engage in mergers or consolidations, change the business conducted
by the Company, make capital expenditures, or engage in certain transactions
with affiliates and otherwise restrict certain corporate activities. In
addition, the Company must comply with specified financial ratios and minimum
tests, including minimum interest coverage ratios and maximum leverage ratios.
The Company utilizes interest rate exchange agreements to manage the
exposure associated with interest rate fluctuations. During fiscal 1997, the
Company purchased interest rate swaps in the notional amount of $100,000 to
hedge the impact of changing interest rates on its variable rate debt. The swap
agreements mature March 31, 2000; the counterparty, however, has the option to
extend maturity until March 31, 2002. The swap agreements provide for interest
to be received on notional amounts at variable rates and provides for interest
to be paid on the same notional amounts at fixed rates. The fixed interest rates
do not change over the life of the swap agreements. The variable interest rates
are reset every three months and are based on LIBOR. The credit risk associated
with the interest rate swap agreements revolve around the ability of the
counterparty to perform its obligation under the agreement. The Company does not
anticipate nonperformance by the counterparty. Terms of the swap agreements are
as follows:
<TABLE>
<CAPTION>
JANUARY 3, APRIL 4,
1998 1998
---------- --------
<S> <C> <C>
Notional amount............................................. $100,000 $150,000
Fair value (unrealized losses).............................. (1,568) (2,250)
Average received rate (variable)............................ 5.91% 5.69%
Average pay rate (fixed).................................... 6.19% 6.19%
Average life (years)........................................ 2.25 2.00
</TABLE>
Net interest received or paid on these contracts is reflected in interest
expense. The difference between the interest paid and received on the interest
rate swap contracts resulted in $328 and $70 of additional interest expense in
1997 and the three months ended 1998, respectively.
In connection with the THL Transactions described in Note 2, on December
20, 1996, the Company issued $100,000 in 9 7/8% Senior Subordinated Notes (the
"Notes") due December 15, 2006. The Notes are subordinated in right of payment
to all existing and future senior indebtedness of the Company. Upon
F-16
<PAGE> 136
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
a change in control triggering event, as defined, the Company is required to
make an offer to repurchase the Notes at 101%. The Notes are redeemable at the
option of the Company on or after December 15, 2001, at prices decreasing from
104 15/16% on December 15, 2001 to par at December 15, 2004. In addition, prior
to December 15, 1999, the Company, at its option, may redeem (at 109 7/8%) up to
$35,000 of principal with the proceeds of one or more equity offerings. During
1997, the noteholders were paid $5,000 in exchange for their consent for the
Company to modify the terms of the Notes and to allow the Company to enter into
the Vistar Merger. This payment is being amortized over the remaining life of
the Notes. Costs of the consent solicitation of $1,258 were expensed in 1997.
The Company has various unsecured notes payable with interest rates ranging
from 6.4% to 8.5% and prime plus 1%.
Maturities of the Company's long-term debt are as follows:
<TABLE>
<CAPTION>
APRIL 4, 1998
---------------------------------------------------------
DUE DATE SENIOR
FOR FISCAL REVOLVING TERM SUBORDINATED NOTES OTHER
YEAR ENDING NOTES LOANS NOTES PAYABLE (NOTE 12) TOTAL
----------- --------- -------- ------------ ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
1999.......................... $1,298 $4,643 $ 5,941
2000.......................... $ 16,500 210 2,585 19,295
2001.......................... 24,500 1,200 25,700
2002.......................... 34,500 1,200 35,700
2003.......................... 56,313 1,200 57,513
Thereafter.................... $41,250 218,187 $100,000 359,437
------- -------- -------- ------ ------ --------
Total................. $41,250 $350,000 $100,000 $5,108 $7,228 $503,586
======= ======== ======== ====== ====== ========
</TABLE>
The carrying amount of debt approximates its fair value.
The Company had letters of credit outstanding totaling $17,556 as of April
4, 1998.
11. CAPITAL STOCK
In conjunction with the Vistar Merger described in Note 4, the Company
effected a 1 for 3 reverse stock split of its Class A Common Stock and
reclassified these shares as Class A Voting Common Stock. The Class B Common
Stock was reclassified as Class B Non-Voting Common Stock, and a stock dividend
was paid, in which two shares of Class B Non-Voting Common Stock were issued for
each share of Class A Voting Common Stock. The Company paid $4,794 in accrued
dividends on the 8% Cumulative Preferred Stock and redeemed the preferred stock
for $58,250. A new series of preferred stock was issued and designated as
Non-Voting 8% Preferred Stock. Treasury shares were converted into Class A
Voting Common Stock and Class B Non-Voting Common Stock via the 1 for 3 reverse
stock split and the Class B Common Stock reclassification, respectively. The 2
for 1 stock dividend was not paid for shares held in treasury.
F-17
<PAGE> 137
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following represents the number of shares outstanding and held in
treasury for each class of stock at respective dates. Share amounts for December
28, 1996, have not been restated for the reverse stock split or stock dividend.
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- ----------
<S> <C> <C> <C>
8% Cumulative Preferred Stock.......................... 582,498
8% Non-Voting Preferred Stock.......................... 40,000 40,000
Class A Common Stock Issued............................ 5,326,935
Class A Common Stock Held in Treasury.................. 358,813
Class A Voting Common Stock............................ 3,534,283 3,534,283
Class A Voting Common Stock Held in Treasury........... 119,938 119,938
Class B Common Stock Issued............................ 50,000
Class B Common Stock Held in Treasury.................. 50,000
Class B Non-Voting Common Stock........................ 10,458,260 10,462,638
Class B Non-Voting Common Stock Held in Treasury....... 50,000 50,000
</TABLE>
The Company has several stock option plans and agreements which provide for
the sale of Class A and Class B Common Stock to certain key associates,
consultants and members of the Board of Directors. Options vest in periods
ranging from zero to five years and are generally exercisable for a period of
ten years from the date of grant. All options granted have exercise prices which
were not less than fair market value at the date of grant.
In conjunction with the Vistar Merger, all options for Class A shares were
converted to options to purchase the same number of Class B shares. At April 4,
1998, all options outstanding are to key associates and are for Class B
Non-Voting shares.
The following table summarizes the stock options outstanding:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996 JANUARY 3, 1998 APRIL 4, 1998
----------------- ----------------- ------------------- ------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
------ -------- ------ -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
period................... 5,025 $241.78 45,532 $ 29.35 54,780 $24.90 17,190 $12.08
Granted.................... 42,133 3.00 15,328 3.00 175,000 13.40 407,500 19.00
Exercised.................. (6,080) 3.00 (203,611) 11.17
Forfeited.................. (1,626) 3.00 (8,979) 136.63
------ ------- ------ ------- -------- ------ ------- ------
Outstanding at end of
period................... 45,532 $ 29.35 54,780 $ 24.90 17,190 $12.08 424,690 $18.72
====== ======= ====== ======= ======== ====== ======= ======
Exercisable at period
end...................... 4,149 $292.00 11,209 $110.05 876 $ 3.00 1,314 $ 3.00
====== ======= ====== ======= ======== ====== ======= ======
Weighted-average fair value
of options granted during
the period using the
Black-Scholes pricing
model.................... $ 1.56 $ 1.43 $ 3.64 $ 4.64
Assumptions used:
Expected dividend
yield.................. 0% 0% 0% 0%
Expected volatility...... 0% 0% 0% 0%
Risk-free interest
rate................... 7.5% 6.6% 6.2% 5.7%
Expected life of option
(in years)............. 10.0 10.0 5.2 5.0
</TABLE>
F-18
<PAGE> 138
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows various information about stock options
outstanding at April 4, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING AT REMAINING EXERCISE EXERCISABLE AT EXERCISE
PRICES APRIL 4, 1998 LIFE PRICE APRIL 4, 1998 PRICE
-------- -------------- --------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 3.00 2,190 6.9 $ 3.00 1,314 $3.00
13.40 15,000 9.3 13.40
19.00 407,500 10.0 19.00
------- ---- ------ ----- -----
$ 3.00-$19.00 424,690 9.9 $18.72 1,314 $3.00
======= ==== ====== ===== =====
</TABLE>
During 1997, the Company recorded $2,976 of expenses associated with the
acceleration of the vesting of 160,000 management stock options. The Company
accounts for employee stock options using the intrinsic value method allowed by
Accounting Principles Board Opinion No. 25. Had compensation costs been
determined based on the fair value method of Statement of Financial Accounting
Standard No. 123 for all plans, the Company's net earnings would have been
reduced to the pro forma amounts as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
--------------------------- ---------------------
1995 1996 1997 1997 1998
------ ------- ------ ----------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net earnings (in thousands):
As reported................... $6,326 $27,774 $3,588 (95) (4,316)
Pro forma..................... $6,317 $27,764 $3,577 (95) (4,319)
</TABLE>
At April 4, 1998 there were 2,500 options available for grant.
12. COMMITMENTS AND CONTINGENCIES
For certain of its workers' compensation, automobile, product and associate
health care liabilities, the Company is self-insured, subject to certain
stop-loss coverage. The estimated costs of reported claims and of
incurred-but-not-reported claims are accrued, generally using actuarial
estimates based on claims history. The amount the Company will ultimately incur
for these liabilities could differ from these estimates.
During 1996, the Company purchased insurance to cover Safelite's remaining
workers' compensation, automobile and product liabilities for the period July 1,
1989 through December 31, 1994. The Company no longer has any liability for
these contingencies; therefore, the self-insured accrual for this period has
been removed from the financial statements. This transaction had no significant
impact on results of operations for 1996. During 1996, the Company also
purchased workers' compensation, automobile and product liability coverage for
the period December 20, 1996 through December 31, 1999. The cost of this
insurance was partially financed by $13,740 in premium financing, payable in
monthly installments, including interest of 6.67% to 6.99%, of $514 in 1997 and
$416 in 1998 and 1999. Under the terms of the financing, if the Company cancels
its insurance policies for any reason, corresponding unearned premium refunds
would be applied directly against the outstanding principal balance. At April 4,
1998, the outstanding principal balance of this premium financing was $7,228.
On June 25, 1998, a customer advised Safelite, following a review of
contract terms, that the customer is disputing certain billings made to it by
Vistar prior to the Vistar Merger. The customer has provided Safelite with a
preliminary estimate of the disputed amount which the Company is reviewing. The
ultimate resolution of this matter is not presently determinable but, in the
opinion of management,
F-19
<PAGE> 139
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
such resolution is not expected to have a significant impact on the Company's
financial statements. In the event the Company is required to make any payment,
such cost would be allocated to goodwill associated with the Vistar Merger.
The Company is involved in various litigation and disputes arising in the
normal course of its business, primarily related to vehicle accidents and human
resource related issues. The Company is also involved in certain environmental
actions brought by the U.S. Environmental Protection Agency and certain state
agencies. The ultimate resolution of these matters is not presently determinable
but, in the opinion of management, such resolution is not expected to have a
significant impact on the Company's financial statements.
13. SAVINGS AND RETIREMENT PLANS
Safelite maintains a 401(k) savings plan, covering substantially all
associates, except the former employees of Vistar, that provides basic employer
matching contributions of up to 40% (depending upon the participant's years of
service) of the first 4% of each participant's compensation. Bonus employer
contributions up to 50% of the basic employer contribution are also made
depending upon the level of associate participation in the plan. Safelite also
maintains a 401(k) savings plan covering substantially all the former associates
of Vistar, that provides basic matching contributions of up to 25% of the first
6% of each participant's compensation. Safelite contributions to its 401(k)
savings plans were $636, $762 and $998 for the years 1995, 1996 and 1997,
respectively. Contributions for the three months ended 1997 (unaudited) and 1998
were $386 and $491, respectively.
Safelite also has a defined benefit plan whose benefits were frozen and
fully vested to participants effective June 30, 1993. The funded status of the
Safelite defined benefit plan is as follows:
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Accumulated and projected benefit obligation (all
vested) for services provided to date............... $(14,964) $(17,192) $(18,548)
Less market value of plan assets...................... 14,319 16,932 18,738
-------- -------- --------
Plan assets in excess of (less than) projected benefit
obligation.......................................... (645) (260) 190
Unrecognized net loss resulting from past experience
different from that assumed......................... 1,227 1,284 895
Adjustment to recognize minimum pension liability..... (1,227) (1,284)
-------- -------- --------
Prepaid (accrued) pension cost........................ $ (645) $ (260) $ 1,085
======== ======== ========
Discount Rate......................................... 7.5% 7.0% 7.0%
</TABLE>
Plan assets at April 4, 1998 are invested in common and preferred stocks,
corporate and U.S. government bonds and money market funds. The expected
long-term rate of return on plan assets was 8.5% for all periods.
As part of the sale of Lear Siegler (Note 3), the Company retained the
liability for pension obligations of former Lear Siegler employees and related
pension assets. Plan benefits are based on various formulae, the principal
factors of which are years of service and compensation during the years
immediately preceding retirement. The Company's funding policy for these plans
is to make the minimum annual contributions required by applicable regulations.
No further accruals for service costs will be made.
F-20
<PAGE> 140
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Lear Siegler defined benefit plan is as follows:
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Accumulated and projected benefit obligation (all
vested) for services provided to date............... $(33,805) $(35,475) $(35,576)
Less market value of plan assets...................... 26,717 31,637 34,905
-------- -------- --------
Plan assets in excess of (less than) projected benefit
obligation.......................................... (7,088) (3,838) (671)
Unrecognized net loss................................. 10,133 13,020 9,814
Adjustment to recognize minimum pension liability..... (10,133) (13,020) (9,814)
-------- -------- --------
Accrued pension cost.................................. $ (7,088) $ (3,838) $ (671)
======== ======== ========
Discount Rate......................................... 7.5% 7.0% 7.0%
</TABLE>
Plan assets at April 4, 1998 consist primarily of a bond mutual fund, U.S.
government obligations and cash equivalents. The expected long-term rate of
return on plan assets was 8.75% in 1995 and 8.5% in 1996, 1997 and the three
months ended 1998.
Net periodic pension expense (income) for all of the Company's defined
benefit plans for the respective periods includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
----------------------------- ENDED
1995 1996 1997 1998
------- ------- ------- ------------
<S> <C> <C> <C> <C>
Service cost-benefit earned during the
period..................................... $ 15
Interest cost on the projected benefit
obligation................................. 3,219 $ 3,225 $ 3,560 $ 911
Actual return on plan assets................. (4,273) (2,736) (3,861) (5,771)
Net amortization and deferral................ 939 (494) 558 4,840
------- ------- ------- -------
Net periodic pension expense (income)........ $ (100) $ (5) $ 257 $ (20)
======= ======= ======= =======
</TABLE>
Net periodic pension expense for the three months ended 1997 (unaudited)
was $64.
At December 28, 1996, January 3, 1998 and April 4, 1998, the Company
recorded, as required by SFAS No. 87, an additional minimum pension liability of
$11,360, $14,304, and $9,814, respectively, related to certain unfunded pension
obligations. The corresponding cumulative charge to stockholders' equity
(deficit) for these amounts at December 28, 1996, January 3, 1998 and April 4,
1998, net of applicable taxes, was $6,816, $8,582 and $5,887, respectively.
14. INCOME TAXES
Income taxes are provided for the amounts estimated to be payable on tax
returns for the current year. Deferred income taxes are provided for all
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. If
necessary, based upon available evidence, a valuation allowance is provided for
the amount of deferred tax assets that are not expected to be realized.
F-21
<PAGE> 141
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the income tax provision (benefit) before extraordinary
items are as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
--------------------------- ----------------------
1995 1996 1997 1997 1998
---- -------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current.............................. $157 $ 2,110 $ 45 $ (71)
Deferred............................. (19,715) (6,887) $59 (1,552)
---- -------- ------- --- -------
Total................................ $157 $(17,605) $(6,842) $59 $(1,623)
==== ======== ======= === =======
</TABLE>
The income tax provision (benefit) differs from the amounts determined by
applying the statutory income tax rate as a result of the following:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
------------------------------ ----------------------
1995 1996 1997 1997 1998
------- -------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income taxes at statutory rate.... $ 2,640 $ 6,706 $ (147) $(13) $(2,079)
Reduction in valuation
allowance....................... (2,000) (25,894) (2,996)
State income taxes................ 312 958 (21) (1) (197)
Lear Siegler net operating
losses.......................... (5,674)
Other, principally permanent
differences..................... (795) 625 1,996 73 653
------- -------- ------- ---- -------
Provision (benefit) for income
taxes........................... $ 157 $(17,605) $(6,842) $ 59 $(1,623)
======= ======== ======= ==== =======
</TABLE>
Items comprising the Company's net deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3, APRIL 4,
1996 1998 1998
------------ ---------- --------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................... $ 32,035 $ 46,688 $ 45,825
Differences between book and tax basis of
inventories...................................... 2,530 3,993 3,770
Reserves not currently deductible................... 17,406 10,533 14,321
Restructuring reserves.............................. 9,862 12,549
Deductible intangibles.............................. 4,502 29
Pension............................................. 4,547 5,722 3,925
Other............................................... 2,738 2,340
Difference between book and tax basis of property,
plant and equipment.............................. 4,373
Valuation Allowance................................. (36,182) (21,800) (21,800)
-------- -------- --------
Total....................................... 23,074 61,840 62,992
-------- -------- --------
Deferred tax liabilities:
Difference between book and tax basis of property,
plant and equipment.............................. (1,322) (400)
-------- -------- --------
Net deferred tax asset................................ $ 21,752 $ 61,440 $ 62,992
======== ======== ========
</TABLE>
A valuation allowance reduces the amount of deferred tax assets that
management believes more likely than not will not be recognized. The valuation
allowance is based on available information at the balance sheet date including
historical earnings, net operating loss limitations and other factors which may
impact the Company's ability to realize the tax benefits.
F-22
<PAGE> 142
SAFELITE GLASS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As part of the sale of Lear Siegler, the Company obtained the right to use
approximately $16,210 of previously unrecognized federal net operating loss
carryforwards. In addition, deferred tax assets totaling $11,386 related to Lear
Siegler, which had been fully reserved, were assigned to Lear Siegler in the
sale transaction.
At April 4, 1998, the Company has net operating loss carryforwards for
federal income tax purposes totaling approximately $112,000 which expire through
2017.
15. EXTRAORDINARY ITEM
During 1997 the Company recorded an extraordinary loss of $2,835, net of
income tax benefit of $1,890, as a result of expensing unamortized loan
origination costs related to its 1996 credit facility and fees paid to the
lenders of its new credit facility. In 1996, the Company recorded an
extraordinary loss of $500, net of income tax benefit of $344, for the
unamortized loan origination fees related to the early repayment of another debt
obligation.
16. DISCONTINUED OPERATIONS
In 1996, the Company recorded income from discontinued operations of
$1,706. This income was primarily the result of resolving, in 1996, various
liability and tax issues associated with operating units of Lear Siegler which
were discontinued in prior years. The following summarizes the significant
items:
<TABLE>
<S> <C>
Settlement of liability issues.............................. $(25,500)
Adjustment of state tax contingencies....................... 19,606
Tax refund.................................................. 7,600
--------
$ 1,706
========
</TABLE>
F-23
<PAGE> 143
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Vistar, Inc.:
We have audited the accompanying consolidated balance sheets of VISTAR,
INC. (formerly Globe Glass & Mirror Co. and successor of Windshields America,
Inc.) (an Illinois corporation) AND SUBSIDIARIES as of March 31, 1996 and 1997,
and the related consolidated statements of earnings (loss), stockholders' equity
and cash flows for each of the three years in the period ended March 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Vistar, Inc.
and Subsidiaries as of March 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1997, in conformity with generally accepted accounting principles.
The financial statements of Vistar, Inc. and Subsidiaries as of December
19, 1997, and for the nine-month periods ended December 21, 1996, and December
19, 1997, were not audited by us and, accordingly, we do not express an opinion
on them.
Chicago, Illinois
April 7, 1997 (except with respect to
the matter described in Note 15,
as to which the date is July 22, 1998)
F-24
<PAGE> 144
VISTAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31
--------------------
1996 1997 DEC. 19, 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 13,438 $ 3,016 $ 4,942
Marketable securities................................ 700 750 --
Trade accounts receivable, less allowance for
doubtful accounts of $2,656, $3,733 and $14,002,
respectively...................................... 30,065 36,035 30,452
Inventories.......................................... 21,347 13,804 7,010
Income tax refunds receivable and prepayments........ 11,682 3,958 3,808
Prepaid expenses and other current assets............ 6,388 8,511 5,675
Current maturities of notes receivable............... 972 677 452
Deferred income taxes................................ 14,802 10,969 4,684
-------- -------- --------
Total current assets.............................. 99,394 77,720 57,023
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land................................................. 962 962 962
Buildings and building improvements.................. 1,023 1,023 1,481
Machinery and equipment.............................. 13,657 20,077 20,143
Leasehold improvements............................... 10,082 11,175 11,328
Furniture and fixtures............................... 2,993 3,356 3,540
-------- -------- --------
28,717 36,593 37,454
Less-Accumulated depreciation and amortization....... 8,653 15,801 19,576
-------- -------- --------
Property, plant and equipment, net................ 20,064 20,792 17,878
-------- -------- --------
OTHER ASSETS:
Notes receivable, excluding current maturities....... 800 800 125
Deferred income taxes................................ 11,739 11,722 16,787
Intangible assets.................................... 157,791 148,417 144,119
Other noncurrent assets.............................. 6,645 2,374 6,605
-------- -------- --------
Total other assets................................ 176,975 163,313 167,636
-------- -------- --------
$296,433 $261,825 $242,537
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt................. $ 4,772 $ 2,906 $ 1,721
Trade accounts payable............................... 23,584 18,639 19,581
Other current liabilities............................ 34,436 35,125 26,108
-------- -------- --------
Total current liabilities......................... 62,792 56,670 47,410
-------- -------- --------
LONG-TERM DEBT, excluding current maturities........... 45,088 17,624 16,695
-------- -------- --------
PREFERENCE STOCK ($10 par value, 44,167 shares issued
and outstanding)..................................... 176,250 176,250 132,023
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $10 par value, 100,000 shares
authorized; 45,970 shares issued and outstanding
(excluding preference shares)..................... 460 460 460
Additional paid-in capital........................... 78,857 78,857 78,857
Accumulated deficit.................................. (67,014) (68,036) (32,908)
-------- -------- --------
Total stockholders' equity........................ 12,303 11,281 46,409
-------- -------- --------
$296,433 $261,825 $242,537
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-25
<PAGE> 145
VISTAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31 FOR THE NINE MONTHS ENDED
------------------------------ -----------------------------
1995 1996 1997 DEC. 21, 1996 DEC. 19, 1997
-------- -------- -------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES........................ $114,319 $172,821 $413,504 $318,762 $339,502
-------- -------- -------- -------- --------
COST OF SALES:
Materials...................... 41,896 67,219 186,263 140,076 164,289
Labor.......................... 17,604 27,104 75,242 56,970 71,151
Vehicle........................ 5,074 6,058 12,209 9,861 11,740
Occupancy...................... 6,371 9,229 16,165 10,759 13,439
Other.......................... 16,711 21,075 22,402 17,873 26,185
-------- -------- -------- -------- --------
87,656 130,685 312,281 235,539 286,804
-------- -------- -------- -------- --------
Gross profit................ 26,663 42,136 101,223 83,223 52,698
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES........ 21,543 38,001 72,090 55,458 49,968
AMORTIZATION OF INTANGIBLE
ASSETS......................... 3,285 5,001 13,371 9,558 10,162
NONRECURRING CHARGES............. -- -- 6,939 5,323 793
RESTRUCTURING CHARGES............ -- 9,532 -- -- --
-------- -------- -------- -------- --------
Operating income (loss)........ 1,835 (10,398) 8,823 12,884 (8,225)
-------- -------- -------- -------- --------
INTEREST EXPENSE................. (49) (731) (2,046) (1,698) (1,206)
INTEREST INCOME.................. -- 98 437 327 600
-------- -------- -------- -------- --------
Income (loss) before income
taxes....................... 1,786 (11,031) 7,214 11,513 (8,831)
(PROVISION) BENEFIT FOR INCOME
TAXES.......................... (175) 1,807 (8,236) (8,416) (268)
-------- -------- -------- -------- --------
NET INCOME (LOSS)................ $ 1,611 $ (9,224) $ (1,022) $ 3,097 $ (9,099)
======== ======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-26
<PAGE> 146
VISTAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ---------- ----------- --------
<S> <C> <C> <C> <C>
BALANCE, March 31, 1994...................... $ -- $42,229 $(59,401) $(17,172)
Conversion of amounts due to Belron into
capital................................. -- 20,000 -- 20,000
Net income................................. -- -- 1,611 1,611
---- ------- -------- --------
BALANCE, March 31, 1995...................... -- 62,229 (57,790) 4,439
Conversion of amounts due to Belron into
capital................................. -- 17,088 -- 17,088
Merger with Globe.......................... 460 (460) -- --
Net loss................................... -- -- (9,224) (9,224)
---- ------- -------- --------
BALANCE, March 31, 1996...................... 460 78,857 (67,014) 12,303
Net loss................................... -- -- (1,022) (1,022)
---- ------- -------- --------
BALANCE, March 31, 1997...................... 460 78,857 (68,036) 11,281
Preference stock dilution (unaudited)...... -- -- 44,227 44,227
Net loss (unaudited)....................... -- -- (9,099) (9,099)
---- ------- -------- --------
BALANCE, December 19, 1997 (unaudited)....... $460 $78,857 $(32,908) $ 46,409
==== ======= ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-27
<PAGE> 147
VISTAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31 FOR THE NINE MONTHS ENDED
----------------------------- -----------------------------
1995 1996 1997 DEC. 21, 1996 DEC. 19, 1997
------- -------- -------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 1,611 $ (9,224) $ (1,022) $ 3,097 $(9,099)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating
activities --
Depreciation.................................... 2,160 3,183 6,198 4,009 5,260
Amortization.................................... 3,285 5,001 13,371 9,558 10,162
Deferred income tax (benefit) provision......... -- (1,992) 5,543 1,741 1,220
(Gain) loss on disposal of property, plant and
equipment..................................... (97) 508 74 (27) 6
Restructuring and other charges................. -- 9,532 -- -- --
Change in assets and liabilities, net of effects
of business acquisitions --
Trade accounts receivable..................... (105) (4,676) (5,468) (1,983) 5,603
Inventories................................... (2,669) (2,400) 7,910 3,886 6,851
Prepaid expenses and other current assets..... (832) (471) 6,931 13,168 3,215
Trade accounts payable........................ (1,355) 3,802 (4,945) 14,776 851
Other current liabilities..................... (2,268) (5,039) 3,938 10,625 (6,747)
Other......................................... (40) (4,387) 4,571 2,544 (3,557)
------- -------- -------- -------- -------
Net cash provided by (used in) operating
activities................................ (310) (6,163) 37,101 61,394 13,765
------- -------- -------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of marketable securities.......... -- (700) (50) -- 750
Cash paid for businesses, net of cash acquired.... (3,181) (10,728) (7,156) (7,153) (1,622)
Cash obtained in Merger........................... -- 15,014 -- -- --
Purchases of property, plant and equipment........ (3,248) (4,583) (8,042) (6,061) (3,553)
Proceeds from sale of property, plant and
equipment....................................... 150 447 -- 24 --
Collections on notes receivable................... -- 28 381 123 219
------- -------- -------- -------- -------
Net cash used in investing activities....... (6,279) (522) (14,867) (13,067) (4,206)
------- -------- -------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in revolving line of credit............ -- 19,869 (25,869) (28,269) (7,633)
Payments on long-term debt........................ (114) (1,409) (4,462) -- --
Net increase (decrease) in payable to Belron...... 6,907 (381) (2,325) -- --
------- -------- -------- -------- -------
Net cash provided by (used in) financing
activities................................ 6,793 18,079 (32,656) (28,269) (7,633)
------- -------- -------- -------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................... 204 11,394 (10,422) 20,058 1,926
CASH AND CASH EQUIVALENTS, beginning of period...... 1,840 2,044 13,438 13,438 3,016
------- -------- -------- -------- -------
CASH AND CASH EQUIVALENTS, end of period............ $ 2,044 $ 13,438 $ 3,016 $ 33,496 $ 4,942
======= ======== ======== ======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest........................................ $ 11 $ 613 $ 2,092 $ 237 $ 1,129
Income taxes.................................... 122 895 10,319 3,498 475
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-28
<PAGE> 148
VISTAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND PRESENTATION
Windshields America, Inc., together with its subsidiaries ("Windshields"),
was a wholly owned subsidiary of Belron (USA) BV ("Belron") through February 29,
1996. On that date, Windshields merged with and into Globe Glass & Mirror Co.
("Globe") with Belron retaining a 51% ownership interest in the merged entity
(the "Merger"). The previous stockholders of Globe obtained a 49% ownership
interest in the merged entity. The common stock of Globe survived the Merger;
Windshields' common stock was canceled and retired. The Merger was accounted for
as a reverse acquisition in accordance with the purchase method of accounting
with Windshields as the deemed acquirer. Pursuant to such accounting, each of
the 50,000 shares of Windshields common stock ($.001 par value) outstanding as
of the Merger date were exchanged for approximately .9194 shares of newly issued
Globe common stock ($10 par value) resulting in Belron owning 51% of the merged
entity. The merged entity originally retained the name of Globe Glass & Mirror
Co. but later changed its name to Vistar, Inc. The accompanying consolidated
financial statements include the accounts of Windshields through the Merger date
and of the merged entity thereafter. All significant intercompany accounts and
transactions have been eliminated in consolidation. As used herein, the
"Company" refers to Windshields through February 29, 1996, and the merged entity
and its subsidiaries thereafter.
The Company's business consists primarily of the replacement and repair of
automotive glass throughout the United States. A significant portion of the
Company's sales are to customers in the insurance industry.
In the opinion of management, the financial statements as of December 19,
1997, and for the nine months ended December 21, 1996, and December 19, 1997,
include all adjustments, consisting only of normal recurring adjustments, which
are necessary to present fairly the financial position and results of operations
for the periods then ended. Operating results for any interim period are not
necessarily indicative of results that may be expected for the full year. All
interim numbers presented herein are unaudited.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of short-term liquid investments. Outstanding
balances of the Company's controlled disbursement accounts are included in trade
accounts payable ($9,324, $7,155 and $8,051 at March 31, 1996, March 31, 1997,
and December 19, 1997, respectively). Restricted cash, held in escrow accounts
for insurance purposes and in support of certain indebtedness, amounted to
$5,717, $1,655 and $1,393 as of March 31, 1996, March 31, 1997, and December 19,
1997, respectively, and is classified as other noncurrent assets.
MARKETABLE SECURITIES
Marketable securities consisted of fixed income securities with original
maturities of less than one year and were carried at amortized cost, which
approximated fair market value, as the Company had the ability and intent to
hold them to maturity.
INVENTORIES
All inventories are stated at the lower of cost (first-in, first-out) or
market (net realizable value) and consist primarily of replacement glass. In
1997, the Company entered into an agreement to purchase a substantial portion of
its glass inventory from one supplier. The provisions of this agreement allow
the Company to maintain lower inventory levels.
F-29
<PAGE> 149
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost which, for such assets
acquired in a business combination, represents the estimated fair value of such
assets at their acquisition date. Major renewals and betterments which extend
the useful life of an asset are capitalized; routine maintenance and repairs are
expensed as incurred. Upon the sale or retirement of these assets, the related
gross cost and accumulated depreciation are removed from the accounts and any
related gain or loss is reflected in earnings.
Depreciation and amortization of property, plant and equipment are computed
using the straight-line method for financial reporting purposes based on the
following estimated useful lives:
<TABLE>
<CAPTION>
CLASSIFICATION PERIOD
-------------- ------
<S> <C>
Building and building improvements.................. 10 to 40 years
Machinery and equipment............................. 2 to 10 years
Leasehold improvements.............................. Over the life
of the lease
Furniture and fixtures.............................. 5 to 10 years
</TABLE>
INTANGIBLE ASSETS
The excess cost over the fair value of net assets acquired in the Merger is
being amortized on a straight-line basis over 20 years. Other such excess costs,
resulting from various acquisitions of smaller glass replacement and repair
businesses, are being amortized on a straight-line basis over five or ten years.
After an acquisition, the Company continually reviews whether subsequent events
and circumstances have occurred that indicate the remaining estimated useful
life of such excess costs may warrant revision or that the remaining balance may
not be recoverable. If events and circumstances indicate that excess costs
related to a particular business should be reviewed for possible impairment, the
Company uses projections to assess whether future operating income of the
business on a nondiscounted basis is likely to exceed the amortization of such
excess costs over its remaining life, to determine whether a write-down to
recoverable value is appropriate. Should an impairment be identified, a loss
would be reported to the extent that the carrying value exceeds the fair value
of that goodwill as determined by valuation techniques available in the
circumstances.
Other intangible assets (with a net recorded value of $3,917, $3,763 and
$4,957 as of March 31, 1996, March 31, 1997, and December 19, 1997,
respectively) include the costs of noncompete agreements with certain previous
owners of businesses acquired by Globe prior to the Merger, costs associated
with the acquisition of customer lists and costs incurred in obtaining trade
names. Such costs are being amortized on a straight-line basis over five years,
except for costs of noncompete agreements which are amortized over the term, not
to exceed seven years, of the agreements. Accumulated amortization of all
intangible assets as of March 31, 1996, March 31, 1997, and December 19, 1997,
amounted to $18,480, $31,851 and $42,013, respectively.
ADVERTISING COSTS
The Company's yellow pages advertising qualifies as direct response
advertising and therefore the Company capitalizes such advertising costs and
amortizes the expense over the period in which the benefits are expected (the
life of the publication), which is generally one year or less. Advertising costs
of $2,399, $2,287 and $2,572 were reported as prepaid expenses as of March 31,
1996, March 31, 1997, and December 19, 1997, respectively. Total advertising
expense was $2,007, $2,894, $5,156, $3,548 and $4,873 in fiscal 1995, fiscal
1996, fiscal 1997 and the nine months ended December 21, 1996, and December 19,
1997, respectively.
F-30
<PAGE> 150
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
REVENUE RECOGNITION
Revenue is recognized when the replacement or repair service is performed.
NEW ACCOUNTING PRONOUNCEMENTS
In July, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), and Statement of Financial Accounting Standards No. 131, "Disclosures
About Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components in a full set of general purpose financial statements. SFAS
No. 131 introduces a new model for segment reporting, called the "management
approach." The management approach is based on the way that the chief operating
decision maker organizes segments within a company for making operating
decisions and assessing performance. Management is currently evaluating the
provisions of this statement to determine its impact upon current reporting.
Both SFAS No. 130 and SFAS No. 131 will be adopted by the Company by fiscal year
1999.
In April, 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5, "Reporting on the Cost of Start-up
Activity" ("SOP 98-5"). SOP 98-5 establishes the standard on the financial
reporting of start-costs and organization cost. SOP 98-5 requires costs of
start-up activities and organization cost to be expensed as incurred. Management
is currently evaluating the provisions of this statement to determine its impact
upon current reporting. SOP 98-5 will be adopted by the Company by fiscal year
1999.
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 period. Actual results could differ from those estimates. In addition,
certain prior-year amounts have been reclassified to conform with current-year
presentation.
3. ACQUISITIONS
Based on independent appraisals of Globe, the purchase price paid in the
Merger by Windshields was determined to be $176,250. In connection with the
Merger, the Company and its stockholders entered into various agreements which
stipulate a dividend policy and certain stockholder rights, including put and
call provisions on the shares retained by the Globe shareholders. Such put
options provide that the Globe shareholders, solely at their option, could put
their entire common stock holdings to the Company, or in certain circumstances,
to Belron for the greater of the Company's Market Value, as defined, and a
preestablished minimum after the one year anniversary of the Merger.
Accordingly, such shares have been classified as Preference Stock outside of
stockholders' equity. Any changes in the minimum value of the putable shares are
reflected as an adjustment to Preference Stock on the Company's balance sheet
with an offsetting adjustment in Accumulated Deficit. Market value, as of March
31, 1997, based on a determination by the shareholders, had not changed since
the Merger. However, based on the Market Value of the Company implied in the
December 19, 1997, merger of the
F-31
<PAGE> 151
Company with and into Safelite Glass Corp. ("Safelite"), as described in Note
14, the value of the putable shares was reduced by $44,227 as of December 19,
1997.
The Merger purchase price was allocated to Globe's net assets as follows:
<TABLE>
<S> <C>
Cash.................................................... $ 15,014
Trade accounts receivable............................... 14,865
Inventories............................................. 8,627
Income tax refunds receivable........................... 11,682
Other current assets.................................... 7,955
Property, plant and equipment........................... 10,982
Intangible assets....................................... 137,217
Other assets............................................ 23,931
Trade accounts payable.................................. (12,865)
Other current liabilities............................... (22,158)
Long-term debt.......................................... (19,000)
=========
</TABLE>
Included in the above allocation are $22,403 of deferred tax assets related
to Windshields which had been fully reserved before the Merger and are further
described in Note 8. Additionally, as a condition of the Merger, Belron
converted $17,088 of advances loaned to the Company into permanent capital
during fiscal 1996. Advances due to Belron are non-interest bearing.
Also, during fiscal 1995, fiscal 1996 and fiscal 1997, the Company acquired
the net assets and businesses of several companies in purchase transactions for
aggregate purchase prices of approximately $5,056, $20,461 and $8,492,
respectively. During the nine months ended December 21, 1996, and December 19,
1997, the Company acquired the net assets and businesses of several companies in
purchase transactions for aggregate purchase prices of approximately $8,492 and
$2,298, respectively. These acquisitions were not material to the Company.
All of the above acquisitions were accounted for as purchases and,
accordingly, the purchase price was allocated to the related assets acquired and
liabilities assumed based upon their estimated fair values at the date of
acquisition. Certain allocations have been, or may be, adjusted based on more
current available information. Future adjustments, if any, will be made prior to
the one year anniversary of the related acquisition and are not expected to be
material. Operating results of acquired businesses have been included in the
consolidated financial statements from the date of acquisition.
The following table summarizes the composition of the acquisitions
described above and consideration paid therefore:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31 NINE MONTHS ENDED
---------------------------- ------------------------------
1995 1996 1997 DEC. 21, 1996 DEC. 19, 1997
------ -------- ------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Merger value.................... $ -- $176,250 $ -- $ -- $ --
Cash paid or withheld pending
collection of acquired
accounts receivable........... 2,886 11,292 7,491 7,491 1,823
Notes issued to sellers......... 2,170 9,169 1,001 1,001 475
------ -------- ------ ------ ------
Total consideration........... 5,056 196,711 8,492 8,492 2,298
Assets acquired................. 4,182 252,361 9,204 9,204 2,389
------ -------- ------ ------ ------
Liabilities assumed............. $ 874 $ 55,650 $ 712 $ 712 $ 91
====== ======== ====== ====== ======
</TABLE>
F-32
<PAGE> 152
4. RESTRUCTURING AND NONRECURRING CHARGES
In conjunction with the Merger, the Company recorded a restructuring charge
of $9,532 and an additional $3,966 reserve in purchase accounting primarily for
the closure of duplicative Windshields and Globe stores, warehouses and offices
and for the estimated costs related to the concurrent decisions to change the
Company's name (ultimately to Vistar, Inc.) and to change from a procurement
practice of warehousing inventory to a vendor-managed inventory program.
Estimated closure costs included (a) $2,371 for the severance of approximately
220 store, warehouse and corporate office employees, (b) $3,010 for future
noncancelable rental payments for facilities subsequent to the date of their
respective closure, (c) $1,199 for the write-off of abandoned assets and (d)
$3,570 for various other related costs necessary for or resulting from the
closure of the facilities, such as legal and brokerage fees to terminate and/or
sublet leases and building restoration costs.
Costs to tear down facility signs with the Windshields and Globe names
($500) and the estimated undepreciated carrying value of such signs ($645) were
also reserved. Based on the larger size of the merged company, management
elected to discontinue the warehousing of inventory prior to its shipment to
Company-owned stores. A program was established whereby certain vendors were
awarded a substantial portion of the Company's procurement requirements in
exchange for delivery directly to the stores. These vendors would acquire the
inventory at the Company's warehouses as the first step in implementing this
program. A $1,135 reserve was established for the estimated difference between
the aggregate carrying value and the bulk (versus retail) price that these
vendors would pay for this inventory. Additionally, the carrying value ($1,068)
of certain computer software systems under development by Windshields at the
time of the Merger was reserved as management elected to convert the Windshields
operations onto the Globe systems.
Total noncash charges, representing asset write-offs, were $4,047. By
December 19, 1997, all affected facilities were closed and all affected
employees were terminated. Actual severance, rental payments and other costs
were not materially different than those estimated when the reserves were
established.
In addition to the costs described above, the Company incurred $6,939,
$5,323 and $793 of nonrecurring costs in fiscal 1997 and the nine-month periods
ended December 21, 1996, and December 19, 1997, respectively, related to the
integration of the Windshields and Globe businesses, the identification of the
new name and the implementation of the vendor-managed inventory program. Such
costs included various consulting fees, temporary services fees, moving,
relocation and other costs. No such future nonrecurring costs are anticipated.
5. NOTES RECEIVABLE
A summary of notes receivable is as follows:
<TABLE>
<CAPTION>
MARCH 31
----------------
1996 1997 DEC. 19, 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Note receivable related to sale of a Globe
subsidiary, due on demand, plus interest at 10%
to 14.4%......................................... $ 833 $ 563 $455
Notes receivable from officers and employees with
interest at various amounts...................... 14 33 --
Other notes receivable, primarily with interest at
5% to 10%........................................ 925 881 122
------ ------ ----
Total notes receivable........................... 1,772 1,477 577
Less -- Current maturities......................... 972 677 452
------ ------ ----
Due by 1999...................................... $ 800 $ 800 $125
====== ====== ====
</TABLE>
F-33
<PAGE> 153
The carrying value of these notes receivable approximate their estimated
fair market value based on their interest rates and near-term maturities.
6. OTHER CURRENT LIABILITIES
A summary of other current liabilities is as follows:
<TABLE>
<CAPTION>
MARCH 31
------------------
1996 1997 DEC. 19, 1997
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Salaries and wages............................... $ 8,483 $ 4,711 $ 4,266
Vacation......................................... 3,501 964 50
Restructuring.................................... 13,100 5,695 1,075
Customer rebates................................. 3,350 9,796 5,275
Other............................................ 6,002 13,959 15,442
------- ------- -------
Total other current liabilities................ $34,436 $35,125 $26,108
======= ======= =======
</TABLE>
7. FINANCING ARRANGEMENTS
On March 31, 1996, the Company had two lines of credit, a temporary
unsecured demand loan providing for borrowings of $50,000 and a $10,000 credit
line secured by receivables and inventory that had been superseded and limited
to zero borrowings by the demand loan but not canceled. Outstanding borrowings
on the demand loan bore interest of LIBOR plus 0.5% or, at the Company's
discretion, the bank's prime rate (averaging 8.25% at March 31, 1996). The
demand loan had no significant covenants. Aggregate borrowings on the demand
loan as of March 31, 1996, were $38,869.
Subsequent to March 31, 1996, the $10,000 credit line was canceled. On May
9, 1996, the demand loan was replaced by a credit facility allowing aggregate
borrowings of $50,000 until March 31, 1998, after which maximum borrowings were
required to be reduced by $5,000 each April 1 down to $35,000 and paid in full
by May 9, 2001. Pursuant to this refinancing, the outstanding borrowings on the
demand note as of March 31, 1996, were classified as long term. Borrowings on
the credit facility bore interest at LIBOR plus applicable margin or, at the
Company's discretion, the bank's prime rate (averaging 6.4% at December 18,
1997). The covenants under the agreement required the Company to maintain, among
other things, minimum profitability, liquidity and net worth levels. Aggregate
borrowings under this credit line were $13,000 as of March 31, 1997. In
connection with the December 19, 1997, merger of the Company with and into
Safelite, as described in Note 14, the Company's borrowings under this line of
credit were paid off by Safelite on December 18, 1997. The amount paid on behalf
of the Company, including accrued interest, was $11,597.
The Company also has various unsecured notes payable related to
acquisitions, with interest rates ranging from 6.4% to 8.33%, and prime plus
1.0% which totaled $10,991 (current maturity $4,772), $7,530 (current maturity
$2,906) and $6,216 (current maturity $1,371) as of March 31, 1996, March 31,
1997, and December 19, 1997, respectively. Principal payments on this debt are
due in various increments through September, 2003. As of December 19, 1997, the
Company was in compliance with all the covenants governing its indebtedness.
Based upon borrowing rates currently available to the Company for
borrowings with similar terms and maturities, the fair value of the Company's
debt was approximately equal to its carrying value as of March 31, 1996, March
31, 1997, and December 19, 1997.
F-34
<PAGE> 154
The aggregate maturities of long-term debt as of March 31, 1997, are as
follows:
<TABLE>
<S> <C>
Year ending March 31 --
1998.................................................. $ 2,906
1999.................................................. 1,010
2000.................................................. --
2001.................................................. 1,200
2002.................................................. 14,200
Thereafter............................................ 1,214
-------
$20,530
=======
</TABLE>
The Company had letters of credit outstanding totaling $10,312, $8,621 and
$0 as of March 31, 1996, March 31, 1997, and December 19, 1997, respectively.
These letters of credit were issued primarily to guarantee various promissory
notes and insurance activities.
8. INCOME TAXES
Components of the (provision) benefit for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 NINE MONTHS ENDED
-------------------------- ------------------------------
1995 1996 1997 DEC. 21, 1996 DEC. 19, 1997
----- ------ ------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Currently payable --
Federal......................... $(132) $ (168) $(1,870) $(5,465) $ --
State........................... (43) (17) (823) (1,210) 952
Deferred.......................... -- 1,992 (5,543) (1,741) (1,220)
----- ------ ------- ------- -------
$(175) $1,807 $(8,236) $(8,416) $ (268)
===== ====== ======= ======= =======
</TABLE>
The principal items comprising the difference between income taxes on the
income (loss) before income taxes computed at the federal statutory rate and the
actual (provision) benefit for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 NINE MONTHS ENDED
---------------------------- ------------------------------
1995 1996 1997 DEC. 21, 1996 DEC. 19, 1997
------ ------- ------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Tax benefit (expense) computed
at the statutory rate......... $ (607) $ 3,751 $(2,453) $(3,914) $ 3,003
Nondeductible amortization of
excess costs.................. (779) (530) (2,503) (1,890) (1,858)
State income taxes, net of
federal benefit............... (45) 416 (964) (875) (37)
Change in valuation allowance... 1,316 (1,298) -- -- --
Other........................... (60) (532) (2,316) (1,737) (1,376)
------ ------- ------- ------- -------
$ (175) $ 1,807 $(8,236) $(8,416) $ (268)
====== ======= ======= ======= =======
</TABLE>
F-35
<PAGE> 155
The tax effects of temporary differences that give rise to significant
portions of deferred income tax benefits (obligations) are as follows:
<TABLE>
<CAPTION>
MARCH 31
------------------
1996 1997 DEC. 19, 1997
------- ------- -------------
<S> <C> <C> <C>
Allowance for doubtful accounts.......................... $ 1,154 $ 1,027 $ 5,500
Inventory bases differences.............................. 1,863 848 540
Property, plant and equipment bases differences.......... 552 948 (191)
Intangible assets bases differences...................... 2,034 3,548 4,502
Accrued vacation......................................... 1,322 64 20
Accrued rent............................................. 742 944 572
Accrued insurance........................................ 1,064 940 2,460
Restructuring reserve.................................... 5,568 2,278 430
Alternative minimum tax credit carryforwards............. 247 274 483
Net operating loss carryforwards......................... 14,417 10,353 10,244
Valuation allowances..................................... (1,693) -- --
Other, net (729) 1,467 (3,089)
------- ------- -------
Total net deferred income tax benefits......... $26,541 $22,691 $21,471
======= ======= =======
</TABLE>
In the accompanying consolidated balance sheet, these net deferred income
tax benefits are classified as current or noncurrent based on the classification
of the related asset or liability for financial reporting. A deferred income tax
obligation or benefit that is not related to an asset or liability for financial
reporting, including deferred income tax assets related to carryforwards, are
classified according to the expected reversal date of the temporary difference.
As of the date of the Merger, Windshields had net deferred income tax
assets of $22,403, primarily due to net operating loss carryforwards. All such
assets were fully offset by a valuation allowance. Based on Windshields'
historical operating results, management concluded that realization of any
benefit from these income tax assets was not reasonably assured. However, due to
the merger with Globe and based on its historical operating results and the
Company's forecast of future operating results, management has concluded that
the Company will likely realize the benefit of these deferred income tax assets.
Accordingly, the valuation allowance of $22,403 was eliminated and, pursuant to
purchase accounting, the resulting net deferred income tax assets were
considered as additional assets acquired in the Merger.
In addition to these carryforwards, the Company has recorded net operating
loss carryforwards attributable to Globe which relate to taxable losses in the
period just prior to the Merger. These taxable losses also created $11,682 of
federal and state income tax refunds from net operating loss carrybacks which
were recorded as receivables by the Company as of March 31, 1996, and
substantially collected in fiscal 1997. The net operating losses which could not
be carried back are subject to various state limitations and accordingly, the
Company had established a valuation allowance against such carryforwards.
However, during fiscal 1997, it was determined that such limitations would not
impair the realizability of these carryforwards and accordingly, the related
valuation allowance was reversed.
The remaining net federal operating losses of the Company as of December
19, 1997, aggregate to $25,780 and expire, if unutilized, in various increments
from 2004 to 2007. Utilization of such carryforwards in any particular year may
be limited under current income tax regulations regarding changes in ownership.
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 subject to the limitations
noted above. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment. In order to fully realize the benefit of its deferred
tax
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<PAGE> 156
assets, the Company will need to generate substantial future taxable income.
Taxable income for the fiscal years ended March 31, 1996 and 1997, was $7,873
and $11,461, respectively (before the effect of net operating loss
carryforwards). Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the deferred tax
assets are deductible, management believes it is more likely than not that the
Company will realize the benefits of these unreserved deductible differences.
9. PROFIT-SHARING/401(K) PLAN
Through December 31, 1996, the Company had two defined contribution 401(k)
profit-sharing plans covering substantially all Windshield employees who had
completed 90 days of service and all Globe nonunion employees. Employees were
allowed to make contributions to the 401(k) plans up to certain specified
limits. The Company matched the employee contributions at specified rates up to
certain percentages of the employee's compensation. These plans were merged into
a single plan, with similar provisions, effective January 1, 1997. The Company
contributed approximately $254, $255, $596, $418 and $468 to these 401(k) plans
during fiscal 1995, fiscal 1996, fiscal 1997 and the nine months ended December
21, 1996, and December 19, 1997, respectively.
10. OTHER RELATED-PARTY TRANSACTIONS
Prior to the Merger, Belron's parent charged the Company a fee equal to
0.5% of net sales for management services. Such charges amounted to $574 and
$744 during the years ended March 31, 1995 and 1996. Concurrent with the Merger,
the management fee for such services was changed to $1,000 annually, plus
expenses incurred by Belron's parent in providing such services. Under this
arrangement, $80 was charged to the Company during the month ended March 31,
1996, $1,000 was charged during the year ended March 31, 1997 ($750 through
December 21, 1996), and $780 for the nine months ended December 19, 1997. The
arrangement was scheduled to be terminated on the fifth anniversary of the
Merger unless otherwise extended by agreement of the stockholders.
The amount due to Belron at March 31, 1996, was $2,574 (included in other
current liabilities). Such amounts were not material at March 31, 1997, or
December 19, 1997. In addition, since the Merger, the Company had a receivable
in the amount of $3,050 from a significant shareholder of the Company. This
receivable is due in accordance with the terms of the original Merger agreement.
Interest accrued and unpaid on this receivable amounted to $400 as of December
19, 1997.
11. LEASE COMMITMENTS
The Company leases certain of its operating facilities, offices and
equipment under long-term operating leases. Certain leases require the payment
of property taxes, insurance and maintenance and contain certain escalation
provisions and renewal options. The Company also leases vehicles under master
leases which typically contain three-year lease terms and expects to renew or
replace vehicle leases as they mature. At March 31, 1997, the Company's
commitments under leases with noncancelable terms of more than one year are as
follows:
<TABLE>
<S> <C>
Year ending March 31 --
1998...................................................... $13,405
1999...................................................... 10,583
2000...................................................... 7,925
2001...................................................... 5,187
2002...................................................... 2,967
Thereafter................................................ 4,134
-------
$44,201
=======
</TABLE>
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<PAGE> 157
Total rent expense was approximately $8,436, $9,519 and $15,864 for the
years ended March 31, 1995, 1996 and 1997, respectively, and $10,084 and $10,783
for the nine months ended December 21, 1996, and December 19, 1997,
respectively.
12. SIGNIFICANT CUSTOMER
Revenues from a significant customer of the Company were approximately
$9,000 and $124,000 for the years ended March 31, 1996 and 1997, respectively,
and $111,000 and $117,000 for the nine months ended December 21, 1996, and
December 19, 1997, respectively. Trade accounts receivable related to this
significant customer were $6,580, $7,788 and $6,615 as of March 31, 1996, March
31, 1997, and December 19, 1997, respectively. As this customer was a
significant customer of Globe, the revenue amount listed above for fiscal 1996
primarily reflects one month's activity. Approximately 47% in fiscal 1995, 69%
in fiscal 1996, 70% in fiscal 1997 (61% through December 21, 1996) and 67% for
the nine months ended December 19, 1997, of total sales were derived from
customers in the insurance industry. The Company's exposure to credit risk is
mitigated by the financial strength of its insurance company customers and the
number of such customers.
13. CONTINGENCIES
The Company is involved in various legal actions arising in the ordinary
course of business. The liabilities, if any, associated with these matters are
not determinable as of December 19, 1997. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's financial position or results of operations.
14. SUBSEQUENT EVENT (UNAUDITED)
Effective December 19, 1997, the Company consummated a merger with Safelite
in a transaction which was accounted for under the purchase method of accounting
as an acquisition of the Company by Safelite. Stockholders of the Company
received cash, common and preferred shares of Safelite (aggregating to
approximately $269,434) in exchange for 100% of the outstanding common and
preference shares of the Company. Certain provisions related to the preference
shares were amended to facilitate the merger, and such shares are no longer
putable to or callable by the combined company. The Company had incurred $1,899
of transaction costs as of December 19, 1997. As Safelite will reimburse the
Company for such costs, the Company recorded this amount as an intangible asset.
15. SUBSEQUENT EVENT
On June 25, 1998, a customer advised Safelite, following a review of
contract terms, that the customer is disputing certain billings made to it by
Vistar prior to the Vistar Merger. The customer has provided Safelite with a
preliminary estimate of the disputed amount, which Safelite is reviewing. The
ultimate resolution of this matter, which could be material to the financial
position and results of operations of Vistar, is not presently determinable.
Accordingly, no provision has been made with respect to any potential outcome of
this matter in the accompanying financial statements.
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<PAGE> 158
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 REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR 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 ITS DATE.
- ------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 16
The Exchange Offer.............................. 25
Transactions.................................... 32
Unaudited Pro Forma Financial Data.............. 37
Selected Consolidated Financial Data............ 42
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 44
Business........................................ 52
Management...................................... 64
Security Ownership of Certain Beneficial Owners
and Management................................ 72
Certain Relationships and Related
Transactions.................................. 75
Description of Capital Stock.................... 77
Description of Other Indebtedness............... 81
Description of Exchange Notes................... 83
Book-Entry; Delivery and Form................... 111
Description of the Initial Notes................ 112
Exchange and Registration Rights Agreement...... 113
Income Tax Considerations....................... 115
Plan of Distribution............................ 117
Legal Matters................................... 117
Independent Auditors............................ 117
Index to Financial Statements................... F-1
</TABLE>
, 1998
<PAGE> 159
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
provides as follows:
(a) 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 he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) 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 he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect to any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections (a) and (b)
of this section. Such determination shall be made (1) by a majority vote of
the board of directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) if there are no such
directors or, if such directors so direct, by independent legal counsel in
a written opinion, or (3) by the shareholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
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<PAGE> 160
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of shareholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to the corporation shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to other enterprises
shall include employee benefit plans; references to fines shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to serving at the request of the corporation shall
include any service as a director, officer, employee, or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner not opposed to the best interests of the
corporation as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The Company's Amended and Restated By-Laws (Exhibit 3.2) provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Delaware law.
The Company maintains insurance with respect to, among other things, the
liabilities that may arise under the statutory provisions referred to above. The
directors and officers of the Company also are insured against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, which might be incurred by them in such capacities and against which they
are not indemnified by the Company.
II-2
<PAGE> 161
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits. Unless otherwise indicated, all Exhibits have been previously
filed.
<TABLE>
<C> <S>
3.1* Restated Certificate of Incorporation of the Company, as
amended.
3.2* Amended and Restated By-Laws of the Company.
3.3* Articles of Incorporation of Carcomp Services, Inc., as
amended.
3.4* By-Laws of Carcomp Services, Inc.
3.5* Articles of Incorporation of U.S.A. Glas, Inc., as amended.
3.6* By-Laws of U.S.A. Glas, Inc.
3.7* Articles of Incorporation of U.S. Auto Glass Centers, Inc.
3.8* By-Laws of U.S.A. Auto Glass Centers, Inc.
4.1 Indenture dated as of December 20, 1996 between the Company
and Fleet National Bank, as Trustee.
4.2* First Supplemental Indenture dated as of December 12, 1997
between the Company and State Street Bank and Trust Company,
as Trustee.
4.3* Second Supplemental Indenture dated as of December 18, 1997
between the Company and State Street Bank and Trust Company.
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation regarding legality of the securities being
registered.
8 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation regarding tax matters.
10.1 Recapitalization Agreement and Plan of Merger and Stock
Purchase Agreement, dated as of November 8, 1996, by and
among Lear Siegler Holdings Corp., The LS Selling
Stockholders (as defined therein), the Company, LSNWY Corp.,
LS Acquisition Corp. and Lite Acquisition Corp.
10.2* Credit Agreement, amended and restated through December 17,
1997, by and among the Company, various lending
institutions, The Chase Manhattan Bank, Bankers Trust
Company and Goldman Sachs Credit Partners L.P.
10.3 Employment Agreement, dated as of December 20, 1996, by and
between the Company and Garen K. Staglin.
10.4 Employment Agreement, dated as of December 20, 1996, by and
between the Company and John F. Barlow.
10.5 Employment Agreement, dated as of December 20, 1996, by and
between the Company and Douglas A. Herron.
10.6 Safelite Glass Corp. 1996 Stock Option Plan.
10.7* Safelite Glass Corp. 1998 Stock Option Plan
10.8* Amended and Restated Management Agreement, dated as of
December 18, 1997, by and between the Company and Thomas H.
Lee Company.
10.9* Amended and Restated Management Agreement, dated as of
December 18, 1997, by and between the Company and Belron
International BV.
10.10* Amended and Restated Shareholders Agreement, dated as of
December 18, 1997, among the Company and the stockholders
named therein.
10.11* Pledge Agreement, dated as of December 17, 1997, made by the
Company in favor of The Chase Manhattan Bank, as Collateral
Agent.
10.12* Amendment No. 1 to the Amended and Restated Shareholders'
Agreement, dated as of March 26, 1998.
10.13* Amendment to the Safelite Glass Corp. 1998 Stock Option
Plan.
</TABLE>
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<PAGE> 162
<TABLE>
<C> <S>
10.14* Registration Agreement, dated as of December 18, 1997, among
the Company and the stockholders named therein.
10.15* Security Agreement, as amended and restated through December
17, 1997, among the Company and The Chase Manhattan Bank, as
Collateral Agent.
10.16* Subsidiary Guaranty, as amended and restated through
December 17, 1997, made by each of the Company's
subsidiaries name therein, in favor of The Chase Manhattan
Bank, as Collateral Agent.
12.1* Computation of the Ratio of Earnings to Fixed Charges for
the Company.
21.1 List of subsidiaries of the Company.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Arthur Andersen LLP.
23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1).
24.1* Powers of Attorney (contained on the signature page hereto).
25.1** Statement on Form T-1 of the eligibility of the Trustee.
27.1* Financial Data Schedule.
99.1* Letter of Transmittal.
99.2* Notice of Guaranteed Delivery.
99.3* Form of Exchange Agent Agreement between the Company and
State Street Bank and Trust Company.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules.
Schedules have been omitted since the information is not applicable, not
required or is included in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
(a)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to the reofferings
by persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(a)(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415 (sec.230.415 of this chapter),
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes 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.
(a)(3) 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
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<PAGE> 163
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.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) 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.
(d) The undersigned registrant hereby undertakes:
(d)(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) (sec.230.424(b) of this chapter) 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.
(iii) To include any material information with respect to the plan of
distribution information in the registration statement;
(d)(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.
(d)(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
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<PAGE> 164
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS, STATE OF OHIO,
ON THE 14TH DAY OF AUGUST 1998.
SAFELITE GLASS CORP.
By: /s/ JOHN F. BARLOW
------------------------------------
John F. Barlow
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John F. Barlow and Anthony J. DiNovi, and each of
them, with the power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities to sign any or all amendments or post-effective amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN F. BARLOW Director, President and Chief August 14, 1998
- --------------------------------------------------- Executive Officer (principal
John F. Barlow executive officer)
/s/ GAREN K. STAGLIN Director and Chairman of the August 14, 1998
- --------------------------------------------------- Board
Garen K. Staglin
/s/ DOUGLAS A. HERRON Senior Vice President, Treasurer August 14, 1998
- --------------------------------------------------- and Chief Financial Officer
Douglas A. Herron (principal financial and
accounting officer)
/s/ ANTHONY J. DINOVI Director August 14, 1998
- ---------------------------------------------------
Anthony J. DiNovi
/s/ SELWYN HERSON Director August 14, 1998
- ---------------------------------------------------
Selwyn Herson
</TABLE>
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<PAGE> 165
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Director August , 1998
- ---------------------------------------------------
Adrian F. Jones
/s/ SETH W. LAWRY Director August 14, 1998
- ---------------------------------------------------
Seth W. Lawry
/s/ THOMAS H. LEE Director August 14, 1998
- ---------------------------------------------------
Thomas H. Lee
/s/ GARY LUBNER Director August 14, 1998
- ---------------------------------------------------
Gary Lubner
/s/ RONNIE LUBNER Director August 14, 1998
- ---------------------------------------------------
Ronnie Lubner
/s/ JOHN E. MASON Director August 14, 1998
- ---------------------------------------------------
John E. Mason
/s/ M. LOUIS SHAKINOVSKY Director August 14, 1998
- ---------------------------------------------------
M. Louis Shakinovsky
/s/ SCOTT M. SPERLING Director August 14, 1998
- ---------------------------------------------------
Scott M. Sperling
/s/ RODNEY STANSFIELD Director August 14, 1998
- ---------------------------------------------------
Rodney Stansfield
</TABLE>
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<PAGE> 166
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS, STATE OF OHIO,
ON THE 14TH DAY OF AUGUST, 1998.
CARCOMP SERVICES, INC.
By: /s/ JOHN F. BARLOW
--------------------------------------
John F. Barlow
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John F. Barlow and Douglas A. Herron, and each of
them, with the power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities to sign any or all amendments or post-effective amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN F. BARLOW Director and President August 14, 1998
- --------------------------------------------------- (principal executive officer)
John F. Barlow
/s/ GAREN K. STAGLIN Director August 14, 1998
- ---------------------------------------------------
Garen K. Staglin
/s/ DOUGLAS A. HERRON Vice President and Treasurer August 14, 1998
- --------------------------------------------------- (principal financial and
Douglas A. Herron accounting officer
Director August , 1998
- ---------------------------------------------------
Adrian F. Jones
/s/ M. LOUIS SHAKINOVSKY Director August 14, 1998
- ---------------------------------------------------
M. Louis Shakinovsky
</TABLE>
II-8
<PAGE> 167
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS, STATE OF OHIO,
ON THE 14TH DAY OF AUGUST, 1998.
U.S.A. GLAS, INC.
By: /s/ JOHN F. BARLOW
--------------------------------------
John F. Barlow
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John F. Barlow and Douglas A. Herron, and each of
them, with the power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities to sign any or all amendments or post-effective amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN F. BARLOW Director and President August 14, 1998
- --------------------------------------------------- (principal executive officer)
John F. Barlow
Director August , 1998
- ---------------------------------------------------
Garen K. Staglin
/s/ DOUGLAS A. HERRON Vice President and Treasurer August 14, 1998
- --------------------------------------------------- (principal financial and
Douglas A. Herron accounting officer
Director August , 1998
- ---------------------------------------------------
Adrian F. Jones
/s/ M. LOUIS SHAKINOVSKY Director August 14, 1998
- ---------------------------------------------------
M. Louis Shakinovsky
</TABLE>
II-9
<PAGE> 168
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS, STATE OF OHIO,
ON THE 14TH DAY OF AUGUST, 1998.
U.S. AUTO GLASS CENTERS, INC.
By: /s/ JOHN F. BARLOW
--------------------------------------
John F. Barlow
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John F. Barlow and Douglas A. Herron, and each of
them, with the power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities to sign any or all amendments or post-effective amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN F. BARLOW Director and President August 14, 1998
- --------------------------------------------------- (principal executive officer)
John F. Barlow
/s/ GAREN K. STAGLIN Director August 14, 1998
- ---------------------------------------------------
Garen K. Staglin
/s/ DOUGLAS A. HERRON Vice President and Treasurer August 14, 1998
- --------------------------------------------------- (principal financial and
Douglas A. Herron accounting officer
Director August , 1998
- ---------------------------------------------------
Adrian F. Jones
/s/ M. LOUIS SHAKINOVSKY Director August 14, 1998
- ---------------------------------------------------
M. Louis Shakinovsky
</TABLE>
II-10
<PAGE> 169
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
3.1* Restated Certificate of Incorporation of the Company, as
amended.
3.2* Amended and Restated By-Laws of the Company.
3.3* Articles of Incorporation of Carcomp Services, Inc., as
amended.
3.4* By-Laws of Carcomp Services, Inc.
3.5* Articles of Incorporation of U.S.A. Glas, Inc., as amended.
3.6* By-Laws of U.S.A. Glas, Inc.
3.7* Articles of Incorporation of U.S. Auto Glass Centers, Inc.
3.8* By-Laws of U.S.A. Auto Glass Centers, Inc.
4.1 Indenture dated as of December 20, 1996 between the Company
and Fleet National Bank, as Trustee.
4.2* First Supplemental Indenture dated as of December 12, 1997
between the Company and State Street Bank and Trust Company,
as Trustee.
4.3* Second Supplemental Indenture dated as of December 18, 1997
between the Company and State Street Bank and Trust Company.
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation regarding legality of the securities being
registered.
8 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation regarding tax matters.
10.1 Recapitalization Agreement and Plan of Merger and Stock
Purchase Agreement, dated as of November 8, 1996, by and
among Lear Siegler Holdings Corp., The LS Selling
Stockholders (as defined therein), the Company, LSNWY Corp.,
LS Acquisition Corp. and Lite Acquisition Corp.
10.2* Credit Agreement, amended and restated through December 17,
1997, by and among the Company, various lending
institutions, The Chase Manhattan Bank, Bankers Trust
Company and Goldman Sachs Credit Partners L.P.
10.3 Employment Agreement, dated as of December 20, 1996, by and
between the Company and Garen K. Staglin.
10.4 Employment Agreement, dated as of December 20, 1996, by and
between the Company and John F. Barlow.
10.5 Employment Agreement, dated as of December 20, 1996, by and
between the Company and Douglas A. Herron.
10.6 Safelite Glass Corp. 1996 Stock Option Plan.
10.7* Safelite Glass Corp. 1998 Stock Option Plan
10.8* Amended and Restated Management Agreement, dated as of
December 18, 1997, by and between the Company and Thomas H.
Lee Company.
10.9* Amended and Restated Management Agreement, dated as of
December 18, 1997, by and between the Company and Belron
International BV.
10.10* Amended and Restated Shareholders Agreement, dated as of
December 18, 1997, among the Company and the stockholders
named therein.
10.11* Pledge Agreement, dated as of December 17, 1997, made by the
Company in favor of The Chase Manhattan Bank, as Collateral
Agent.
10.12* Amendment No. 1 to the Amended and Restated Shareholders'
Agreement, dated as of March 26, 1998.
10.13* Amendment to the Safelite Glass Corp. 1998 Stock Option
Plan.
10.14* Registration Agreement, dated as of December 18, 1997, among
the Company and the stockholders named therein.
</TABLE>
<PAGE> 170
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
10.15* Security Agreement, as amended and restated through December
17, 1997, among the Company and The Chase Manhattan Bank, as
Collateral Agent.
10.16* Subsidiary Guaranty, as amended and restated through
December 17, 1997, made by each of the Company's
subsidiaries name therein, in favor of The Chase Manhattan
Bank, as Collateral Agent.
12.1* Computation of the Ratio of Earnings to Fixed Charges for
the Company.
21.1 List of subsidiaries of the Company.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Arthur Andersen LLP.
23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1).
24.1* Powers of Attorney (contained on the signature page hereto).
25.1** Statement on Form T-1 of the eligibility of the Trustee.
27.1* Financial Data Schedule.
99.1* Letter of Transmittal.
99.2* Notice of Guaranteed Delivery.
99.3* Form of Exchange Agent Agreement between the Company and
State Street Bank and Trust Company.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SAFELITE GLASS CORP.
Safelite Glass Corp. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The present name of the Corporation is Safelite Glass Corp. The
name under which the Corporation was originally incorporated is LS Acquisition
Corp. No. 23. The date of filing of its original Certificate of Incorporation
with the Secretary of State was January 13, 1987.
2. This Restated Certificate of Incorporation restates, integrates and
further amends the Restated Certificate of Incorporation, as amended, of the
Corporation to read as herein set forth in full:
FIRST: The name of the Corporation is Safelite Glass Corp.
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The aggregate number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is 16,000,000 shares of
capital stock, of which 40,000 shares shall be designated Non-Voting 8%
Preferred Stock, par value $.01 per share, 4,960,000 shares shall be designated
as Class A Voting Common Stock, par value $.01 per share (the "Class A Common"),
and 11,000,000 shares shall be designated as Class B Non-Voting Common Stock,
par value $.01 per share (the "Class B Common," and together with the Class A
Common, the "Common Stock").
Effective upon the filing of this Restated Certificate of
Incorporation, each three (3) shares of issued and outstanding Class A Common
Stock shall automatically and without further action on the part of the holder
thereof be converted into one (1) share of Class A Voting Common Stock.
A. The powers, preferences and rights of the shares of Preferred
Stock, and the qualifications, limitations or restrictions thereof are as
follows:
<PAGE> 2
1. Designation and Amount. The Corporation shall be authorized to
issue 40,000 shares designated as Non-Voting 8% Preferred Stock, par value $.01
per share (the "Preferred Stock"). Preferred Stock shall have the preferences,
limitations and rights set forth below.
2. Dividends.
(a) General Obligation. The Corporation will pay cumulative
semi-annual dividends on Preferred Stock if, when and as declared by the Board
of Directors of the Corporation, and to the extent permitted under the General
Corporation Law of the State of Delaware, which shall accrue on a daily basis
(computed on the basis of a 360-day year and actual days elapsed) at the rate
per annum of eight percent (8%) per share of Preferred Stock calculated as a
percentage of $1,000 (plus accrued and unpaid dividends), compounded
semi-annually, from and including December 18, 1997 until the redemption of
Preferred Stock (with payment being calculated through the date on which payment
shall be tendered to the holders of Preferred Stock). This dividend rate will
automatically increase to (i) fourteen percent (14%) per annum upon the
occurrence of a Redemption Event (defined below), (ii) fifteen percent (15%) per
annum on the first annual anniversary date of such Redemption Event and (iii)
sixteen percent (16%) per annum on the second anniversary date of such
Redemption Event if the Corporation elects not to redeem Preferred Stock upon
the occurrence of such Redemption Event. Such dividends will accrue and be
cumulative whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
shares of Preferred Stock will be deemed to be its "date of issuance" regardless
of the number of times transfer of such shares of Preferred Stock is made on the
stock records of the Corporation, and regardless of the number of certificates
which may be issued to evidence such shares of Preferred Stock. A "Redemption
Event" shall mean (i) an underwritten initial public offering (a "Public
Offering") of the Corporation's capital stock pursuant to a registration
statement effected under the Securities Act of 1933, as amended (the "Securities
Act") or (ii) the occurrence of a Change in Control under the terms of the
Indenture, dated as of December 20, 1996, as amended from time to time, by and
between the Corporation and Fleet National Bank, Trustee.
(b) Distributing Partial Dividend Payments. If at any time the
Corporation distributes less than the total amount of dividends then accrued
with respect to Preferred Stock, such payment will be distributed among the
holders of Preferred Stock so that an equal amount will be paid (as nearly as
possible) with respect to each outstanding share of Preferred Stock.
(c) Priority. So long as any shares of Preferred Stock remain
outstanding neither the Corporation nor any Subsidiary (which shall mean any
corporation, association or other business entity of which the Corporation
directly or indirectly owns at the time more than fifty percent (50%) of the
outstanding voting securities or equity interests) will redeem, purchase or
otherwise acquire any other equity security of the Corporation junior to
Preferred Stock in right to payment now or hereafter outstanding, including,
without limitation, the Common Stock (all such securities collectively, the
"Junior Securities"), nor will the Corporation declare or pay any cash dividend
-2-
<PAGE> 3
(including accrued dividends) or make any distribution of assets other than
shares of Junior Securities upon any Junior Securities; provided nothing herein
shall prohibit the Corporation from acquiring Common Stock of the Corporation
pursuant to contractual rights approved by the Board of Directors of the
Corporation.
3. Liquidation, Dissolution or Winding Up.
(a) Treatment at Liquidation, Dissolution and Winding Up. In the
event of a Liquidity Event (as herein defined), before any distribution or
payment may be made with respect to the Junior Securities, holders of each share
of Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes, whether such assets are capital, surplus, or capital
earnings, an amount in cash equal to $1,000 per share of Preferred Stock (which
amount, together with the other share and per share numbers used herein shall be
subject to equitable adjustment whenever there shall occur a stock split,
combination, reclassification or other similar event involving the class or
series of stock in question), plus accrued dividends from the date of issuance
thereof up to and including the date full payment shall be tendered to the
holders of Preferred Stock with respect to such Liquidity Event (the
"Liquidation Amount"). The term "Liquidity Event" shall mean a liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary.
If upon any such Liquidity Event the assets of the Corporation
available for distribution to its stockholders shall be insufficient to permit
payment to the holders of Preferred Stock of the full amount of the Liquidation
Amount to which they are entitled to be paid, the holders of shares of Preferred
Stock shall share ratably in any distribution of assets according to the amounts
which would be payable with respect to the shares of Preferred Stock held by
them upon such distribution if all amounts payable on or with respect to said
shares were paid in full.
After the payment of the Liquidation Amount shall have been made in
full to the holders of Preferred Stock or funds necessary for such payment shall
have been set aside by the Corporation in trust for the accounts of holders of
Preferred Stock so as to be available for such payments, the holders of
Preferred Stock shall be entitled to no further participation in the
distribution of the assets of the Corporation, and the remaining assets of the
Corporation legally available for distribution to its stockholders shall be
distributed among the holders of other classes of securities of the Corporation
in accordance with their respective terms.
(b) Distributions in Cash. The Liquidation Amount shall be paid in
cash to the extent the Corporation has cash available. Whenever a distribution
provided for in this Section 3 is payable in property other than cash, the value
of such distribution shall be the fair market value of such property as
determined in good faith by the Corporation's Board of Directors.
-3-
<PAGE> 4
4. Voting Power.
Except as otherwise required by law, the holders of Preferred Stock
shall not be entitled to vote on any corporate matters.
5. Redemption.
(a) The Corporation may redeem Preferred Stock at its option, in
whole or in part, at $1,000 per share plus accrued dividends from the date of
issuance thereof up to and including the date full payment shall be tendered to
holders of Preferred Stock with respect to such redemption (the "Redemption
Price"), at any time (the "Redemption Date").
(b) Surrender of Certificates. Each holder of shares of Preferred
Stock to be redeemed under this Section 5 shall surrender the certificate or
certificates representing such shares to the Corporation at the principal office
of the Corporation, and thereupon the Redemption Price for such shares as set
forth in this Section 5 shall be paid to the order of the person whose name
appears on such certificate or certificates. Irrespective of whether the
certificates therefor shall have been surrendered, all shares of Preferred Stock
which are the subject of a redemption shall be deemed to have been redeemed and
shall be canceled effective as of the closing of the Public Offering or the
Redemption Date, as the case may be, unless the Corporation shall default in the
payment of the Redemption Price.
(c) Partial Redemptions. If at any time the Corporation redeems
less than all of the outstanding shares of Preferred Stock, such redemption will
be made from the holders of Preferred Stock on a pro rata basis based upon the
number of shares of Preferred Stock held by each stockholder.
6. Restrictions and Limitations.
The Corporation shall not amend this Restated Certificate of
Incorporation without the approval by vote or written consent, by the holders of
at least a majority of the then outstanding shares of Preferred Stock, voting
together as a separate class, if such amendment would amend any of the rights,
preferences, privileges of or limitations provided for herein for the benefit of
any shares of Preferred Stock. Without limiting the generality of the preceding
sentence, the Corporation will not amend this Restated Certificate of
Incorporation without the approval by the holders of at least a majority of the
then outstanding shares of Preferred Stock, voting separately as a separate
class, if such amendment would:
(i) change the relative seniority rights of holders of Preferred
Stock as to the payment of dividends in relation to the holders of any other
capital stock of the Corporation;
(ii) reduce the amount payable to the holders of Preferred Stock
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, or change the
-4-
<PAGE> 5
relative seniority of the liquidation preferences of the holders of Preferred
Stock to the rights upon liquidation of the holders of other capital stock of
the Corporation, or change the dividend rights of the holders of Preferred
Stock;
(iii) cancel or modify the redemption rights of the holders of
Preferred Stock provided for in Section 5 herein; or
(iv) cancel or modify the rights of the holders of Preferred Stock
provided for in this Section 6.
7. Notices of Record Date. In the event of:
(a) any taking by the Corporation of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger of the Corporation, or any transfer of all or substantially all of
the assets of the Corporation to any other corporation, or any other entity or
person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation,
then and in each such event the Corporation shall mail or cause to be
mailed to each holder of Preferred Stock a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right and a description of such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, merger, dissolution, liquidation or winding up is
expected to become effective and (iii) the time, if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities, including
Preferred Stock) shall be entitled to exchange their shares of Common Stock (or
other securities, including Preferred Stock) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, merger, dissolution, liquidation or winding up. Such notice shall be
mailed at least ten (10) business days prior to the date specified in such
notice on which such action is to be taken.
8. No Reissuance of Preferred Stock. No share or shares of Preferred
Stock acquired by the Corporation by reason of redemption, purchase or otherwise
shall be reissued, and all such shares shall be canceled, retired and eliminated
from the shares which the Corporation shall be authorized to issue. The
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce the authorized number of shares of Preferred Stock
accordingly.
-5-
<PAGE> 6
B. Except as otherwise provided in this Part B or as otherwise
required by applicable law, all shares of Class A Common and Class B Common
shall be identical in all respects and shall entitle the holders thereof to the
same rights, preferences and privileges, subject to the same qualifications,
limitations and restrictions, as set forth herein. The powers, preferences and
rights of the shares of Class A Common and Class B Common, and the
qualifications, limitations or restrictions thereof are as follows:
1. Dividends.
As and when dividends are declared or paid with respect to shares
of Common Stock, whether in cash, property or securities of the Corporation, the
holders of Class A Common and the holders of Class B Common shall be entitled to
receive such dividends pro rata at the same rate per share of each class of
Common Stock; provided that (i) if dividends are declared or paid in shares of
Class A Common or Class B Common, the dividends payable in shares of Class A
Common shall be payable to holders of Class A Common and the dividends payable
in shares of Class B Common shall be payable to holders of Class B Common and
(ii) if the dividends consist of other voting securities of the Corporation, the
Corporation shall pay to each holder of Class B Common dividends consisting of
non-voting securities (except as otherwise required by law) of the Corporation
which are otherwise identical to the voting securities and which are convertible
into such voting securities on the same terms as the Class B Common is
convertible into the Class A Common.
2. Dissolution, Liquidation or Winding-Up.
In the event of any dissolution, liquidation or winding-up of the
affairs of the Corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the Corporation and
of the amounts to which the holders of any outstanding shares of any capital
stock ranking senior in preference to the Common Stock and including, without
limitation, Preferred Stock, the holders of the Class A Common Stock and the
holders of the Class B Common Stock shall be entitled to participate pro rata at
the same rate per share of each class of Common Stock in all distributions to
the holders of the Common Stock in any liquidation, dissolution or winding up of
the Corporation. The Board of Directors of the Corporation, in good faith, shall
determine the fair market value, as of the date of distribution, of any property
(other than cash) distributed in the event of any dissolution, liquidation or
winding-up of the affairs of the Corporation (and such fair market value shall
be the amount received in such dissolution, liquidation or winding-up by the
stockholders by reason of the distribution of the property). Any determination
made by the Board of Directors of the Corporation pursuant to this Section 2
shall be final and binding on the Corporation, and all holders of Common Stock.
-6-
<PAGE> 7
3. Voting Power.
Except as otherwise provided in this Part B or as otherwise
required by applicable law, the holders of Class A Common shall be entitled to
one vote per share on all matters to be voted on by the Corporation's
stockholders, and the holders of Class B Common shall have no right to vote on
any matters to be voted on by the Corporation's stockholders.
4. Conversion of the Class B Common.
(a) Any holder of shares of Class B Common shall have the right to
exchange such holder's shares of Class B Common as follows: (i) any time on or
after the Triggering Day, all shares of Class B Common held by any person shall
be exchangeable, on a one-for-one basis, for shares of Class A Common and (ii)
upon or any time after the sale, which is not a Permitted Transfer, to any
person, such shares of Class B Common which have been so sold shall be
exchangeable for shares of Class A Common. The terms "Triggering Day" and
"Permitted Transfer" shall have the meaning set forth in that certain
Shareholders Agreement among the Corporation and its stockholders dated as of
December ___, 1997.
(b) Surrender of Certificates. From and after such time as the shares
of Class B Common are exchangeable pursuant to Section 4(a) above, each such
share of Class B Common may be exchanged for one share of Class A Common in the
following manner: each holder of shares of Class B Common wishing to exchange
shares of Class B Common for shares of Class A Common shall surrender the
certificate or certificates representing such shares to the Corporation at the
principal office of the Corporation, and thereupon the Corporation shall cause
such shares to be exchanged for the same number of shares of Class A Common. The
Corporation shall, within 3 business days of receipt of a duly endorsed
certificate(s) of Class B Common, cause to be issued to such holder thereof a
certificate for shares of Class A Common equal in number to the shares of Class
B Common represented by the certificate(s) which had been surrendered for
exchange by such beneficial holder.
FIFTH: The Board of Directors is expressly authorized to adopt,
amend, or repeal the by-laws of the Corporation.
SIXTH: Elections of directors need not be by written ballot unless
the by-laws of the Corporation shall otherwise provide.
SEVENTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that the foregoing shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. If the General
-7-
<PAGE> 8
Corporation Law of Delaware is hereafter amended to permit further elimination
or limitation of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of Delaware as so amended. Any repeal
or modification of this Article Seventh by the stockholders of the Corporation
or otherwise shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification.
EIGHTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which said application has been made, be
binding on all the creditors or class of creditors, and/or on all of the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
NINTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
3. This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Safelite Glass Corp. has caused this
certificate to be signed by David W. Wood, its Secretary, this 18th day of
December, 1997.
SAFELITE GLASS CORP.
By:_________________________________
David W. Wood
Secretary
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EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS OF
SAFELITE GLASS CORP.
(A DELAWARE CORPORATION)
ADOPTED: DECEMBER 18, 1997
<PAGE> 2
AMENDED AND RESTATED BYLAWS OF
SAFELITE GLASS CORP.
(a Delaware corporation)
ARTICLE 1. OFFICES
Section 1. Registered Office. The registered office of the corporation
within the state of Delaware shall be in the city of Wilmington, county of New
Castle.
Section 2. Other Offices. The Corporation may also have an office or
offices other than said registered office at such place or places, either within
or outside of the state of Delaware, as the board of directors shall from time
to time determine or the business of the Corporation may require.
ARTICLE II. MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at any such place,
either within or outside of the state of Delaware, as shall be designated from
time to time by the board of directors and stated in the notice of meeting or in
a duly executed waiver thereof.
Section 2. Annual Meeting. The annual meeting of stockholders shall be
held at 10:00 a.m., on the first Tuesday of October, if not a legal holiday, and
if a legal holiday, then on the next succeeding day not a legal holiday, at
10:00 a.m., or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of meeting or in a duly
executed waiver thereof. At such annual meeting, the stockholders shall elect,
by a plurality vote, a board of directors and transact such other business as
may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of stockholders, unless
otherwise prescribed by statute, may be called at any time by the board of
directors or the chairman of the board, and shall be called by the secretary
upon the request in writing of a stockholder or stockholders holding of record
at least ten percent (10%) of the voting power of the issued and outstanding
shares of stock of the Corporation entitled to vote at such meeting.
Section 4. Notice of Meetings. Except as otherwise expressly required
by statute, written notice of each annual and special meeting of stockholders
stating the date, place, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be given
to each stockholder of record entitled to vote thereat not fewer than ten (10)
or more than sixty (60) days before the date of the meeting. Business transacted
at any special meeting of the stockholders shall be limited to the purposes
stated in the notice. Notice shall be given personally or by mail, and, if by
mail, shall be sent in a
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postage prepaid envelope, addressed to the stockholder at his address as it
appears on the records of the Corporation. Notice by mail shall be deemed given
at the time when the same shall be deposited in the United States mail, postage
prepaid. Notice of any meeting shall not be required to be given to any person
who attends such meeting, person or by proxy for the express purpose of except
when such person attends the meeting in objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, or who, either before or after the meeting, shall submit a
signed, written waiver of notice, in person or by proxy. Neither the business to
be transacted at nor the purpose of an annual or special meeting of stockholders
need be specified in any written waiver of notice.
Section 5. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, showing the
address and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city, town, or
village where the meeting is to be held, which place shall be specified in the
notice of meeting, or, if not specified, at the place where the meeting is to be
held. The list shall be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum, Adjournments. The holders of a majority of the
voting power of the issued and outstanding stock of the Corporation entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings by stockholders, except
as otherwise provided by statute or by the certificate of incorporation of the
Corporation. If, however, such quorum shall not be present or represented by
proxy at any meeting of stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented by proxy. At such
adjourned meeting at which a quorum shall be present or represented by proxy,
any business may be transacted that might have been transacted at the meeting as
originally called. If the adjournment is for more than thirty (30) days, or if
after adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 7. Organization. At each meeting of stockholders, the chairman
of the board or, in his absence, the chief executive officer or a co-chief
executive officer shall act as chairman of the meeting. The secretary or, in his
absence or inability to act, the person whom the chairman of the meeting shall
appoint secretary of the meeting shall act as secretary of the meeting and keep
the minutes thereof.
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Section 8. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
Section 9. Voting. Except as otherwise provided by statute or the
certificate of incorporation of the Corporation, each stockholder of the
Corporation shall be entitled at each meeting of stockholders to one (1) vote
for each share of capital stock of the corporation standing in his name on the
record of stockholders of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these bylaws as the record date for the determination of the
stockholders who shall be entitled to notice of and to vote at such meeting; or
(b) if no such record date shall have been so fixed, then at the
close of business which notice thereof shall be given, or, if notice is on the
day next preceding the day on waived, at the close of business on the date next
preceding the day on which the meeting is held.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact, but no proxy shall be voted after eleven
(11) months from its date unless the proxy provides for a longer period. Every
proxy shall be revocable, prior to the taking of the vote, at the will of the
stockholder executing it, except as otherwise provided by law, by a writing
delivered to the Corporation stating that the proxy is so revoked or by a
subsequent proxy executed by, or by attendance at the meeting and voting in
person by, the person executing the proxy. Any such proxy shall be delivered to
the secretary of the meeting at or prior to the time designated in the order of
business for so delivering such proxies. When a quorum is present at any
meeting, the vote of the holders of a majority of the voting power of the issued
and outstanding stock of the Corporation entitled to vote thereon, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of statute
or of the certificate of incorporation of the Corporation or of these bylaws, a
different vote is required, in which case such express provision shall govern,
and control the decision of such question. Unless required by statute, or
determined by the chairman of the meeting to be advisable, the vote on any
question need not be by ballot. On a vote by ballot, each ballot shall be signed
by the stockholder voting, or by Its proxy, if there be such proxy, and shall
state the number of shares voted.
Section 10. Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one (1) or more inspectors to act at such
meeting or any adjournment thereof If any of the inspectors so appointed shall
fail to appear or act, the chairman of the meeting shall, or if inspectors shall
not have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine
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the number of shares of capital stock of the Corporation outstanding and the
voting power of each, the number of shares represented at the meeting, the
existence of a quorum, and the validity and effect of proxies, and shall receive
votes, ballots, or consents; hear and determine all challenges and questions
arising in connection with the right to vote; count and tabulate a votes,
ballots, or consents; determine the results, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the chairman of the meeting, the inspectors shall make a report in writing of
any, challenge, request, or matter determined by them and shall execute a
certificate of any fact found by them. No director or candidate for the office
of director shall act as an inspector of an election of directors. Inspectors
need not be stockholders.
Section 11. Action by Consent. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, by any provision of statute or of the certificate of
incorporation of the Corporation or of these bylaws, the meeting and vote of
stockholders may be dispensed with, and the action taken without such meeting
and vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not fewer than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares of stock of the Corporation entitled to vote thereon
were present and voted.
Section 12. Ratification of Acts of Directors and Officers. Except as
otherwise provided by law or by the certificate of incorporation of the
Corporation, any transaction or contract or act of the Corporation or of the
directors or the officers of the Corporation may be ratified by the affirmative
vote of the holders of the number of shares which would have been necessary to
approve such transaction, contract or act at a meeting of stockholders, or by
the written consent of stockholders in lieu of a meeting.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the board of directors. The board
of directors may exercise all such authority and powers of the Corporation and
do all such lawful acts and things as are not by statute or the certificate of
incorporation of the Corporation directed or required to be exercised or done by
the stockholders.
Section 2. Number, Qualifications, Election, and Term of Office. The
number of directors constituting the board of directors shall be ten (10) or as
otherwise fixed, from time to time, by the affirmative vote of a majority of the
entire board of directors or by action of the stockholders of the Corporation.
Any increase or decrease in the number of directors shall be effective as
determined by the board. Directors need not be stockholders. Except as otherwise
provided by statute or these bylaws, the directors shall be elected at the
annual meeting of stockholders. Each director shall hold office until his
successor shall have been
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elected and qualified, or until his death, or until he shall have resigned, or
have been removed, as hereinafter provided in these bylaws.
Section 3. Place of Meetings. Meetings of the board of directors shall
be held at such place or places, within or outside of the state of Delaware, as
the board of directors may from time to time determine or as shall be specified
in the notice of any such meeting.
Section 4. Annual Meeting. The board of directors shall meet for the
purpose of organization, the election of officers, and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given in the event such annual meeting is not
so held. The annual meeting of the board of directors may be held at such other
time or place (within or outside of the state of Delaware) as shall be specified
in a notice thereof given as hereinafter provided in Section 7 of this Article
III.
Section 5. Regular Meetings. Regular meetings of the board of directors
shall be held at such time and place as the board of directors may fix. if any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting that would otherwise be held on that day
shall be held at the same hour on the next succeeding business day. Notice of
regular meetings of the board of directors need not be given except as otherwise
required by statute or these bylaws.
Section 6. Special Meetings. Special meetings of the board of directors
may be called by the chairman of the board, by one or more directors of the
Corporation, or by the chief executive officer or a co-chief executive officer.
Section 7. Notice of Meetings. Notice of each special meeting of the
board of directors (and of each regular meeting for which notice shall be
required) shall be given by the secretary as hereinafter provided in this
Section 7, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these bylaws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be sent by overnight
courier to each director, addressed to him at his residence or usual place of
business, at least three (3) days before the day on which such meeting is to be
held, or shall be sent addressed to him at such place by telegraph, cable,
telex, telecopier, or other similar means, or be delivered to him personally or
be given to him by telephone or other similar means, at least twenty-four (24)
hours before the time at which such meeting is to be held. Notice of any such
meeting need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of notice or who shall attend such meeting,
except when he shall attend for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
Section 8. Quorum and Manner of Acting. A majority of the entire board
of directors shall constitute a quorum for the transaction of business at any
meeting of the board of
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directors, and, except as otherwise expressly required by statute, the
certificate of incorporation of the Corporation, or these bylaws, the act of a
majority of the entire board of directors shall be the act of the board of
directors. In the absence of a quorum at any meeting of the board of directors,
a majority of the directors present thereat may adjourn such meeting to another
time and place. Notice of the time and place of any such adjourned meeting shall
be given to all of the directors unless such time and place were announced at
the meeting at which the adjournment was taken, in which case such notice shall
only be given to the directors who were not present thereat. At any adjourned
meeting at which a quorum is present, any business may be transacted that might
have been transacted at the meeting as originally called. The directors shall
act only as a board and the individual directors shall have no power as such.
Section 9. Organization. At each meeting of the board of directors, the
chairman of the board or, in the absence of the chairman of the board, the chief
executive officer or a co-chief executive officer (or, in his or their absence,
another director chosen by the majority of the directors present) shall act as
chairman of the meeting and preside thereat. The secretary or, in his absence,
any person appointed by the chairman of the meeting shall act, as secretary of
the meeting and keep the minutes thereof.
Section 10. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 11. Vacancies. Any vacancy in the board of directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of directors, or any other cause, may be filled by the vote of a
majority of the directors then in office, though fewer than a quorum, or by the
sole remaining director, or by the stockholders at the next annual meeting
thereof or at a special meeting thereof Each director so elected shall hold
office until his successor shall have been elected and qualified or until
removed.
Section 12. Removal of Directors. Any director may be removed, either
with or without cause, at any time, by the holders of a majority of the voting
power of the issued and outstanding capital stock of the Corporation entitled to
vote at an election of directors.
Section 13. Compensation. The board of directors shall have authority
to fix the compensation, including fees for reimbursement of expenses, of
directors for services to the Corporation in any capacity.
Section 14. Committees. The board of directors may, by resolution
passed by a majority of the entire board of directors, designate one or more
committees, including an executive committee, each committee to consist of one
or more of the directors of the
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Corporation. The board of directors may designate one or more directors as
alternates of any committee, who may replace any absent or disqualified member
at any meeting of the committee. In addition, in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
Except to the extent restricted by statute or the certificate of
incorporation of the Corporation, each such committee, to the extent provided in
the resolution creating it, shall have and may exercise all the powers and
authority of the board of directors and may authorize the seal of the
Corporation to be affixed to all papers that require it. Each such committee
shall serve at the pleasure of the board of directors and have such name as may
be determined from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the board of directors.
Section 15. Action by Consent. Unless restricted by the certificate of
incorporation of the Corporation, any action required or permitted to be taken
by the board of directors or any committee thereof may be taken without a
meeting if all of the board of directors or such committee, as the case may be,
consent thereto in writing, and each writing is filed with the minutes of the
proceedings of the board of directors or such committee, as the case may be.
Section 16. Telephonic Meeting. Unless restricted by the certificate of
incorporation of the Corporation, any one (1) or more members of the board of
directors or any committee thereof may participate in a meeting of the board of
directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation by such means shall constitute
presence in person at the meeting.
ARTICLE IV. OFFICERS
Section 1. Number and Qualifications. The officers of the Corporation
shall be elected by the board of directors and shall include the chairman of the
board, the president, the chief executive officer or the co-chief executive
officers, one or more vice presidents, the secretary, and the treasurer. If the
board of directors wishes, it may also elect other officers (including one or
more assistant treasurers and one or more assistant secretaries) as may be
necessary or desirable for the business of the Corporation. Any two or more
offices may be held by the same person, and no officer, except the chairman of
the board, need be a director. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed, as hereinafter
provided in these bylaws.
Section 2. Resignations. Any officer of the corporation may resign at
any time by giving written notice of his resignation to the Corporation. Any
such resignation shall take
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effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon number receipt.
Unless otherwise specified therein, the acceptance of any such resignation shall
not be necessary to make it effective.
Section 3. Removal. Any officer of the corporation may be removed,
either with or without cause, at any time, by the board of directors at any
meeting or by consent as provided in Article III.
Section 4. Chairman of the Board. The chairman of the board shall be a
member of the board of directors. If present, the chairman of the board shall
preside at each meeting of the board of directors or the stockholders. He shall
advise and counsel with the chief executive officer or the co-chief executive
officers, and with other executives of the Corporation, and shall perform such
other duties as may from time to time be assigned to him by the board of
directors.
Section 5. President. The president shall, in the absence of the
chairman of the board, preside at each meeting of the board of directors or the
stockholders. The president shall perform all duties incident to the office of
president and such other duties as may from time to time be assigned to him by
the chairman of the board or the board of directors.
Section 6. Chief Executive Officer or Co-Chief Executive Officers. The
chief executive officer or co-chief executive officers shall, in the absence of
the chairman of the board, preside at each meeting of the board of directors or
the stockholders. The chief executive officer or co-chief executive officers
shall perform all duties incident to the office of chief executive officer and
such other duties as may from time to time be assigned to him or them by the
chairman of the board or the board of directors.
Section 7. Vice President(s). Each vice president shall perform all
such duties as from time to time may be assigned to him by the board of
directors, the chairman of the board, or the chief executive officer or a
co-chief executive officer. At the request of the chairman of the board or the
chief executive officer or a co-chief executive officer, or in the absence of
such chief executive officer or both co-chief executive officers or in the event
of his or their inability or refusal to act, the vice president, or if there
shall be more than one (1), the vice presidents in the order determined by the
chairman of the board or the board of directors (or if there be no such
determination, then the vice presidents in the order of their election), shall
perform the duties of the chief executive officer, and, when so acting, shall
have the powers of and be subject to the restrictions placed upon the chief
executive officer or co-chief executive officers in respect of the performance
of such duties.
Section 8. Treasurer. The treasurer shall: have charge and custody of,
and be responsible for, all the funds and securities of the corporation; keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation; deposit all moneys and other valuables to the credit of the
Corporation in such depositories as may be designated by
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the board of directors or pursuant to its direction; receive, and give receipt
for, moneys due and payable to the Corporation from any source whatsoever;
disburse the funds of the Corporation and supervise the investments of its
funds, taking proper vouchers therefor; render to the board of directors,
whenever the board of directors may require, an account of the financial
condition of the Corporation; and in general, perform all duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the board of directors.
Section 9. Secretary. The secretary shall: keep or cause to be kept in
one (1) or more books provided for the purpose, the minutes of all meetings of
the board of directors, the committees of the board of directors, and the
stockholders; see that all notices are duly given in accordance with the
provisions of these bylaws and as required by law- be custodian of the records
and the seal of the Corporation and affix and attest the seal to all
certificates for shares of the Corporation (unless the seal of the Corporation
on such certificates shall be a facsimile, as hereinafter provided) and affix
and attest the seal to all other documents to be executed on behalf of the
Corporation under its seal; see that the books, reports, statements,
certificates, and other documents and records required by law to be kept and
filed are properly kept and filed; and in general, perform all duties incident
to the office of secretary and such other duties as from time to time may be
assigned to his by the board of directors.
Section 10. Assistant Treasurer. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties as from time to time may be
assigned by the board of directors.
Section 11. Assistant Secretary. The assistant secretary, or if there
shall be more than one, the assistant secretaries in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties as from time to time may be
assigned by the board of directors.
Section 12. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the board of directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V. STOCK CERTIFICATES AND THEIR TRANSFER
Section 1. Stock Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by, or in the name of the
Corporation by, the chairman of
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the board or the chief executive officer or a co-chief executive officer or a
vice president and by the treasurer or an assistant treasurer or the secretary
or an assistant secretary of the Corporation, certifying the number of shares
owned by such stockholder in the Corporation. If the Corporation shall be
authorized to issue more than one (1) class of stock or more than one (1) series
of any class, the designations, preferences, and relative participating,
optional, or other special rights of each class of stock or series thereof and
the qualifications, limitations, or restriction of such preferences and/or
rights shall be set forth in full or sized on the face or back of the
certificate that the Corporation shall issue to represent such class or series
of stock, provided that, except as otherwise provided in Section 202 of the
General Corporation Law of the State of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate that
the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the designations, preferences, and relative participating,
optional, or other special rights of each class of stock or series thereof and.
the qualifications, limitations, or restrictions of such preferences and/or
rights.
Section 2. Facsimile Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
Section 3. Lost Certificates. The board of directors may direct a new
- -certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen, or
destroyed certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct sufficient to indemnify it
against any claim that may be made against the Corporation on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
such new certificate
Section 4. Transfers of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its records-, provided, however, that the Corporation shall be
entitled to recognize and enforce any lawful restriction on transfer. Whenever
any transfer of stock shall be made for collateral security, and not absolutely,
it shall be so expressed in the entry of transfer if, when the certificates are
presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
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Section 5. Transfer Agents and Registrars. The board of directors may
appoint, or authorize any officer or officers to appoint, one (1) or more
transfer agents and one (1) or more registrars.
Section 6. Regulations. The board of directors may make such additional
rules and regulations, not inconsistent with these bylaws, as it may deem
expedient concerning the issue, transfer, and registration of certificates for
shares of stock of the Corporation.
Section 7. Fixing the Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock
or for the purpose of any other lawful action, the board of directors may fix,
in advance, a record date that shall not be more than sixty (60) or fewer than
ten (10) days before the date of such meeting, and not more than sixty (60)
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting, provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
Section 8. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its records as the
owner of shares of stock to receive dividends and to vote as such owner. The
Corporation shall be entitled to hold liable for calls and assessments a person
registered on its records as the owner of shares of stock, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares of stock on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the
State of Delaware.
ARTICLE VI. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. General. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the fight of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contenders or its equivalent, shall not, of
itself, create a presumption that the person did
- 11 -
<PAGE> 13
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, provided that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware 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 Court of Chancery or such other court
shall deem proper.
Section 3. Indemnification in Certain Cases. To the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections I and 2 of this Article VI, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 4. Procedure. Any indemnification under Sections I and 2 of
this Article VI (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
such Sections I and 2. Such determination shall be made (a) by the board of
directors by a majority vote of the directors who were not parties to such
action, suit or proceeding, even though less than a quorum or (b) if there are
no such directors, or, even if obtainable, a quorum of disinterested directors
so direct, by independent legal counsel in a written opinion, or (c) by the
stockholders.
Section 5. Advances for Expenses. Expenses (including reasonable
attorneys' fees) incurred in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon number
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount if it shall be ultimately determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article VI.
- 12 -
<PAGE> 14
Section 6. Rights Not Exclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
VI shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any law, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
Section 7. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
Section 8. Definition of Corporation. For the purposes of this Article
VI, references to "the Corporation" include all constituent corporations
(including any constituent of a constituent) absorbed in a consolidation or
merger as well as the resulting or surviving corporation which, if its separate
existence had continued, would have had the power and authority to indemnify its
directors, officers, and employees or agents, so that, any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
Section 9. Survival of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to this Article VI shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 10. Other Definitions. For purposes of this Article VI,
references to "other enterprises" shall include employee benefit plans;
references to "other enterprises" shall include any excise taxes assessed on a
person with respect to any employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a director, officer
or agent of the corporation which imposes duties on, or involves services by,
such director, officer or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VI.
- 13 -
<PAGE> 15
ARTICLE VII. GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of statute and the
certificate of incorporation of the Corporation, dividends upon the shares of
capital stock of the Corporation may be declared by the board of directors at
any regular or special meeting. Dividends may be paid in cash, in property, or
in shares of stock of the Corporation, unless otherwise provided by statute or
the certificate of incorporation of the Corporation.
Section 2. Reserves. Before Payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the board of directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the board of directors may think
conducive to the interests of the Corporation. The board of directors may modify
or abolish any such reserves in the manner in which it was created.
Section 3. Seal. The seal of the Corporation shall be in such form as
shall be approved by the board of directors.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the board of
directors.
Section 5. Checks, Notes, Drafts, Etc. All checks, notes, drafts, or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the corporation by such officer, officers,
person or persons as from time to time may be designated by the board of
directors or by an officer or officers authorized by the board of directors to
make such designation.
Section 6. Execution of Contracts, Deeds, Etc. The board of directors
may authorize any officer or officers, and any agent or agents, in the name and
on behalf of the Corporation, to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts, and other obligations or instruments, and
such authority may be general or confined to specific instances.
Section 7. Voting of Stock in Other Corporations. Unless otherwise
provided by resolution of the board of directors, the chairman of the board or
the chief executive officer or a co-chief executive officer from time to time,
may (or may appoint one (1) or more attorneys or agents to) cast the votes that
the Corporation may be entitled to cast as a stockholder or otherwise in any
other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation. In the event one (1) or more attorneys or agents are
appointed, the chairman of the board, the chief executive officer or a co-chief
executive officer may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent. The
- 14 -
<PAGE> 16
Chairman of the board or the chief executive officer or a co-chief executive
officer may, or may instruct the attorneys or agents appointed to, execute or
cause to be executed in the name and on behalf of the Corporation and under its
seal or otherwise, such written proxies, consents, waivers, or other instruments
as may be necessary or proper in the circumstances.
ARTICLES VIII. AMENDMENTS
These bylaws may be amended or repealed or new bylaws adopted (a) by
action of the stockholders entitled to vote thereon at any annual or special
meeting of stockholders or (b) if the certificate of incorporation of the
corporation so provides, by action of the board of directors at a regular or
special meeting thereof. Any bylaw made by the board of directors may be amended
or repealed by action of the stockholders at any annual or special meeting of
stockholders.
- 15 -
<PAGE> 1
Exhibit 3.3
File Number 5613-936-2
----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
I, George H. Ryan, Secretary of State of the State of Illinois, do
hereby certify that CARCOMP SERVICES, INC., A DOMESTIC CORPORATION, INCORPORATED
UNDER THE LAWS OF THIS STATE OCTOBER 15, 1990, APPEARS TO HAVE COMPLIED WITH ALL
THE PROVISIONS OF THE BUSINESS CORPORATION ACT OF THIS STATE RELATING TO THE
FILING OF ANNUAL REPORTS AND PAYMENT OF FRANCHISE TAXES, AND AS OF THIS DATE, IS
IN GOOD STANDING AS A DOMESTIC CORPORATION IN THE STATE OF
ILLINOIS*************************************
IN TESTIMONY WHEREOF, I hereto set my hand
and cause to be affixed the Great Seal of
the State of Illinois this 10th day of
December A.D., 1997
/s/ George H. Regan
--------------------------------------------
SECRETARY OF STATE
<PAGE> 2
File Number [Illegible]
-----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
WHEREAS, ARTICLES OF INCORPORATION OF
THE GLOBE GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now, Therefore, I Jim Edgar, Secretary of State of the State of Illinois by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of Springfield, this 15th day
of October A.D. 1990 and of the Independence of the Untied States the two
hundred and 15th.
/s/ Jim Edgar
-----------------------------------
SECRETARY OF STATE
<PAGE> 3
<TABLE>
<S> <C>
JIM EDGAR
SECRETARY OF STATE
STATE OF ILLINOIS
ARTICLES OF INCORPORATION
Pursuant to the provisions of "The Business Corporation Act of 1983", the undersigned incorporators(s) hereby adopt the following
Articles of Incorporation.
ARTICLE ONE The name of the corporation is The Globe Group, Inc.
---------------------------------------------------------------------------------------
(Shall contain the word "corporation", "company", incorporated",
-----------------------------------------------------------------------------------------------------------------------
"limited", or an abbreviation thereof)
ARTICLE TWO The name and address of the initial registered agent and its registered office are:
Registered Agent
David R. Shevitz
---------------------------------------------------------------------------------------------------------
First Name Middle Name Last Name
Registered Office
525 West Monroe, Suite # 1600
---------------------------------------------------------------------------------------------------------
Number Street Suite # (A PO Box alone is not acceptable)
Chicago 60606 Cook
---------------------------------------------------------------------------------------------------------
City Zip Code County
ARTICLE THREE The purpose or purposes for which the corporation is organized are:
IF NOT SUFFICIENT SPACE TO COVER THIS POINT, ADD ONE OR MORE SHEETS OF THIS SIZE.
To engage in any lawful act or activity for which corporations may be organized under the Illinois Business Corporation Act.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
CLASS *PAR VALUE PER SHARE NUMBER OF SHARES AUTHORIZED
======================================================================================================================
common 1(cent) 10,000
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations, restrictions and the special or relative rights in respect
of the shares of each class are:
IF NOT SUFFICIENT SPACE TO COVER THIS POINT, ADD ONE OR MORE SHEETS OF THIS SIZE.
ARTICLE FIVE The number of shares to be issued initially, and the consideration to be received by the corporation therefor, are:
*PAR VALUE NUMBER OF SHARES Consideration to be
CLASS PER SHARE PROPOSED TO BE ISSUED received therefor
======================================================================================================================
common 1(cent) 100 $100.00
----------------------------------------------------------------------------------------------------------------------
$
----------------------------------------------------------------------------------------------------------------------
$
----------------------------------------------------------------------------------------------------------------------
$
----------------------------------------------------------------------------------------------------------------------
TOTAL $100.00
-----------------------------------
*A declaration as to a "par value" is optional. This space may be marked "n/a" when no reference to a par value is desired.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of directors of the corporation is ________, and the names and
addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their
successors be elected an qualify are:
NAME RESIDENTIAL ADDRESS
======================================================================================================================
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all property to be owned by the corporation for the $__________________
following year wherever located will be:
(b) It is estimated that the value of the property to be located within the State of Illinois $__________________
during the following year will be:
(c) It is estimated that the gross amount of business which will be transacted by the $__________________
corporation during the following year will be:
(d) It is estimated that the gross amount of business which will be transacted from places of $__________________
business in the State of Illinois during the following year will be:
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to be included in the Articles of Incorporation, e.g.,
authorizing preemptive rights; denying cumulative voting; regulating internal affairs; voting majority requirements;
fixing a duration other than perpetual; etc.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned incorporators(s) hereby declare(s), under penalties of perjury, that the statements made in the foregoing
Articles of Incorporation are true.
Dated October 15, 1990.
---------- --
SIGNATURES AND NAMES POST OFFICE ADDRESS
1. /s/ Gilbert L. Bratten 1. 700 South Second Street
------------------------------------------------- ----------------------------------------------------------
Signature Street
Gilbert L. Bratten Springfield, IL 62704
------------------------------------------------- ----------------------------------------------------------
Name (please print) City/Town State Zip
2. 2.
------------------------------------------------- ----------------------------------------------------------
Signature Street
------------------------------------------------- ----------------------------------------------------------
Name (please print) City/Town State Zip
3. 3.
------------------------------------------------- ----------------------------------------------------------
Signature Street
------------------------------------------------- ----------------------------------------------------------
Name (please print) City/Town State Zip
(Signatures must be in ink on original document. Carbon copy, xerox or rubber stamp signatures may only be used on conformed
copies). NOTE: If a corporation acts as incorporator, the name of the corporation and the state of incorporation shall be shown and
the execution shall be by its President or Vice-President and verified by him, and attested by its Secretary or an Assistant
Secretary.
</TABLE>
<PAGE> 5
File Number 5613 936 2
----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
WHEREAS, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
THE GLOBE GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now, Therefore, I, Jim Edgar, Secretary of State of the State of Illinois by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
Springfield, this 24th day of October A.D. 1990 and
of the Independence of the United States the two
hundred and 15th.
/s/ Jim Edgar
-------------------------------
SECRETARY OF STATE
<PAGE> 6
File # 5613 936 2
------------
JIM EDGAR
SECRETARY OF STATE
STATE OF ILLINOIS
ARTICLES OF AMENDMENT
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE The name of the corporation is The Globe Group, Inc.
------------------------------------
__________________________________________________________ (Note 1)
ARTICLE TWO The following amendment of the Articles of Incorporation was
adopted on October 24, 1990 in the manner indicated below ("X" one
box only)
[X] By a majority of the incorporators provided no directors were named
in the articles of incorporation and no directors have been
elected, or by a majority of the board of directors, in accordance
with Section 10 10, the corporation having issued no shares as of
the time of adoption of this amendment.
(Note 2)
[ ] By a majority of the board of directors, in accordance with
Section 10 15, shares having been issued but shareholder action not
being required for the adoption of the amendment.
(Note 3)
[ ] By the shareholders, in accordance with Section 10 20, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders At a meeting of shareholders, not
less than the minimum number of votes required by statute and by
the articles of incorporation were voted in favor of the amendment.
(Note 4)
[ ] By the shareholders, in accordance with Sections 10 20 and 7 10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders A consent in writing has been signed
by shareholders having not less than the minimum number of votes
required by statute and by the articles of incorporation
Shareholders who have not consented in writing have been given
notice in accordance with Section 7 10.
(Note 4)
[ ] By the shareholders, in accordance with Sections 10 20 and 7 10,
a resolution of the board of directors have been duly adopted and
submitted to the shareholders A consent in writing has been signed
by all the shareholders entitled to vote on this amendment.
(Note 4)
(INSERT AMENDMENT)
(ANY ARTICLE BEING AMENDED IS REQUIRED TO BE SET FORTH IN ITS ENTIRETY.)
(SUGGESTED LANGUAGE FOR AN AMENDMENT TO CHANGE THE CORPORATE NAME IS: RESOLVED
THAT THE ARTICLES OF INCORPORATION BE AMENDED TO READ AS FOLLOWS:)
RESOLVED, that Article One of the Articles of Incorporation be amended
to read as follows: "The name of the corporation is AutoComp Services, Inc."
- --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE> 7
PAGE 2
RESOLUTION
RESOLVED, that Article Eight of the Articles of
Incorporation have inserted therein the following:
"Cumulative voting of shares of stock
of the corporation shall not be
allowed under any circumstances."
<PAGE> 8
PAGE 3
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any Class below the number of issued
shares of that class, provided for or effected by this
amendment, is as follows. (If not applicable, insert "No
change")
No change
ARTICLE FOUR (a) The manner in which said amendment effects a change in the
amount of paid-in capital (Paid-in capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total
of these accounts) is as follows: (If not applicable, insert
"No change")
No change
(b) The amount of paid-in capital (Paid in Capital replaces
the terms Stated Capital and Paid in Surplus and is equal to
the total of these accounts) as changed by this amendment is
as follows. (If not applicable, insert "No change")
No change
Before Amendment After Amendment
Paid-in Capital $_______________ $______________
(COMPLETE EITHER ITEM 1 OR 2 BELOW)
(1) The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
<TABLE>
<S> <C>
Dated _____________________, 19____________________________ _____________________________________________
(Exact Name of Corporation)
attested by _______________________________________________ by __________________________________________
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
----------------------------------------------- ---------------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
(2) If amendment is authorized by the incorporators, the incorporators must sign below.
OR
If amendment is authorized by the directors and there are no officers, then a majority of the directors or
such directors as may be designated by the board, must sign below.
The undersigned affirms, under penalties of perjury, that the facts stated herein are true.
Dated October 24 , 1990
------------------------------------------- --
/s/ Gilbert L. Bratten
- ----------------------------------------------------------- ---------------------------------------------
Gilbert L. Bratten
- ----------------------------------------------------------- ---------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------
</TABLE>
<PAGE> 9
PAGE 4
NOTES AND INSTRUCTIONS
NOTE 1 State the true exact corporate name as it appears on the records of
the office of the Secretary of State, BEFORE any amendments herein
reported.
NOTE 2 Incorporators are permitted to adopt amendments ONLY before any
shares have been issued and before any directors have been named or
elected. (ss.10.10)
NOTE 3 Directors may adopt amendments without shareholder approval in only
six instances, as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to ss.5.10 is also
filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(d) to change the corporate name by substituting the work
"corporation", "incorporated", "company", "limited", or the
abbreviation "corp.", "inc.", "co.", or "ltd." for a similar word or
abbreviation in the name, or by adding a geographical attribution to
the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with ss.9 05.
(f) to restate the articles of incorporation as currently amended.
(ss.10.15)
NOTE 4. All amendments not adopted under ss. 10.10 or ss. 10.15 require (1)
that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. (ss. 10.20)
NOTE 5: When shareholder approval is by written consent, all shareholders
must be given notice of the proposed amendment at least 5 days before
the consent is signed. If the amendment is adopted, shareholders who
have not signed the consent must be promptly notified of the passage of
the amendment. (secs. 7.10 & 10.20)
<PAGE> 10
File Number 5613-925-2
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
WHEREAS, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
AUTOCOMP SERVICES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the Great
Seal of the State of Illinois, at the City of Springfield, this 26th day of
February A.D. 1991 and of the Independence of the United States the two hundred
and 15th.
/s/ George H. Regan
----------------------------
George H. Regan
Secretary of State
<PAGE> 11
File No. 5613-936-2
SECRETARY OF STATE
STATE OF ILLINOIS
ARTICLES OF AMENDMENT
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE The name of the corporation is AutoComp Services, Inc. (Note 1)
ARTICLE TWO The following amendment of the Articles of Incorporation was
adopted on February 25, 1991 in the manner indicated below. ("X"
one line only.)
[ ] By a majority of the incorporations, provided no directors were
named in the articles of incorporation and no directors have been
elected; or by a majority of the board of directors, in accordance
with Section 10.10, the corporation having issued no shares as of
the time of adoption of this amendment; (Note 2)
[ ] By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder action not
being required for the adoption of the amendment; (Note 3)
[ ] By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. At a meeting of shareholders, not
less than the minimum number of votes required by statute and by
the articles of incorporation were voted in favor of the amendment;
(Note 4)
[ ] By the shareholders, in accordance with Sections 10.20 and 7.10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed
by shareholders having not less than the minimum number of votes
required by statute and by the articles of incorporation.
Shareholders who have not consented in writing have been given
notice in accordance with Section 7.10, and (Note 4)
[X] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors have been duly adopted and
submitted to the shareholders. A consent in writing has been signed
by all the shareholders entitled to vote on this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is: RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
RESOLVED, that Article One of the Articles of Incorporation be amended to
read as follows:
"The name of the corporation is CarComp Services, Inc."
-------------------------------------------------------
(NEW NAME)
ALL CHANGES OTHER THAN NAMES, INCLUDE ON PAGE 2
(OVER)
<PAGE> 12
PAGE 2
RESOLUTION
N/A
<PAGE> 13
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued shares
of that class, provided for or effected by this amendment, is as
follows: (if not applicable, insert "No change")
NO CHANGE
ARTICLE FOUR (a) The manner in which said amendment effects a change in the
amount of paid-in capital (Paid-in capital replaces the terms
Stated Capital and Paid in Surplus and is equal to the total of
these accounts) is as follows: (if not applicable, insert "No
change")
NO CHANGE
(b) The amount of paid-in capital (Paid-in capital replaces the
terms Stated Capital and Paid in Surplus and is equal to the
total of these accounts) as changed by this amendment is as
follows: (if not applicable, insert "No change")
NO CHANGE
Before Amendment After Amendment
Paid-in Capital $_______________ $_____________
(Complete either Item 1 or 2 below)
(1) The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
Dated February 25, 1991 AutoCorp Services, Inc.
/s/ Robert J. Kubiak, Assistant Secretary /s/ Edward Cheskis, President
- ----------------------------------------- -----------------------------
(2) If amendment is authorized by the incorporators, the incorporators must sign
below.
If amendment is authorized by the directors and there are no officers, then a
majority of the directors or such directors as may be designated by the board,
must sign below.
Dated ____________________, 19
<PAGE> 14
NOTES AND INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein
reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any
shares have been issued and before any directors have been named or
elected. (ss.10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only six
instances as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to ss.5.10 is also
filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(d) to change the corporate name by substituting the work
"corporation", "incorporated", "limited", or the abbreviation "corp.",
"inc.", "co.', or "ltd." for a similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with ss.9.05;
(f) to restate the articles of incorporation as currently amended.
(ss.10.15)
NOTE 4: all amendments not adopted under ss.10.10 or ss.10.15 require (1)
that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. (ss.10.20)
NOTE 5: When shareholder approval is by written consent, all shareholders
must be given notice of the proposed amendment at least 5 days before
the consent is signed. If the amendment is adopted, shareholders who
have not signed the consent must be promptly notified of the passage of
the amendment. (secs. 7.10 & 10.20).
<PAGE> 15
FORM BCA 10-30
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
Filing Fee $25.00
Filing Fee for Re-Stated Articles $100.00
Filed Feb. 26, 1991
George H. Ryan, Secretary of State
Return to:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone 217-782-6961
335290-1
<PAGE> 1
Exhibit 3.4
BY-LAWS
OF
CARCOMP SERVICES, INC.
(name changed amendment dated 2/26/91)
<PAGE> 2
BY-LAWS
ARTICLE I
SHAREHOLDERS
SECTION 1.1. ANNUAL MEETING. An annual meeting of the shareholders
shall be held on the second Monday in September of each year, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting; provided, however, that if in any year such date shall be a
legal holiday, such meeting shall be held on the next succeeding business day.
SECTION 1.2. PLACE OF MEETING. The board of directors may designate any
place, either within or without the State of Illinois, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors.
SECTION 1.3. VOTING BY BALLOT. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
ARTICLE II
DIRECTORS
SECTION 2.1. NUMBER. The number of directors of the corporation shall
be one (1).
SECTION 2.2. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately after
the annual meeting of shareholders. If the board of directors resolves to hold
any additional regular meetings such resolution shall constitute sufficient
notice thereof.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president or at least one-third of the number of directors constituting the
whole board. The person or persons authorized to call special meetings of the
board of directors may fix any place as the place for holding any special
meeting of the board of directors called by them. Written notice of any special
meetings shall be delivered to each director at his business address at least
five (5) days previous to said meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegram company.
- 2 -
<PAGE> 3
ARTICLE III
COMMITTEES
A majority of the board of directors may create one or more committees
and appoint members of the board to serve on the committee or committees. Each
committee shall have such authority as the board of directors may from time to
time direct.
ARTICLE IV
OFFICERS
SECTION 4.1. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at the regular
meeting of the board of directors held after each annual meeting of
shareholders. However, new offices may be created and filled. and vacancies may
be filled at any meeting of the board of directors. Each officer shall hold
office until the next regular meeting of directors following the annual meeting
of shareholders or until his earlier death, resignation or his removal in the
manner provided by law.
SECTION 4.2. NUMBER. The officers of the corporation shall be chosen by
the board of directors and shall be a president and a secretary, The board of
directors may also choose a chairman of the board, one or more vice chairmen,
one or more vice presidents, a treasurer, and one or more assistant secretaries
and assistant treasurers, and such additional officers and agents as the board
of directors may deem necessary from time to time. Any two or more offices may
be held by the same person. Those officers chosen by the board shall have such
duties as are hereinafter described.
SECTION 4.3. THE CHIEF EXECUTIVE OFFICER. The board of directors shall
designate whether the chairman of the board, if one shall have been chosen, or
the president shall be the chief executive officer of the corporation. If a
chairman of the board has not been chosen, or if one has been chosen but not
designated chief executive officer, then the president shall be the chief
executive officer of the corporation. The chief executive officer shall be the
principal executive officer of the corporation and shall in general supervise
and control all of the business and affairs of the corporation, unless otherwise
provided by the board of directors. He shall preside at all meetings of the
stockholders and of the board of directors and shall see that orders and
resolutions of the board of directors are carried into effect. He may sign
bonds, mortgages, certificates for shares and all other contracts and documents
whether or not under the seal of the corporation except in cases where the
signing and execution thereof shall be expressly delegated by law, by the board
of directors or by these by-laws to some other officer or agent of the
corporation. He shall have general powers of supervision and shall be the final
arbiter of all differences between officers of the corporation and his decision
as to any matter affecting the corporation shall be final and binding as between
the officers of the corporation subject only to its board of directors.
- 3 -
<PAGE> 4
SECTION 4.4. THE PRESIDENT. In the absence of the chief executive
officer or in the event of his inability or refusal to act, if the chairman of
the board has been designated chief executive officer, the president shall
perform the duties of the chief executive officer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the chief
executive officer. At all other times the president shall have the active
management of the business of the corporation under the general supervision of
the chief executive officer. He shall have concurrent power with the chief
executive officer to sign bonds, mortgages, certificates for shares and other
contracts and documents, whether or not under the seal of the corporation except
in cases where the signing and execution thereof shall be expressly delegated by
law, by the board of directors, or by these by-laws to some other officer or
agent of the corporation. In general, he shall perform all duties incident to
the office of president and such other duties as the chief executive officer or
the board of directors may from time to time prescribe.
SECTION 4.5. THE CHAIRMAN OF THE BOARD. The chairman of the board, if
one is chosen, shall be chosen from among the members of the board. If the
chairman of the board has not been designated chief executive officer, he shall
perform such duties as may be assigned to him by the chief executive officer or
by the board of directors.
SECTION 4.6. VICE CHAIRMAN OF THE BOARD. In the absence of the chief
executive officer or in the event of his inability or refusal to act, if the
chairman of the board has been designated chief executive officer, the
vice-chairman, or if there be more than one, the vice-chairmen, in the order
determined by the board of directors, shall perform the duties of the chief
executive officer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the chief executive officer. At all other
times, the vice-chairman or vice-chairmen shall perform such duties and have
such powers as the chief executive officer or the board of directors may from
time to time prescribe.
SECTION 4.7. THE VICE-PRESIDENT. In the absence of the president or in
the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the executive vice-president and
then the other vice-president or vice-presidents in the order designated, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the chief executive officer or the board of directors may from time to time
prescribe.
SECTION 4.8. THE SECRETARY. The secretary shall attend all meetings of
the board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors,
- 4 -
<PAGE> 5
and shall perform such other duties as may be prescribed by the board of
directors or the chief executive officer, under whose supervision he shall be.
He shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
SECTION 4.9. THE ASSISTANT SECRETARY. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
chief executive officer or the board of directors may from time to time
prescribe.
SECTION 4.10. THE TREASURER. The treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the board of directors, taking proper vouchers for such disbursements, and shall
render to the president and the board of directors, at its regular meetings, or
when the board of directors so requires, an account of all his transactions as
treasurer and of the financial condition of the corporation. If required by the
board of directors, he shall give the corporation a bond (which shall be renewed
every six (6) years) in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all book, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
SECTION 4.11. THE ASSISTANT TREASURER. The assistant treasurer, or if
there shall be more than one, the assistant treasurers in the order determined
by the board of directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the treasurer or in the event
of his inability or refusal to act, perform the duties and exercise the powers
of the treasurer and shall perform such other duties and have such other powers
as the chief executive officer or the board of directors may from time to time
prescribe.
ARTICLE V
INDEMNIFICATION
- 5 -
<PAGE> 6
SECTION 5.1. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The corporation shall, to the fullest extent to which it is
empowered to do so by The Illinois Business Corporation Act of 1983 (the "Act")
or any other applicable laws as may from time to time be in effect, indemnify
any person who was or is a party, or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he or she is or was a
director or officer of the corporation, or who is or was serving at the request
of the corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against all 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 he or she
reasonably believed to be in, or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
(b) The corporation shall, to the fullest extent to which it is
empowered to do so by the Act or any other applicable laws as may from time to
time be in effect, 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 a right of the corporation to procure judgment in its favor by reason of the
fact that such person is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a director or officer 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 manner he or she reasonably believed
to be in, or not opposed to the best interests of the corporation, provided that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation, unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability, but in
view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper.
SECTION 5.2. CONTRACT WITH THE CORPORATION. The provisions of this
Article V shall be deemed to be a contract between the corporation and each
director or officer who serves in any such capacity at any time while this
Article V and the relevant provisions of the Act or other applicable law, if
any, are in effect, and any repeal or modification of any such law or of this
Article V shall not affect any rights or obligations then existing with respect
to any state of facts then or heretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon such state of facts. However, the provisions of this Article V shall
not be deemed to be a contract between the corporation and any directors and/or
officers of any corporation (the "Predecessor Corporation") which shall merge
into or consolidate with this corporation when this corporation shall be the
surviving or
- 6 -
<PAGE> 7
resulting corporation, and any such directors, officers, employees and/or agents
of the Predecessor Corporation shall be indemnified to the extent required under
Section 8.75 of the Act only at the discretion of the board of directors of this
corporation.
- 7 -
<PAGE> 1
Exhibit 3.5
File Number [Illegible]
-----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF U.S.A. GLASS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF
ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS
PROVIDED BY THE BUSINESS CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1,
A.D. 1984.
Now therefore, I, Jim Edgar, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law do hereby issue this
certificate and attach hereto a copy of the Application of the aforesaid
corporation.
In testimony whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois at the City of Springfield, this 26th day of
April AD 1989 and of the Independence of the United States the two hundred and
13th,
/s/ Jim Edgar
----------------------------------
Secretary of State
<PAGE> 2
ARTICLES OF INCORPORATION
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is U.S.A. Glass, Inc.
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent
Maurice P. Raizes
Registered Office
208 South LaSalle Street, Suite 1860
Chicago, 60604 Cook
ARTICLE THREE The purpose or purposes for which the corporation is organized
are:
The distribution, sale and installation of automobile glass
and related products. The transaction of any and all lawful
business for which corporations may be incorporated under the
Illinois Corporations Act.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
Class *Par value per share Number of shares
authorized
Common N/A 10,000
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of
shares of each class are:
ARTICLE FIVE: The number of shares to be issued initially, and the
consideration to be received by the corporation therefore,
are:
<PAGE> 3
Number of
*Par Value shares to be Consideration to be
Class per share issued received therefor
Common N/A 100 $100.00
Total $100.00
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of
directors of the corporation is ________, and the names and
addresses of the persons who are to serve as directors under
the first annual meeting of shareholders or until their
successors be elected and qualify are:
Name Residential Address
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all $_________________
property to be owned by the
corporation for the following year
wherever located will be:
(b) It is estimated that the value of the $_________________
property to be located within the State
of Illinois during the following year
will be:
(c) It is estimated that the gross amount of $_________________
business will be transacted by the
corporation during the following year
will be:
<PAGE> 4
(a) It is estimated that the value of all $_________________
property to be owned by the
corporation for the following year
wherever located will be:
(d) It is estimated that the gross amount of $_________________
business which will be translated from
places of business in the State of
Illinois during the following year will
be:
ARTICLE EIGHT OTHER PROVISIONS
Attached separate sheet of this size for any other provision to
be included in the Articles of Incorporation, e.g., authorizing
pre-emptive rights; denying cumulative voting; regulating
internal affairs; voting majority requirements; fixing a duration
other than perpetual; etc.
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.
Dated: August 22, 1988
Signatures and Names Post Office Address
1. /s/ Richard J. Lee 1. 1880 W. Fullerton Ave.
----------------------------- Chicago, IL 60614
Richard Lee
-----------------------------
2. 2.
----------------------------- ---------------------------------
----------------------------- -------------------------------------
3. 3.
----------------------------- ----------------------------------
----------------------------- -------------------------------------
(Signatures must be in ink on original document. Carbon copy, xerox or rubber
stamp signal. may only be used on conformed copies)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice-President and verified by him, and attested by its Secretary
or an Assistant Secretary.
<PAGE> 5
State of Illinois
Office of
THE SECRETARY OF STATE
Whereas, ARTICLES OF INCORPORATION OF U.S.A. GLASS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED
IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS
CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now therefore, I, Jim Edgar, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law do hereby issue this
certificate and attach hereto a copy of the Application of the aforesaid
corporation.
In testimony whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois at the City of Springfield, this 29th day of
August AD 1988 and of the Independence of the United States the two hundred and
13th,
/s/ Jim Edgar
-----------------------------------
Secretary of State
<PAGE> 6
ARTICLES OF AMENDMENT
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE The name of the corporation is U.S.A. Glass, Inc.
ARTICLE TWO The following amendment of the Articles of Incorporation was
adopted on April 7, 1989 in the manner indicated below. ("x" one
box only)
[ ] By a majority of the board of directors, in
accordance with Section 10.15, shares having been
issued but shareholder action not being required for
the adoption of the amendment;
(Note 2)
[ ] By a majority of the board of directors, in
accordance with Section 10.15, shares having been
issued but shareholder action not being required for
the adoption of the amendment;
(Note 3)
[ ] By the shareholders, in accordance with Section
10.20, a resolution of the board of directors having
been duly adopted and submitted to the shareholders.
At a meeting of shareholders, not less than the
minimum number of votes required by statute and by
the Articles of incorporation were voted in favor of
the amendment;
(Note 4)
[ ] By the shareholders, in accordance with Sections
10.20 and 7.10 a resolution of the board of directors
having been duly adopted and submitted to the
shareholders. A consent in writing has been signed by
shareholders having not less than the minimum number
of votes required by statute and by the Articles of
incorporation. Shareholders who have not consented in
writing have been given notice in accordance with
Section 7.10;
(Note 4)
[ ] By the shareholders, in accordance with Sections
10.20 and 7.10, a resolution of the board of
directors have been duly adopted and submitted to the
shareholders. A consent in writing has been signed by
all the shareholders entitled to vote on this
amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
U.S.A. Glas, Inc.
- --------------------------------------------------------------------------------
(New Name)
<PAGE> 7
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued
shares of that class, provided for or elected by this
amendment, is as follows. (If not applicable, insert "No
change")
No change
ARTICLE FOUR (a) The manner in which said amendment effects a change in the
amount of paid-in-capital (Paid-in capital replaces the terms
Stated Capital and Paid in Surplus and is equal to the total
of these accounts) is as follows: (If not applicable, insert
"No change")
No change
(b) The amount of paid-in capital (Paid in Capital replaces
the terms Stated Capital and Paid in Surplus and is equal to
the total of these accounts; as changed by this amendment is
as follows:
(If not applicable, insert "No change")
No change
Before Amendment After Amendment
Paid-In Capital $_______________ $_____________
(Complete either Item 1 or 2 below)
The undersigned corporation has caused these Articles to be signed by
its duly authorized officers, each of whom affirm, under penalties of perjury,
that the facts stated herein are true.
Dated April 10, 1989 U.S.A. Glass, Inc.
Attested by /s/ Maurice P. Raizes by /s/ Joe Kellman
------------------------------- --------------------------------
(Signature of Secretary) (Signature of President)
Maurice P. Raizes, Secretary Joe Kellman, President
------------------------------- --------------------------------
(Type or Print Name and Title) (Type of Print Name and Title)
If amendment is authorized by the incorporators, the Incorporators
must sign below.
OR
If amendment is authorized by the directors and there are no
officers, then a majority of the directors or such directors as may be
designated by the board, must sign below.
The undersigned affirms, under penalties of perjury, that the facts
stated herein are true.
Dated_____________________________, 19__
- ---------------------------------------- ------------------------------------
- ---------------------------------------- ------------------------------------
- ---------------------------------------- ------------------------------------
<PAGE> 8
NOTES AND INSTRUCTIONS
NOTE 1. State the true exact corporate name as it appears on the records of the
office of the Secretary of State. BEFORE any amendments herein
reported.
NOTE 2. Incorporators are permitted to adopt amendments only before any shares
have been issued and before any directors have been named or elected.
(ss. 1010)
NOTE 3. Directors may adopt amendments without shareholder approval in only six
instances, as follows:
(a) to remove the names and addresses of
directors named in the Articles of
incorporation;
(b) to remove the name and address of the
initial registered agent and registered
office, provided a statement pursuant to
ss.5.10 is also filed;
(c) to split the issued who shares and unissued
authorized shares by multiplying them by a
whole number, so long as no class or series
is adversely affected thereby;
(d) to change the corporate name by substituting
the word "corporation", "incorporated",
"company", "limited", or the abbreviation
"corp", "inc.", "co.", or "ltd." or a
similar word or abbreviation in the name, or
by adding a geographical attribution to the
name;
(e) to reduce the authorized shares of any class
pursuant to a cancellation statement filed
in accordance with ss.9.05.
(f) to restate the Articles of incorporation as
currently amended.(ss.10.15)
NOTE 4. All amendments not adopted under ss.10.10 or ss.10.15 require (1) that
the board of directors adopt a resolution setting forth the proposed
amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a
shareholders' meeting (either annual or special) or
(2) by consent, in writing, without a meeting.
To be adopted, the amendment must receive the
affirmative vote or consent of the holders of at
least 2/3 of the outstanding shares entitled to vote
on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is
required).
The Articles of incorporation may supersede the 2/3
vote requirement by specifying any smaller or larger
vote requirement not less than a majority of the
outstanding shares entitled to vote and not less than
a majority within each class when class voting
applies. (ss.10.20)
NOTE 5. When shareholder approval is by written consent, all shareholders must
be given notice of the proposed amendment at least 5 days before the
consent is signed. If the amendment is adopted, shareholders who have
not signed the consent must be promptly notified of the passage of the
amendment. (secs.7.10 & 10.20)
<PAGE> 9
File Number 5520-596-5
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
To all to whom these Presidents Shall Come Greeting:
I, George H. Ryan, Secretary of State of the State of Illinois, do
hereby certify that U.S.A. GLAS, INC., A DOMESTIC CORPORATION, INCORPORATED
UNDER THE LAWS OF THIS STATE AUGUST 29, 1988, APPEARS TO HAVE COMPLIED WITH ALL
THE PROVISIONS OF THE BUSINESS CORPORATION ACT OF THIS STATE RELATING TO THE
FILING OF ANNUAL REPORTS AND PAYMENT OF FRANCHISE TAXES, AND AS OF THIS DATE, IS
IN GOOD STANDING AS A DOMESTIC CORPORATION IN THE STATE OF ILLINOIS***
In Testimony Whereof, I hereto set my hand
and cause to be affixed the Great Seal of
the State of Illinois this 10th day of
DECEMBER A.D., 1997.
/s/ George H. Regan
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SECRETARY OF STATE
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Exhibit 3.6
BY-LAWS
OF
U.S.A. GLASS, INC.
ARTICLE I
OFFICES
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose business office is identical with
such registered office, and may have other offices within or without the state.
ARTICLE II
SHAREHOLDERS
FURTHER, RESOLVED, that Article II, Section 1 of the corporation's
by-laws be and the same are amended by deleting therefrom the first sentence in
its entirety and substituting the following:
"The annual meeting of the shareholders shall be held on the first
Monday in July of each year or at such time as the board of directors
may designate for the purpose of electing directors and for the
transaction of such other business as may come before the meeting."
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SECTION 3. PLACE OF MEETING. The board of directors may designate any
place, as the place of meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be at
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date,
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than 10
nor more than 60 days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than 20 nor more than 60 days before the date of the meeting,
either personally or by mail, by or at the direction of the president, or the
secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail addressed to the
shareholder at his or her address as it appears on the records of the
corporation, with postage thereon prepaid. When a meeting is adjourned to
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another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders, or
shareholders entitled to receive payments of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors of the corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than 60 days and for a meeting of shareholders, not less than 10 days, or in the
case of a merger, consolidation, share exchange, dissolution or sale, lease or
exchange of assets, not less than 20 days before the date of such meeting, no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividends, the date on which notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. A determination of shareholders shall apply to any adjournment
of the meeting.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the corporation shall make, within 20 days after the
record date for a meeting of shareholders or 10 days before such meeting,
whichever is earlier, a complete list of the shareholders entitled to vote at
such meeting; arranged in alphabetical order, with the address of and the number
of shares held by each which list, for a period of 10 days prior to such
meeting, shall be kept on file at the registered office of the corporation and
shall be subject to inspection by any shareholder, and to copying a t the
shareholder's expense, at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original share ledger or transfer book, or a duplicate thereof kept
in this State, shall be prima facie evidence as to who are the shareholders
entitled to examine such last or share ledger or transfer book or to vote at a
any meeting of shareholders.
SECTION 7. QUORUM. The holders of a majority of the outstanding shares
of the corporation entitled to vote on a matter, represented in person or by
proxy, shall constitute a quorum for consideration of such matter at any meeting
of shareholders, but in no event shall a quorum consist of less than one-third
of the outstanding shares entitled so to vote; provided that if less than a
majority of the outstanding shares are represented at said meeting, a majority
of the shares so represented may adjourn the meeting at any time without further
notice, if a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by the Business
Corporation Act, the articles of incorporation or these by-laws. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the original meeting. Withdrawal
of shareholders from any meeting shall not cause failure of a duly constituted
quorum at that meeting.
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SECTION 8. PROXIES. Each shareholder may appoint a proxy to vote or
otherwise act for him or her by signing an appointment form and delivering it to
the person so appointed, but no such proxy shall be valid after 11 months from
the date of its execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote in each matter submitted to vote at a
meeting of shareholders, and in all elections for directors, every shareholder
shall have the right to vote the number of shares owned by such shareholder for
as many persons as there are directors multiplied by the number of such shares
or to distribute such cumulative votes in any proportion among any number of
candidates. Each shareholder may vote either in person or by proxy as provided
in SECTION 8 hereof.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares held by the
corporation in a Fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares entitled to vote at any given
time.
Shares registered in the name of another corporation, domestic or
foreign, may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability, may be voted by his or her administrator,
executor or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such
receiver, and shares held or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority to
do so is contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their shares, for a period not to exceed 10 years, by entering into a written
voting trust agreement specifying the terms and conditions of the voting trust
and by transferring, their shares to such trustee or trustees for the purpose of
the agreement. Any such trust agreement shall not become effective until a
counterpart of the agreement is deposited with the corporation at its registered
office. The counterpart of the voting trust agreement so deposited with the
corporation shall be subject to
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the same right of examination by a shareholder of the corporation, in person or
by agent or attorney, as are the books and records of the corporation, and shall
be subject to examination by any holder of a beneficial interest in the voting
trust, either in person or by agent or attorney, at any reasonable time for any
proper purpose.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
SECTION 11. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote in person or by proxy, the number of
shares owned by him/her, for as many persons as there are directors to be
elected, or to cumulate such votes, and give one candidate as many votes as the
number of directors multiplied by the number of his/her shares shall equal, or
to distribute them on the same principle among as many candidates as he/she
shall think fit.
The articles of incorporation may be amended to limit or eliminate
cumulative voting rights in all or specified circumstances, or to limit or deny
voting rights or to provide special voting rights as to any class or classes or
series of shares of the corporation.
SECTION 12. INSPECTORS. At any meeting of shareholders, the presiding
officer may, or upon the request of any shareholder, shall appoint one or more
persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or
her or by a majority of them if there be more than one inspector acting at such
meeting. If there is move than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so taken shall be signed
(a) If 5 days prior notice of the proposed action is given in writing to all of
the shareholders entitled to vote with respect to the subject matter hereof, by
the holders of outstanding shares having not less than the minimum
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number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voting or
(b) by all of the shareholders entitled to vote with respect to the subject
matter thereof.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given in writing to those
shareholders who have not consented in writing. In the event that the action
which is consented to is such as would have required the filing of a certificate
under any section of the Business Corporation Act if such action had been voted
on by the shareholders at a meeting thereof, the certificate filed under such
section shall state, in lieu of any statement required by such section
concerning any vote of shareholders, that written consent has been given in
accordance with the provisions of SECTION 7.10 of the Business Corporation Act
and that written notice has been given as provided in such SECTION 7.10.
SECTION 14. VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by or under the direction of its board of directors. A majority of the
board of directors may establish reasonable compensation for their services of
other officers, irrespective of any personal interest.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be one. Each director shall hold office until the next
annual meeting of share holders; or until his successor shall have been elected
and qualified. Directors need not be residents of Illinois or shareholders of
the corporation. The number of directors may be increased or decreased from time
to time by the amendment of this section. No decrease shall have the effect of
shortening the term of any incumbent, director.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately after
the annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for holding of additional regular meetings
without other notes than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board or directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
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SECTION 5. NOTICE. Notice of any special meeting shall be given at
least ___ days previous thereto by written notice to each director at his
business address. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegram company. The attendance of a director
at, any meeting shall constitute a waiver of notice of such meeting, except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by these
by-laws shall constitute a quorum for transaction of business at any meeting of
the board of directors; provided that if less than a majority of such number of
directors are at said meeting, a majority of the directors present may adjourn
the meeting at any time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless the act of a greater number is required by statute, these
by-laws, or the articles of incorporation.
SECTION 8. VACANCIES. Any vacancy on the board of directors may be
filled by election at the next annual or special meeting of shareholders. A
majority of the board of directors may fill any vacancy prior to such annual or
special meeting of shareholders.
SECTION 9. RESIGNATION AND REMOVAL OF DIRECTORS. A director may resign
at any time upon written notice to the board of directors. A director may be
removed with or without cause, by a majority of shareholders if the notice of
the meeting names the director or directors to be removed at said meetings.
SECTION 10. INFORMAL ACTION BY DIRECTORS. The authority of the board of
directors may be exercised without a meeting if a consent in writing, setting
forth the action taken, is signed by all of the directors entitled to vote.
SECTION 11. COMPENSATION. The board of directors, by the affirmative
vote of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise notwithstanding any director conflict of interest. By
resolution of the board of directors, the directors may be paid their expenses,
if any, of attendance at each meeting of the board. No such payment previously
mentioned in this section shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
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SECTION 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his or her dissent shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered or certified mail to the secretary
of the corporation immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of such action.
SECTION 13. COMMITTEES. A majority of the board of directors may create
one or more committees of two or more members to exercise appropriate authority
of the board of directors. A majority of such committee shall constitute a
quorum for transaction of business. A committee may transact business without a
meeting by unanimous written consent.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
president, one or more vice-presidents, a treasurer, a secretary, and such other
officers as may be elected or appointed by the board of directors. Any two or
more offices may be held by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided. Election of an officer shall
not of itself create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the corporation would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
SECTION 4. PRESIDENT. The president shall be the principal executive
officer of the corporation. Subject to the direction and control of the board of
directors, he/she shall be in charge of the business of the corporation; he
shall see that the resolutions and directions of the board of directors are
carried into effect except in those instances in which that responsibility is
specifically assigned to some other person by the board of directors; and, in
general, he/she shall discharge all duties incident to the office of president
and such other
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duties as may be prescribed by the board of directors from time to time. He
shall preside at all meetings of the shareholders and of the board of directors.
Except in those instances in which the authority to execute is expressly
delegated to another officer or agent of the corporation or a different mode of
execution is expressly prescribed by the board of directors or these by-laws, he
may execute for the corporation certificates for its shares, and any contracts,
deeds, mortgages, bonds or other instruments which the board of directors has
authorized to be executed, and he may accomplish such execution either under or
without the seal of the corporation and either individually or with the
secretary, any assistant secretary, or any other officer thereunto authorized by
the board of directors, according to the requirements of the form of the
instrument. He may vote all securities which the corporation is entitled to vote
except as and to the extent such authority shall be vested in a different
officer or agent of the corporation by the board of directors.
SECTION 5. THE VICE-PRESIDENTS. The vice-president (or in the event
there be more than one vice-president, each of the vice presidents) shall assist
the president in the discharge of his/her duties as the president may direct and
shall perform such other duties as from time to time may be assigned to him/her
by the president or by the board of directors. In the absence of the president
or in the event of his/her inability or refusal to act, the vice-president (or
in the event there be more than one vice-president, the vice-presidents in the
order designated by the board of directors, or by the president if the board of
directors has not made such a designation, or in the absence of any designation,
then in the order of seniority of tenure as vice president) shall perform the
duties of the president and when so acting, shall have the powers of and be
subject to all the restrictions upon the president. Except in those instances in
which the authority to execute is expressly delegated to another of officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, the vice president (or
each of them if there are more than one) may execute for the corporation
certificates for its shares and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors has authorized to be executed, and
he/she may accomplish such execution either under or without the seal of the
corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
SECTION 6. THE TREASURER. The treasurer shall be the principal
accounting and financial officer of the corporation. He shall: (a) have charge
of and be responsible for the maintenance of adequate books of account for the
corporation; (b) have charge and custody of all funds and securities of the
corporation, and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer, and
such other duties as from time to time may be assigned to him by the president
or by the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors may determine.
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SECTION 7. THE SECRETARY. The secretary shall: (a) record the minutes
of the shareholders' and of the board of directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation; (d) keep
a register of the post-office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) sign with the president or a
vice-president, or any other officer thereunto authorized by the board of
directors, certificates for shares of the corporation, the issue of which shall
have been authorized by the board of directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or theses by laws; (f) have general charge of the stock
transfer books of the corporation; (g) have authority to certify the by-laws,
resolutions of the shareholders and board of directors and committees thereof,
and other documents of the corporation as true and correct copies thereof, and
(h) perform all duties incident to the office of secretary and such other duties
as from time to time may be assigned to him/her by the president or by the board
of directors.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or by
the president or the board of directors. The assistant secretaries may sign with
the president, or a vice-president, or any other officer thereunto authorized by
the board of directors, certificates for shares of the corporation, the issue of
which shall have been authorized by "the board of directors, and any contracts,
deeds, mortgages, bonds, or other instruments. which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these by-laws. The assistant treasurers shall
respectively, if required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the board of
directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
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SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness if issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. SHARES REPRESENTED BY CERTIFICATES AND UNCERTIFICATED
SHARES. Shares either shall be represented by certificates or shall be
uncertificated shares.
Certificates representing shares of the corporation shall be signed by
the appropriate officers and may be sealed with the seal or a facsimile of the
seal of the corporation. If a certificate is countersigned by a transfer agent
or registrar, other than the corporation or its employee, any other signatures
may be facsimile. Each certificate representing shares shall be consecutively
numbered or otherwise identified, and shall also state the name of the person to
whom issued, the number and class of shares (with designation of series, if
any), the date of issue, and that the corporation is organized under Illinois
law. If the corporation is authorized to issue shares of more than one class or
of series within a class, "he certificate shall also contain such information or
statement as may be required by law.
Unless prohibited by the articles of incorporation, the board of
directors may provide by resolution that some or all of any class or series of
shares shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until the certificate has been surrendered
to the corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the corporation shall send the registered owner thereof a
written notice of all information that would appear on a certificate. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of uncertificated shares shall be identical to those of the holders of
certificates representing shares of the same class and series.
The name and address of each shareholder, the number and class of
shares held and the date on which the shares were issued shall be entered on the
books of the corporation. The person
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in whose name shares stand on the books of the corporation shall be deemed the
owner thereof for all purposes as regards the corporation.
SECTION 2. LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed the board of directors may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.
SECTION 3. TRANSFERS OF SHARES. Transfer of shares of the corporation
shall be recorded on the books of the Corporation. Transfer of shares
represented by a certificate, except in the case of a lost or destroyed
certificates, shall be made on surrender for cancellation of the certificate for
such shares. A certificate presented for transfer must be duly endorsed and
accompanied by proper guaranty of signature and other appropriate assurances
that the endorsement is effective. Transfer of an uncertificated share shall be
made on receipt by the corporation of an instruction from the registered owner
or other appropriate person. The instruction shall be in writing or a
communication in such form as may be agreed upon in writing by the corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the board of
directors.
ARTICLE VIII
DISTRIBUTIONS
The board of directors may authorize, and the corporation may make,
distributions to its shareholders, subject to any restrictions in its articles
of incorporation or provided by law.
ARTICLE IX
SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Illinois." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced, provided that the affixing of the corporate seal to an
instrument shall not give the instrument additional force or effect, or change
the construction thereof, and the use of the corporate seal is not mandatory.
ARTICLE X
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WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these by-laws or under the provisions of the articles of incorporation or under
the provisions of The Business Corporation Act of the State of Illinois, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time started therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute waiver of notice thereof unless the person at the meeting objects to
the holding of the meeting because proper notice was not given.
ARTICLE XI
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (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, 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 he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment or settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact 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 he or she acted in good faith and in a manner he or she 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
- 12 -
<PAGE> 13
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
SECTION 3. To the extent that a director, officer, employee or agent of
a corporation has been successful, on the merits or otherwise, in the defense or
any action, suit or proceeding referred to in sections 1 and 2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith.
SECTION 4. Any indemnification under sections 1 and 2 shall be made by
the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is roper in the
circumstances because he or she has met the applicable standard of conduct set
forth in sections 1 and 2. Such determination shall be made (a) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
shareholders.
SECTION 5. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding, as authorized by the board of
directors in the specific case, upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount, unless it
shall ultimately be determined that he or she is entitled to be indemnified by
the corporation as authorized in this article.
SECTION 6. The indemnification provided by this article shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any by-law, agreement vote of shareholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
his or her status as such, whether or not the corporation woudl have the power
to indemnify such person against such liability under the provisions of these
sections.
- 13 -
<PAGE> 14
SECTION 8. If the corporation has paid indemnity or had advanced
expenses to a director, officer, employee or agent, the corporation shall report
the indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders' meeting.
SECTION 9. References to "the corporation" shall include, in addition
to the surviving corporation, any merging corporation, including any corporation
having merged with a merging corporation, absorbed in a merger which otherwise
would have lawfully been entitled to indemnify its directors, officers and
employees or agents.
ARTICLE XII
AMENDMENTS
Unless the power to make, alter, amend or repeal the by-laws is
reserved to the shareholders by the articles of incorporation, the by-laws of
the corporation may be made, altered, amended or repealed by the shareholders or
the board of directors, by no by-law adopted by the shareholders may be altered,
amended or repealed by the board of directors if the by-laws so provide. The
by-laws may contain any provisions for the regulation and management of the
affairs of the corporation not inconsistent with the law or the articles of
incorporation.
- 14 -
<PAGE> 1
Exhibit 3.7
JOINT PLAN OF MERGER AND AGREEMENT OF MERGER
BETWEEN
U.S. AUTO GLASS CENTERS, INC.
AND
ACME GLASS, INCORPORATED
WITH
U.S. AUTO GLASS CENTERS, INC.
SURVIVING CORPORATION
WHEREAS, U.S. AUTO GLASS CENTERS, INC., hereinafter called U.S. Auto or
the Surviving Corporation, is an Illinois corporation with principal place of
business at Chicago, Illinois; and
WHEREAS, the aggregate number of shares that U.S. AUTO is authorized to
issue is 1,000 common shares at a par value of $100.00 each, of which 250 shares
are outstanding; and
WHEREAS, ACME GLASS, INCORPORATED, hereinafter called ACME is a
Michigan corporation with its principal place of business at Jackson, Michigan;
and
WHEREAS, the aggregate number of shares that ACME is authorized to
issue is 500 common shares at a par value of $10.00 each, 400 of which shares
are outstanding and are owned legally and beneficially by U.S. AUTO; and
<PAGE> 2
WHEREAS, it is desirable for the benefit of both parties and their
shareholders that the properties, businesses, assets and liabilities of both
parties be combined into one surviving corporation which shall be U.S. AUTO.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto in accordance with the
applicable provisions of the laws of the States of Illinois and Michigan do
hereby agree as follows:
1. MERGER. ACME shall be merged with and into U.S. AUTO
and U.S. Auto does hereby merge ACME with and into itself. On and after the
effective date of this contemplated merger:
(a) U.S. AUTO shall be the Surviving Corporation, and
shall continue to exist as a domestic corporation
under the laws of Illinois, with all of the rights
and obligations of such surviving domestic
corporation as are provided by the Illinois Business
Corporation Act, and especially Section 157.69
thereof.
(b) ACME, as constituent corporation, pursuant to the
Michigan Business Corporation Act, and the Illinois
Business Corporation Act, shall cease to exist
(except as otherwise provided for specific purposes
in such Act), and its property shall become the
property of U.S. AUTO as the Surviving Corporation.
<PAGE> 3
2. ARTICLES OF INCORPORATION; BY-LAWS. The Articles of
Incorporation as amended by By-Laws of U.S. AUTO shall continue as the Articles
of Incorporation and By-Laws of the Surviving Corporation.
3. DIRECTORS. The Directors of U.S. AUTO shall be the
Directors of the Surviving Corporation until their successors are duly elected
and qualified under the By-Laws of the Surviving Corporation.
4. SHARES OF SURVIVOR. Each common share of U.S. AUTO
outstanding on the effective date of the merger shall thereupon, without further
action, become one common share of the Surviving Corporation, without the
issuance or exchange of new shares or share certificates.
5. CANCELLATION OF ACME SHARES. All authorized and
outstanding common shares of ACME, such shares being owned in their entirety by
U.S. AUTO, and all rights in respect thereof, shall be cancelled forthwith on
the effective date of the merger, and the certificates representing such shares
shall be surrendered and cancelled.
6. APPROVAL. This Agreement and Plan of Merger shall be
submitted to the shareholders of U.S. AUTO and ACME for approval as required by
the laws of Illinois and Michigan respectively. If and when such required
approval is obtained, the proper officers of each corporation shall, and are
hereby authorized and directed to, perform all such further acts
<PAGE> 4
and execute and deliver to the proper authorities for filing all documents, as
the same may be necessary or property to render effective the merger
contemplated by this Plan and Agreement.
7. ABANDONMENT OF PLAN. Notwithstanding any of the provisions of
this Agreement, the sole Director of U.S. AUTO at any time before or after
approval by shareholders of either or both corporations, and prior to the
effective date of the merger herein contemplated, and for any reason he may
deem sufficient and proper, shall have the power and authority to abandon and
refrain from making effective the contemplated merger as set forth herein; in
which case this Plan and Agreement shall thereby by cancelled and become null
and void.
8. EFFECTIVE DATE. This merger shall be effective upon the date
of filing with the Secretary of State of Illinois.
IN WITNESS WHEREOF, U.S. AUTO and ACME has caused this Agreement to be
executed in their corporate names by their respective officers and also by the
sole director of each corporation on the 7th day of December, 1979.
U.S. AUTO GLASS CENTERS, INC.
By: /s/ Joseph Kellman
-------------------------------
President
Attest:
/s/ Joseph Kellman
-----------------------------------
Its Sole Directors
/s/ [Illegible]
- ---------------------------------
Assistant Secretary
<PAGE> 5
ACME GLASS, INCORPORATED
By: /s/ Joseph Kellman
-------------------------------
President
Attest:
/s/ Joseph Kellman
-----------------------------------
Its Sole Directors
/s/ [Illegible]
- ---------------------------------
Assistant Secretary
<PAGE> 6
Certificate Number: 3834
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of Merger duly signed, and verified, of GLOBE GLASS
OF ARKANSAS, INC., an Arkansas Corporation, MOBILE GLASS COMPANY, a California
Corporation, TRI-STATE GLASS & TRIM CO., A, U.S. AUTO GLASS CENTER, INC., an
Indiana Corporation, CENTRAL GLASS & TRIM COMPANY, a Missouri Corporation, U.S.
AUTO GLASS CENTERS OF OHIO, INC., AN OHIO CORPORATION, GLASCO OF BRISTOL, INC.,
a Tennessee Corporation, ACME U.S. AUTO GLASS CENTERS, INC., a Texas
Corporation, and GLOBE GLASS CO. OF WISCONSIN, INC., a Wisconsin Corporation,
merged into U.S. AUTO GLASS CENTERS, INC., an Illinois Corporation, have been
filed in the Office of the Secretary of State on the 16th day of December, A.D.
1974, as provided by "THE BUSINESS CORPORATION ACT" in force July 13, A.D. 1933,
as amended;
Now, therefore, I, MICHAEL J. HOWLETT, Secretary of State of the State
of Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of merger and attach thereto a copy of the Articles of Merger of the
aforesaid CORPORATION.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois.
Done at the City of Springfield this 16th day of December, A.D. 1974,
and of the Independence of the United States the one hundred and 99th .
Michael J. Howlett
-----------------------------------
Secretary of State
(SEAL)
<PAGE> 7
ARTICLES OF MERGER 4995-264-3
OF DOMESTIC AND FOREIGN Date Paid 12-16-94
CORPORATION Filing Fee $550.00
Clerk
- ------------------------------ -----------------------------------
TO: MICHAEL HOWLETT, Secretary of State
The undersigned corporations, pursuant to Section 69a of "The
Business Corporation Act" of the State of Illinois, hereby execute the following
articles of merger:
ARTICLE ONE
The names of the corporations proposing to merge and the names
of the states under the laws of which such corporations are organized, are as
follows:
Name of Corporation State of Incorporation
------------------- ----------------------
U.S. Auto Glass Centers, Inc. Illinois
Globe Glass of Arkansas, Inc. Arkansas
Mobile Glass Company California
U.S. Auto Glass Centers, Inc. Colorado
Tri-State Glass & Trim Co., a U.S. Auto
Glass Center, Inc. Indiana
Central Glass & Trim Service, Inc. Michigan
Allen Transfer Company Missouri
U.S. Auto Glass Centers of OHIO, Inc. OHIO
Glasco of Bristol, Inc. Tennessee
Acme U.S. Auto Glass Centers, Inc. Texas
Globe Glass Co. of Wisconsin, Inc. Wisconsin
ARTICLE TWO
The laws of Illinois, Arkansas, California, Colorado, Indiana,
Michigan, Missouri, OHIO, Tennessee, Texas and Wisconsin, the states under which
such corporations are organized, permit such merger.
<PAGE> 8
ARTICLE THREE
The name of the surviving CORPORATION shall be U.S. AUTO GLASS
CENTERS, INC., and it shall be governed by the laws of the State of Illinois.
ARTICLE FOUR
The plan of merger is as follows:
A. The following corporations shall be merged into U.S. AUTO
GLASS CENTERS, INC., an Illinois CORPORATION:
Globe Glass of Arkansas, Inc., an Arkansas CORPORATION.
Mobile Glass Company, a California CORPORATION.
U.S. Auto Glass Centers, Inc., a Colorado CORPORATION.
Tri-State Glass & Trim Co., a U.S. Auto Glass Center, Inc, an
Indiana CORPORATION.
Central Glass & Trim Service, Inc., a Michigan CORPORATION.
Allen Transfer Company, a Missouri CORPORATION.
U.S. Auto Glass Centers of OHIO, Inc., an OHIO CORPORATION.
Glasco of Bristol, Inc., a Tennessee CORPORATION.
Acme U.S. Auto Glass Centers, Inc., a Texas CORPORATION.
Globe Glass Co. of Wisconsin, Inc., a Wisconsin CORPORATION.
B. U.S. Auto Glass Centers, Inc. (Illinois); Globe Glass of
Arkansas, Inc. (Arkansas); Mobile Glass Company (California); U.S. Auto Glass
Centers, Inc. (Colorado); Tri- State Glass & Trim Co., a U.S. Auto Glass Center,
Inc. (Indiana); Central Glass & Trim Service, Inc. (Michigan); Glasco of
Bristol, Inc. (Tennessee); Acme U.S. Auto Glass Centers, Inc. (Texas); Globe
Glass Co. of Wisconsin, Inc. (Wisconsin) shall become a single CORPORATION which
shall be U.S. AUTO GLASS CENTERS, INC., an Illinois CORPORATION, the surviving
CORPORATION. The separate existence of the Globe Glass of Arkansas, Inc.
(Arkansas); Mobile Glass Company (California); U.S. Auto Glass Centers, Inc.
(Colorado); Tri-State Glass & Trim Co., a U.S. Auto Glass Center, Inc.
(Indiana); Central Glass & Trim Service, Inc. (Michigan); Allen Transfer Company
(Missouri); U.S. Auto Glass Centers of OHIO, Inc. (OHIO); Glasco of Bristol,
Inc. (Tennessee); Acme U.S. Auto Glass Centers, Inc. (Texas); and Globe Glass
Co. of Wisconsin, Inc. (Wisconsin) shall cease, and the existence of U.S. AUTO
GLASS CENTERS, INC., an Illinois CORPORATION, shall continue.
C. U.S. AUTO GLASS CENTERS, INC., an Illinois CORPORATION,
shall possess all the rights, privileges, immunities and franchises, as well as
of a public as of a private nature, of U.S. AUTO GLASS CENTERS, INC. (Illinois);
Globe Glass of Arkansas, Inc. (Arkansas); Mobile Glass Company (California);
U.S. Auto Glass Centers, Inc. (Colorado); Tri- State Glass & Trim Co., a U.S.
Auto Glass Center, Inc. (Indiana); Central Glass & Trim Service, Inc.
(Michigan); Glasco of Bristol, Inc. (Tennessee); Acme U.S. Auto Glass Centers,
Inc. (Texas); and Globe Glass Co. of Wisconsin, Inc. (Wisconsin). All property,
real, personal, or
<PAGE> 9
mixed, and all debts due on whatever account and all other __________ in action
and all and every other interest of or belonging or due to Globe Glass of
Arkansas, Inc. (Arkansas); Mobile Glass Company (California); U.S. Auto Glass
Centers, Inc. (Arkansas); Mobile Glass Company (California); U.S. Auto Glass
Centers, Inc. (Colorado); Tri-State Glass & Trim Coo., a U.S. Auto Glass Center,
Inc. (Indiana); Central Glass & Trim Service, Inc. (Michigan); Allen Transfer
Company (Missouri); U.S. Auto Glass Centers of OHIO, Inc. (OHIO); Globe Glass
Co. of Wisconsin, Inc. (Wisconsin) shall be taken and deemed to be transferred
and vested in U.S. AUTO GLASS CENTERS, INC., an Illinois CORPORATION, without
further act or deed.
D. U.S. AUTO GLASS CENTERS, INC., an Illinois CORPORATION,
shall become responsible and liable for all the liabilities and obligations of
Globe Glass of Arkansas, Inc. (Arkansas); Mobile Glass Company (California);
U.S. Auto Glass Centers, Inc. (Colorado); Tri-State Glass & Trim Co., a U.S.
Auto Glass Center, Inc. (Indiana); Central Glass & Trim Service, Inc.
(Michigan); Allen Transfer Company (Missouri); U.S. Auto Glass Centers of OHIO,
Inc. (OHIO); Glasco of Bristol, Inc. (Tennessee); Acme U.S. Auto Glass Centers,
Inc. (Texas); and Globe Glass Co. of Wisconsin, Inc. (Wisconsin).
E. This merger shall be consummated as a non-taxable
reorganization under the terms and provisions of Sections 354 through 375, both
inclusive of the Internal Revenue Code, and under Regulation 1.3682 of the
Internal Revenue Service Regulations and any other applicable sections of the
Code or Regulations of the Internal Revenue Service.
F. Each of the following corporations:
Globe Glass of Arkansas, Inc. (Arkansas)
Mobile Glass Company (California)
U.S. Auto Glass Centers, Inc. (Colorado)
Tri-State Glass & Trim Co., a U.S. Auto Glass Center, Inc.
(Indiana)
Central Glass & Trim Service, Inc. (Michigan)
Allen Transfer Company (Missouri)
U.S. Auto Glass Centers of OHIO, Inc. (OHIO)
Glasco of Bristol, Inc. (Tennessee)
Acme U.S. Auto Glass Centers, Inc. (Texas)
Globe Glass Co. of Wisconsin, Inc. (Wisconsin)
are all wholly owned subsidiaries of U.S. AUTO GLASS CENTERS, INC., an Illinois
CORPORATION, and upon the effective date of the merger all of the issued and
outstanding shares of stock of:
Globe Glass of Arkansas, Inc. (Arkansas)
Mobile Glass Company (California)
U.S. Auto Glass Centers, Inc. (Colorado)
Tri-State Glass & Trim Co., a U.S. Auto Glass Center, Inc.
(Indiana)
Central Glass & Trim Service, Inc. (Michigan)
Allen Transfer Company (Missouri)
<PAGE> 10
U.S. Auto Glass Centers of OHIO, Inc. (OHIO)
Glasco of Bristol, Inc. (Tennessee)
Acme U.S. Auto Glass Centers, Inc. (Texas)
Globe Glass Co. of Wisconsin, Inc. (Wisconsin)
shall be canceled.
ARTICLE FIVE
Effective date of merger:
For all purposes of the laws of the State of Illinois, the
merger provided for shall become effective and the separate existences of:
Globe Glass of Arkansas, Inc. (Arkansas)
Mobile Glass Company (California)
U.S. Auto Glass Centers, Inc. (Colorado)
Tri-State Glass & Trim Co., a U.S. Auto Glass Center, Inc.
(Indiana)
Central Glass & Trim Service, Inc. (Michigan)
Allen Transfer Company (Missouri)
U.S. Auto Glass Centers of OHIO, Inc. (OHIO)
Glasco of Bristol, Inc. (Tennessee)
Acme U.S. Auto Glass Centers, Inc. (Texas)
Globe Glass Co. of Wisconsin, Inc. (Wisconsin)
except insofar as they may be continued by statute, shall cease as soon as these
articles of merger shall be adopted, approved, and acknowledged in accordance
with the laws of the State of Illinois and certificates of its adoption and
approval shall have been executed in accordance with such laws and the articles
of merger shall have been filed in and accepted by the office of the Secretary
of State of the State of Illinois.
ARTICLE SIX
The officers and directors of U.S. AUTO GLASS CENTERS, INC.,
an Illinois CORPORATION, shall continue after the merger as officers and
directors of the surviving CORPORATION. On the effective date of the merger, the
by-laws and purposes of U.S. AUTO GLASS CENTERS, INC. (Illinois) as presently
enforced shall be the by-laws and purposes of the surviving CORPORATION until
the same shall be altered, amended or repealed or until new by-laws and purposes
shall be adopted.
ARTICLE SEVEN
As to each CORPORATION, the number of shares outstanding and
the number of and designation of the shares of any class entitled to vote as a
class are:
<PAGE> 11
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Total No. of Designation of No. of
Total No. of Shares Class Entitled Shares of
Shares Entitled to to Vote as a Such Class
Name of Corporation Outstanding Vote Class (If any) (If any)
- ------------------- ------------ ------------ -------------- ----------
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Auto Glass Centers, Inc.
(Illinois) 250 250 None None
- --------------------------------------------------------------------------------------------------------
Globe Glass of Arkansas, Inc.
(Arkansas) 100 100 None None
- --------------------------------------------------------------------------------------------------------
U.S. Auto Glass Centers, Inc.
(Colorado) 1,500 1,500 None None
- --------------------------------------------------------------------------------------------------------
Tri-State Glass & Trim Co., a
U.S. Auto Glass Center, Inc.
(Indiana) 100 100 None None
- --------------------------------------------------------------------------------------------------------
Central Glass & Trim Service,
Inc. (Michigan) 100 100 None None
- --------------------------------------------------------------------------------------------------------
Allen Transfer Company
(Missouri) 1,000 1,000 None None
- --------------------------------------------------------------------------------------------------------
U.S. Auto Glass Centers of
OHIO, Inc. (OHIO) 100 100 None None
- --------------------------------------------------------------------------------------------------------
Glasco of Bristol, Inc.
(Tennessee) 1,287,38 1,287.38 None None
- --------------------------------------------------------------------------------------------------------
Acme U.S. Auto Glass Centers,
Inc. (Texas) 100 100 None None
- --------------------------------------------------------------------------------------------------------
Globe Glass Co. of Wisconsin,
Inc. (Wisconsin) 100 100 None None
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
ARTICLE EIGHT
As to each CORPORATION, the number of shares voted for and
against the plan, respectively, and the number of shares of any class entitled
to vote as a class voted for and against the plan, are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Total Total
Shares Shares Shares Shares
Voted Voted Voted Voted
Name of Corporation For Against Class For Against
- ------------------- -------- ------- ----- ------ -------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Auto Glass Centers, Inc.
(Illinois) 250 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Globe Glass of Arkansas, Inc.
(Arkansas) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
U.S. Auto Glass Centers, Inc.
(Colorado) 1,500 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Tri-State Glass & Trim Co., a
U.S. Auto Glass Center, Inc.
(Indiana) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Central Glass & Trim Service,
Inc. (Michigan) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Allen Transfer Company
(Missouri) 1,000 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
U.S. Auto Glass Centers of
OHIO, Inc. (OHIO) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Glasco of Bristol, Inc.
(Tennessee) 1,287,38 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Acme U.S. Auto Glass Centers,
Inc. (Texas) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Globe Glass Co. of Wisconsin,
Inc. (Wisconsin) 100 None N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
ARTICLE NINE
All provisions of the laws of the State of Illinois, Arkansas,
California, Colorado, Indiana, Michigan, Missouri, OHIO, Tennessee, Texas and
Wisconsin, applicable to the proposed merger have been complied with.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
these articles of merger to be executed in its name by its president and its
corporate seal to be hereunto affixed, attested by its secretary, this 4th day
of December, 1974.
U. S. AUTO GLASS CENTERS, INC.
(Illinois)
Attest:
[ILLEGIBLE] By: /s/ Joseph Kellman
- --------------------------------------- -------------------------------
Secretary President
GLOBE GLASS OF ARKANSAS, INC.
Attest:
[ILLEGIBLE] By: /s/ Joseph Kellman
- --------------------------------------- -------------------------------
Secretary President
MOBILE GLASS COMPANY
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- -------------------------------
Secretary President
U.S. AUTO GLASS CENTERS, INC.
(Colorado)
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- -------------------------------
Secretary President
<PAGE> 14
TRI-STATE GLASS & TRIM CO., a
U.S. Auto Glass Center, Inc.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
CENTRAL GLASS & TRIM SERVICE, INC.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
ALLEN TRANSFER COMPANY
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
U.S. AUTO GLASS CENTERS OF OHIO, INC.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
GLASCO OF BRISTOL, INC.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
ACME U.S. AUTO GLASS CENTERS, INC.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
<PAGE> 15
GLOBE GLASS CO. OF WISCONSIN, INC.
Attest:
[Illegible] By: /s/ Joseph Kellman
- --------------------------------------- ---------------------------------
Secretary President
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of U.S. AUTO GLASS CENTERS, INC. (Illinois),
one of the corporations executing the foregoing documents, and being first duly
sworn, acknowledged that he signed the foregoing articles of merger in the
capacity herein set forth and declared that the statements therein contained are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of GLOBE GLASS OF ARKANSAS, INC., one of the
corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 16
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of MOBILE GLASS COMPANY, one of the
corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of U.S. AUTO GLASS CENTERS, INC. (Colorado),
one of the corporations executing the foregoing documents, and being first duly
sworn, acknowledged that he signed the foregoing articles of merger in the
capacity herein set forth and declared that the statements therein contained are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 17
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of TRI-STATE GLASS & TRIM CO., A U.S. Auto
Glass Center, Inc., one of the corporations executing the foregoing documents,
and being first duly sworn, acknowledged that he signed the foregoing articles
of merger in the capacity herein set forth and declared that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of CENTRAL GLASS & TRIM SERVICE, INC., one of
the corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 18
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of ALLEN TRANSFER COMPANY, one of the
corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of U.S. AUTO GLASS CENTERS OF OHIO, INC., one
of the corporations executing the foregoing documents, and being first duly
sworn, acknowledged that he signed the foregoing articles of merger in the
capacity herein set forth and declared that the statements therein contained are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 19
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of GLASCO OF BRISTOL, INC., one of the
corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of ACME U.S. AUTO GLASS CENTERS, INC., one of
the corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 20
STATE OF ILLINOIS)
COUNT OF COOK ) SS.
I, Patricia S. Stewart, a Notary Public do hereby certify that on the
4th day of December, 1974, personally appeared before me JOSEPH KELLMAN, who
declares that he is the President of GLOBE GLASS CO. OF WISCONSIN, INC., one of
the corporations executing the foregoing documents, and being first duly sworn,
acknowledged that he signed the foregoing articles of merger in the capacity
herein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Patricia Stewart
-------------------------------------
NOTARY PUBLIC
<PAGE> 21
Certificate Number: 63179
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING
WHEREAS, Articles of Incorporation duly signed and verified of U.S.
AUTO GLASS CENTERS, INC. have been filed in the Office of the Secretary of State
on the 10th day of January A.D. 1972, as provided by 'THE BUSINESS CORPORATION
ACT" of Illinois in force July 13, A.D. 1933.
Now therefore, I, John W. Lewis, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate of
incorporation and attach thereto a copy of the Articles of Incorporation of the
aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, done at the City of Springfield this 10th
day of January A.D. 1972 and of the Independence of the United States the one
hundred and 96th
/s/ John W. Lewis
----------------------------------
Secretary of State
(SEAL)
<PAGE> 22
FORM B C A-47
BEFORE ATTEMPTING TO EXECUTE THESE BLANKS BE SURE TO READ
CAREFULLY THE INSTRUCTIONS ON THE BACK THEREOF.
(THESE ARTICLES MUST BE FILED IN DUPLICATE)
STATE OF ILLINOIS, ) (Do not write in this space)
) Date Paid
COOK COUNTY ) ss. Initial License Fee $
) Franchise Tax $
TO PAUL POWELL, ) Filing Fee $
Secretary of State: )
Clerk $
The undersigned,
- --------------------------------------------------------------------------------
Address
Name Number Street City State
- --------------------------------------------------------------------------------
JACK A. COHON 208 South La Salle Street Chicago Illinois
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
being one or more natural persons of the age of twenty-one years or more or a
corporation, and having subscribed to shares of the corporation to be organized
pursuant hereto, for the purpose of forming a corporation under "The Business
Corporation Act" of the State of Illinois, do hereby adopt the following
Articles of Incorporation:
ARTICLE ONE
The name of the corporation hereby incorporated is: U.S. AUTO GLASS CENTERS,
INC.
ARTICLE TWO
The address of its initial registered office in the State of Illinois is: 208
South La Salle Street, in the City of Chicago (60604) County of Cook and the
name of its initial Registered Agent at said address is: JACK A. COHON
ARTICLE THREE
The duration of the corporation is: Perpetual
<PAGE> 23
ARTICLE FOUR
The purpose or purposes for which the corporation is organized are:
To engage in the business of buying, selling and installing glass,
glass products and products related thereto.
To enter into, make and perform contracts of any kind and description
with any person, firm, association, corporation, municipality, state, government
or dependency thereof.
ARTICLE FIVE
PARAGRAPH 1: The aggregate number of shares which the corporation is authorized
to issue is 1,000 divided into one classes. The designation of each class, the
number of shares of each class, and the par value, if any, of the shares of each
class, or a statement that the shares of any class are without par value, are as
follows:
Class Series Number of Par value per share or statement that
(If any) Shares shares are without par value
Common None 1,000 $100.00 per share
PARAGRAPH 2: The preferences, qualifications, limitations, restrictions and the
special or relative rights in respect of the shares of each class are: None
<PAGE> 24
ARTICLE SIX
The class and number of shares which the corporation proposes to issue
without further report to the Secretary of State, and the consideration
(expressed in dollars) to be received by the corporation therefor, are:
Class of shares Number of shares Total consideration to be
received therefor:
Common 10 $1,000.00
$
---------
ARTICLE SEVEN
The corporation will not commence business until at least one thousand
dollars has been received as consideration for the issuance of shares.
ARTICLE EIGHT
The number of directors to be elected at the first meeting of the
shareholders is: one (1)
ARTICLE NINE
PARAGRAPH 1: It is estimated that the value of all property to be owned by the
corporation for the following year wherever located will be $__________
PARAGRAPH 2: It is estimated that the value of the property to be located within
the State of Illinois during the following year will be $__________
PARAGRAPH 3: It is estimated that the gross amount of business which will be
transacted by the corporation during the following year will be $__________
PARAGRAPH 4: It is estimated that the gross amount of business which will be
transacted at or from places of business in the State of Illinois during the
following year will be $__________
NOTE: If all the property of the corporation is to be located in this
State and all of its business is to be transacted at or from places of business
in this State, or if the incorporators elect to pay the initial franchise tax on
the basis of its entire stated capital and paid-in surplus, then the information
called for in Article Nine need not be stated.
<PAGE> 25
/s/ Jack A. Cohon )
------------------------------
JACK A. COHON )
------------------------------
______________________________) Incorporators
______________________________)
______________________________)
______________________________)
NOTE: There may be one or more incorporators. Each incorporator shall
be either a corporation, domestic or foreign, or a natural person of the age of
twenty-one years or more. If a corporation acts as incorporator, the name of the
corporation and state of incorporation shall be shown and the execution must be
by its President or Vice-President and verified by him, and the corporate seal
shall be affixed and attested by its Secretary or an Assistant Secretary.
OATH AND ACKNOWLEDGMENT
STATE OF ILLINOIS )
) SS.
Cook County )
I, Beatrice Wolpe, A Notary Public, do hereby certify that on the 7th
day of Jan. 1972 JACK A. COHON personally appeared before me and being first
duly sworn by me acknowledged the signing of the foregoing document in the
respective capacities therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year above written.
Place
(NOTARIAL SEAL)
Here /s/ Beatrice Wolpe
-----------------------------------
Notary Public
<PAGE> 26
FORM B C A-47
================================================================================
ARTICLES OF INCORPORATION
U. S. AUTO GLASS CENTERS, INC.
================================================================================
The following fees are required to be paid at the time of issuing
Certificate of Incorporation: Filing fee $75.00; Initial license fee of
50(cent) per $1,000.00 or 1/20th of 1% of the amount of stated capital
and paid-in surplus of the corporation proposes to issue without
further report (Article Six); Initial franchise tax of 1/10th of 1% of
the issued, as above noted. However, the minimum initial franchise tax
is $25.00 and varies monthly on $25,000, or less, as follows: January,
$37.50; February, $35.42; March, $33.33; April, $31.25; May, $29.17;
June, $27.08; July, 1.00; Aug., .9167; Sept., .8334; Oct., .75; Nov.,
.6667; Dec., .5834.
In excess of $25,000, the franchise tax per $1,000.00 is as follows:
Jan., $1.50; Feb., 1.4167; March, 1.3334; April, 1.25; May, 1.1667;
June, 1.0834; July, 1.00; Aug., .9167; Sept., .8334; Oct., .75; Nov.,
.6667; Dec., .5834.
All shares issued in excess of the amount mentioned in article Six of
this application must be reported within 60 days from date of issuance
thereof, and franchise tax and license fee paid thereon; otherwise, the
corporation is subject to a penalty of 1% for each month on the amount
until reported and subject to a fine of not to exceed $500.00.
The same fees are required for a subsequent issue of shares except the
filing fee is $1.00 instead of $75.00.
================================================================================
<PAGE> 27
Certificate Number: 22063
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING
WHEREAS, Articles of amendment to the Articles of Incorporation duly
signed and verified of U.S. AUTO GLASS CENTERS, INC. have been filed in the
Office of the Secretary of State on the 25th day of November A.D. 1974, as
provided by 'THE BUSINESS CORPORATION ACT" of Illinois in force July 13, A.D.
1933.
Now therefore, I, Michael J. Howlett, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, done at the City of Springfield this 25th
day of November A.D. 1974 and of the Independence of the United States the one
hundred and 99th
/s/ Michael J. Howlett
-----------------------------------
Secretary of State
(SEAL)
<PAGE> 28
FORM BCA-55
(Do not write in this space)
Date Paid
Initial License Fee $
Franchise Tax $
Filing Fee $
Clerk $
(File in Duplicate)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
U.S. AUTO GLASS CENTERS, INC.
-----------------------------
(Exact Corporate Name)
To Michael J. Howlett
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles
of Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
U.S. AUTO GLASS CENTERS, INC.
ARTICLE SECOND: The following amendment or amendments were
adopted in the manner prescribed by "The Business Corporation Act" of the State
of Illinois:
ARTICLE FOUR is hereby amended to read as follows:
The purpose or purposes for which the corporation is organized are: To
buy, sell, manufacture and exchange glass and glass products, and to engage in
the general glass business;
<PAGE> 29
to buy, sell, manufacture and deal with all materials and products of any
character useful in the operation of a general glass business; to buy, sell,
manufacture and deal with automobile parts and hardware.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign, and transfer or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association, or corporation.
To enter into, make and perform contracts of every kind and description
with any person, firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof.
In general to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Illinois upon corporations formed under the Business Corporation Act of the
State of Illinois, and to do all of the things hereinbefore set forth.
To enter into the business of the transportation of property by motor
vehicle for hire. To transport motor vehicles from the place of business of its
customers to the various business locations of this corporation. to apply for
and obtain from the proper governmental authorities any and all necessary
certificates and licenses to enable this corporation to engage in the activities
set forth in this paragraph.
(Disregard separation into classes ARTICLE THIRD: The number of shares of
if class voting does not apply to the corporation outstanding at the time
the amendment voted on.) of the adoption of said amendment was Ten
(10); and the number of shares of each
class entitled to vote as a class on the
adoption of said amendment or amendments,
and the designation of each such class
were as follows:
CLASS NUMBER OF SHARES
<PAGE> 30
<TABLE>
<S> <C>
(Disregard separation into classes ARTICLE FOURTH: The number of shares voted for said
if class voting does not apply to amendment or amendments was ten (10); and the number of
the amendment voted on.) shares voted against said amendment or amendments was
None. The number of shares of each class entitled to vote as a
class voted for and against said amendment or amendments,
respectively, was:
CLASS NUMBER OF SHARES VOTED
FOR AGAINST
(Disregard these items unless the Item 1. On the date of the adoption of this amendment,
amendment restates the articles of restating the articles of incorporation, the corporation had
incorporation.) ____ shares issued, itemized as follows:
CLASS SERIES NUMBER OF PAR VALUE PER SHARE
(IF ANY) SHARES OR STATEMENT THAT SHARES
ARE WITHOUT PAR VALUE
Item 2. On the date of the adoption of this amendment
restating the articles of incorporation, the corporation had a
stated capital of $__________ and a paid-in surplus of
$__________ or a total of $__________.
</TABLE>
<PAGE> 31
<TABLE>
<S> <C>
(Disregard this Article where this ARTICLE FIFTH: The manner in which the exchange,
amendment contains no such reclassification, or cancellation of issued shares, or a reduction
provisions.) of the number of authorized shares of any class below the
number of issued shares of that class, provided for in, or
effected by, this amendment, is as follows:
(Disregard this Paragraph where ARTICLE SIXTH: Paragraph 1: The manner in which said
amendment does not affect stated amendment or amendments effect a change in the amount of
capital or paid-in surplus.) stated capital or the amount of paid-in surplus, or both, is as
follows:
(Disregard this Paragraph where Paragraph 2: The amounts of stated capital and of paid-in
amendment does not affect stated surplus as changed by this amendment are as follows:
capital or paid-in surplus.)
BEFORE AMENDMENT AFTER AMENDMENT
STATED CAPITAL .........$ $
PAID-IN SURPLUS ........$ $
</TABLE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of
Amendment to be executed in its names by its __________ President, and its
corporate seal to be hereto affixed, attested by its Secretary, this 8th day of
November, 1974.
U.S.A. AUTO GLASS CENTERS, INC.
-----------------------------------
(Exact Corporate Name)
By /s/ Joseph Kellman
--------------------------------
President
<PAGE> 32
Place
(CORPORATE SEAL)
Here
ATTEST:
[Illegible]
- -----------------------------------
Its Secretary
STATE OF Illinois
---------------------------
ss.
COUNTY OF Cook
--------------------------
I, Beatrice Wolpe, a Notary Public, do hereby certify that on the 8th day of
November, 1974, Joseph Kellman personally appeared before me and, being first
duly sworn by me, acknowledged that he signed the foregoing document in the
capacity therein set forth and declared that the statements therein contained
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ Beatrice Wolpe
-----------------------------------
Notary Public
Place
(NOTARIAL SEAL)
Here
<PAGE> 33
Certificate Number: 15946
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING
WHEREAS, Articles of Merger, duly signed and verified of U.S. AUTO GLASS
CENTERS, INC. incorporated under the laws of the State of Illinois have been
filed in the Office of the Secretary of State provided by the "Business
Corporation Act" of Illinois, in force July 13, A.D. 1933.
Now therefore, I, Alan J. Dixon, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate of
amendment and attach thereto a copy of the Application of the aforesaid
corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the Great
Seal of the State of Illinois, done at the City of Springfield this 21st day of
January A.D. 1980 and of the Independence of the United States the one hundred
and 4th
/s/ Alan J. Dixon
-----------------------------------
Secretary of State
(SEAL)
<PAGE> 34
FORM BCA-66A
ARTICLES OF MERGER
OF SUBSIDIARY
CORPORATIONS
(Strike out inapplicable words)
To JOHN W. LEWIS, Secretary of State,
The undersigned corporation, pursuant to Section 66A of "The Business
Corporation Act" of the State of Illinois, hereby executed the following
articles of merger:
ARTICLE ONE
The names of the corporations proposing to merge and the names of the
States under the laws of which such corporations are organized, are as follows:
Name of Corporation State of Incorporation
U.S. Auto Glass Centers, Inc. Illinois
- ------------------------------ ------------------------------
Acme Glass, Incorporated Michigan
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
ARTICLE TWO
The laws of Illinois and Michigan the State under which such
corporations are organized, permit such merger.
ARTICLE THREE
The name of the surviving corporation shall be U.S.A. Auto Glass
Centers, Inc. and it shall be governed by the laws of the State of Illinois.
<PAGE> 35
ARTICLE FOUR
The plan of merger is as follows:
The plan of merger is set forth in the Joint Plan of Merger
and Agreement of Merger which is attached hereto and made a
part hereof.
<PAGE> 1
Exhibit 3.8
BY-LAWS
OF
U.S. AUTO GLASS CENTERS, INC,
ARTICLE I
Offices
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose office is identical with such
registered office, and may have other offices within or without the state.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders shall
be held on the third Monday in March of each year for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday, such
meeting shall be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called either by the president, by the board of directors or by the holders
of not less than one-fifth of all the outstanding shares of the corporation, for
the purpose or purposes stated in the call of the meeting.
SECTION 3. PLACE OF MEETING. The board of directors may designate any
place, as the place of meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be at Cohon, Raizes &
Regal, 208 South LaSalle Street, Chicago, IL 60604.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date,
and hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than forty days before the date of the meeting, or in the case of a
merger or consolidation not less than twenty nor more than forty days before the
meeting, either personally or by mail, by or at the direction of the
<PAGE> 2
president, or the secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the records of the
corporation, with postage thereon prepaid. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend, or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of shares or for the purpose of any other lawful action,
the board of directors of the corporation may fix in advance a record date which
shall not be more than forty days and, for a meeting of shareholders, not less
than ten days, or in the case of a merger or consolidation not less than twenty
days, before the date of such meeting. If no record date is fixed, the record
date for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, the date on which notice of the meeting is mailed shall
be the record date for such determination of shareholders, and the record date
for the determination of shareholders for any other purpose shall be the date on
which the board of directors adopts the resolution relating thereto. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the share. holders
entitled to vote at such meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name of the shareholder,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the registered office of the corporation and shall be open to inspection
by any shareholder for any purpose germane to the meeting, at any time during
usual business hours. Such list shall also be produced and kept open at the time
and place of the meeting and may be inspected by any shareholder during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof kept in this State, shall be prima facie evidence as to who
are the shareholders entitled to examine such list or share ledger or transfer
book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. The holders of a majority of the outstanding shares
of the corporation, present in person or represented by proxy, shall constitute
a quorum at any meeting of shareholders; provided that if less than a majority
of the outstanding shares are represented at said meeting, a majority of the
shares so represented may adjourn the meeting at any time without further
notice. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by The Business
Corporation Act, the articles
- 2 -
<PAGE> 3
of incorporation or these by-laws. At any adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any meeting
shall not cause failure of a duly constituted quorum at that meeting.
SECTION 8. PROXIES. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote upon each matter submitted to vote at a
meeting of shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent, or proxy as the by-laws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrators executor court appointed
guardian, or conservator, either in person or by proxy without a transfer of
such shares into the name of such administrator, executor, court appointed
guardian, or conservator. Shares standing in the name of a trustee may be voted
by him, either in person or by proxy.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their share, for a period not to exceed ten years, by entering into a written
voting trust agreement specifying the terms and conditions of the voting trust,
and by transferring their shares to such trustee or trustees for the purpose of
the agreement. Any such trust agreement shall not become effective until a
counterpart of the agreement is deposited with the corporation at its registered
office. The counterpart of the voting trust agreement so deposited with the
corporation shall be subject to the same right of examination by a shareholder
of the corporation, in person or by agent or attorney, as are the books and
records of the corporation, and shall be subject to examination
- 3 -
<PAGE> 4
by any holder of a beneficial interest in the voting trust, either in person or
by agent or attorney, at any reasonable time for any proper purpose.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
SECTION 11. CUMULATIVE VOTING. In all elections for directors every
shareholder shall have the right to vote, in person or by proxy, the number of
shares owned by him, for as many persons as there are directors to be elected,
or to cumulate said shares, and give one candidate as many votes as the number
of directors multiplied by the number of his shares shall equal, or to
distribute them on the same principle among as many candidates as he shall see
fit.
SECTION 12. INSPECTORS. At any meeting of shareholders, the presiding
officer may, or upon the request of any shareholder shall appoint one or more
persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or by
a majority of them if there be more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
SECTION 14. VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
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ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by its board of directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be One (1). Each director shall hold office until the
next annual meeting of shareholders or until his successor shall have been
elected and qualified. Directors need not be residents of Illinois or
shareholders of the corporation. The number of directors may be increased or
decreased from time to time by the amendment of this section; but no decrease
shall have the effect of shortening the term of any incumbent director.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately after
the annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least 5 days previous thereto by written notice to each director at his business
address. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegram company. The attendance of a director at
any meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. QUORUM, A majority of the number of directors fixed by these
by-laws shall constitute a quorum for transaction of business at any meeting of
the board of directors, provided that if less than a majority of such number of
directors are present at said meeting, a majority of the directors present may
adjourn the meeting at any time without further notice.
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SECTION 7. MANNER OF ACTING. The act of the majority, of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless the act of a greater number is required by statute, these
by-laws, or the articles of incorporation.
SECTION 8. VACANCIES. Any vacancy occurring in the board of directors
and any directorship to be filled by reason of an increase in the number of
directors, may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose.
SECTION 9. ACTION WITHOUT A MEETING. Unless specifically prohibited by
the articles of incorporation or by-laws, any action required to be taken at a
meeting of the board of directors, or any other action which may be taken at a
meeting of the board of directors, or of any committee thereof may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all the directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be. Any such consent signed by all the directors or all the members of the
committee shall have the same effect as a unanimous vote, and may be stated as
such in any document filed with the Secretary of State or with anyone else.
SECTION 10. COMPENSATION. The board of directors, by the affirmative
vote of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers, or otherwise. By resolution of the board of directors the directors
may be paid their expenses, if any, of attendance at each meeting of the board.
No such payment previously mentioned in this section shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
SECTION 12. EXECUTIVE COMMITTEE. The board of directors, by resolution
adopted by a majority of the number of directors fixed by the by-laws or
otherwise, may designate two or more directors to constitute an executive
committee, which committee, to the extent provided in such resolution, shall
have and exercise all of the authority of the board of directors in the
management of the corporation, except as otherwise required by law. Vacancies in
the membership of the committee shall be filled by the board of directors at a
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regular or special meeting of the board of directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the board
when required.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
president, one or more vice-presidents (the number thereof to be determined by
the board of directors), a treasurer, a secretary, and such assistant
treasurers, assistant secretaries or other officers as may be elected by the
board of directors. Any two or more offices may be held by the same person,
except the offices of president and secretary.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided. Election of an officer shall
not of itself create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. PRESIDENT. The president shall be the principal executive
officer of the corporation. Subject to the direction and control of the board of
directors, he shall be in charge of the business of the corporation; he shall
see that the resolutions and directions of the board of directors are carried
into effect except in those instances in which that responsibility is
specifically assigned to some other person by the board of directors; and, in
general, he shall discharge all duties, incident to the office of president and
such other duties as may be prescribed by the board of directors from time to
time. He shall preside at all meetings of the shareholders and of the board of
directors. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the corporation or a
different mode of execution is expressly prescribed by the board of directors or
these by-laws, he may execute for the corporation certificates for its shares,
and any contracts, deeds, mortgages, bonds, or other instruments which the board
of directors has authorized to be executed, and he may accomplish such execution
either under or without the seal of the corporation and either individually or
with the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of directors, according to the requirements of the form
of the instrument. He may vote all securities which the corporation is entitled
to vote except as and
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to the extent such authority shall be vested in a different officer or agent of
the corporation by the board of directors.
SECTION 5. THE VICE-PRESIDENTS. The vice-president (or in the event
there be more than one vice-president, each of the vice-presidents) shall assist
the president in the discharge of his duties as the president may direct and
shall perform such other duties as from time to time may be assigned to him by
the president or by the board of directors In the absence of the president or in
the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated by the board of directors, or by the president if the board of
directors has not made such a designation, or in the absence of any designation,
then in the order of seniority of tenure as vice-president) shall perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, the vice-president (or
each of them if there are more than one) may execute for the corporation
certificates for its shares and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors has authorized to be executed, and he
may accomplish such execution either under or without the seal of the
corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
SECTION 6. THE TREASURER. The treasurer shall be the principal
accounting and financial officer of the corporation, He shall: (a) have charge
of and be responsible for the maintenance of adequate books of account for the
corporation; (b) have charge and custody of all funds and securities of the
corporation, and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the president
or by the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors may determine.
SECTION 7. THE SECRETARY. The secretary shall: (a) record the minutes
of the shareholders' and of the board of directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation; (d) keep
a register of the post-office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) sign with the president, or
a vice-president, or any other officer thereunto authorized by the board of
directors, certificates for shares of the corporation, the issue of which shall
have been authorized by the board of directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except
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<PAGE> 9
when a different mode of execution is expressly prescribed by the board of
directors or these by-laws; (f) have general charge of the stock transfer books
of the corporation; (g) perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
president or by the board of directors.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or by
the president or the board of directors. The assistant secretaries may sign with
the president, or a vice-president, or any other officer thereunto authorized by
the board of directors, certificates for shares of the corporation, the issue of
which shall have been authorized by the board of directors, and any contracts,
deeds, mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these by-laws. The assistant treasurers shall
respectively, if required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the board of
directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
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<PAGE> 10
SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND
THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be signed by the president or a vice-president or by such
officer as shall be designated by resolution of the board of directors and by
the secretary or an assistant secretary, and shall be sealed with the seal or a
facsimile of the seal of the corporation. If both of the signatures of the
officers be by facsimile, the certificate shall be manually signed by or on
behalf of a duly authorized transfer agent or clerk. Each certificate
representing shares shall be consecutively numbered or otherwise identified, and
shall also state the name of the person to whom issued, the number and class of
shares (with designation of series, if any), the date of issue, that the
corporation is organized under Illinois law, and the par value or a statement
that the shares are without par value. If the corporation is authorized and does
issue shares of more than one class or of series within a class, the ??? shall
also contain such information or statement as may be required by law.
The name and address of each shareholder, the number and class of
shares held and the date on which the certificates for the shares were issued
shall be entered on the books of the corporation. The person in whose name
shares stand on the books of the corporation shall be deemed the ??? thereof for
all purposes as regards the corporation.
SECTION 2. LOST CERTIFICATES. If a certificate represents shares has
allegedly been lost or destroyed the board of directors may in its discretion,
except as may be required by law, direct that a new ??? be issued upon such
indemnification and other reasonable requirements ??? may impose.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the corporation
shall be recorded on the books of the corporation and, except in the case of a
lost or destroyed certificate, on surrender for cancellation of the certificate
for such shares. A certificate presented for transfer must be duly endorsed and
accompanied by proper guaranty of signature and other appropriate assurances
that the endorsement is effective.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE VIII
DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its articles of incorporation.
ARTICLE IX
SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Illinois". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these by-laws or under the provisions of the articles of incorporation or under
the provisions of The Business Corporation Act of the State of Illinois, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI
AMENDMENTS
The power to make, alter, amend, or repeal the by-laws of the
corporation shall be vested in the board of directors, unless reserved to the
shareholders by the articles of incorporation. The by-laws may contain any
provisions for the regulation and management of the affairs of the corporation
not inconsistent with law or the articles of incorporation.
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EXHIBIT 4.2
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of December 12, 1997,
between SAFELITE GLASS CORP., a Delaware corporation (hereinafter referred to as
the "Company"), and STATE STREET BANK & TRUST COMPANY, a state chartered trust
company under the laws of The Commonwealth of Massachusetts, as trustee
(hereinafter referred to as the "Trustee"), amends and supplements the Indenture
providing for the issuance of the Company's 9 7/8% Senior Subordinated Notes due
2006, dated as of December 20, 1996, among the Company, SGC Franchising Corp. (a
former subsidiary of the Company) and Fleet National Bank (predecessor trustee
to the Trustee) (the "Original Indenture"), and, to the extent inconsistent
therewith, supersedes the Original Indenture.
RECITALS
WHEREAS, Section 9.2 of the Original Indenture provides that the
Company and the Trustee may, among other things, amend the Original Indenture
with the written consent of the Holders of at least a majority in principal
amount of the Securities; and
WHEREAS, in connection with certain transactions proposed to be entered
into by the Company, including, but not limited to, the Vistar Merger (as
defined below), the Company and the Trustee desire to amend and supplement the
Original Indenture pursuant to the terms and conditions of the Original
Indenture and with the written consent of the Holders of at least a majority in
principal amount of the Securities, subject to the limitations on effectiveness
of this First Supplemental Indenture as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used and not defined in this First Supplemental
Indenture shall have the meaning specified in or pursuant to the Original
Indenture.
(b) The definition of "Permitted Indebtedness" contained in Article I,
Section 1.1 of the Original Indenture is hereby amended and restated in its
entirety to read as follows:
"Permitted Indebtedness" means, without duplication, (i) the
Securities and the obligations under the Guarantees, (ii) Indebtedness
incurred pursuant to the Bank Credit Agreement in an aggregate
principal amount at any time outstanding not to exceed $450 million (A)
less the aggregate amount of Indebtedness of a Receivables Entity in a
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Qualified Receivables Transaction, (B) less the amount of all mandatory
principal payments actually made by the Company in respect of term
loans thereunder (excluding (1) any such payments to the extent
refinanced at the time of payment under a replaced Bank Credit
Agreement and (2) any such payments relating to the Sale of Excluded
Assets in an aggregate amount not to exceed $30 million) and (C) in the
case of a revolving facility, reduced by any required permanent
repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder, (iii) other Indebtedness of the
Company and its Restricted Subsidiaries outstanding on the Issue Date
reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions
thereon, (iv) Interest Swap Obligations of the Company or any of its
Restricted Subsidiaries covering Indebtedness of the Company or any of
its Restricted Subsidiaries; provided that any Indebtedness to which
any such Interest Swap Obligations correspond is otherwise permitted to
be incurred under this Indenture; provided, further, that such Interest
Swap Obligations are entered into, in the judgment of the Company, to
protect the Company and its Restricted Subsidiaries from fluctuation in
interest rates on their respective outstanding Indebtedness, (v)
Indebtedness under Currency Agreements, (vi) intercompany Indebtedness
owed by the Company to any Wholly Owned Restricted Subsidiary of the
Company or by any Restricted Subsidiary of the Company to the Company
or any Wholly Owned Restricted Subsidiary of the Company, (vii)
Acquired Indebtedness of the Company or any Restricted Subsidiary of
the Company to the extent the Company could have incurred such
Indebtedness in accordance with Section 4.3 on the date such
Indebtedness became Acquired Indebtedness; provided that, in the case
of Acquired Indebtedness of a Restricted Subsidiary of the Company,
such Acquired Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company, (viii) guarantees by the Company and its
Wholly Owned Restricted Subsidiaries of each other's Indebtedness;
provided that such Indebtedness is permitted to be incurred hereunder,
including, with respect to guarantees by Wholly Owned Restricted
Subsidiaries of the Company, Section 4.11, (ix) Indebtedness arising
from the honoring by a bank or other financial institution of a check,
draft or other similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business; provided that
such Indebtedness is extinguished within five business days of its
incurrence, (x) any refinancing, modification, replacement, renewal,
restatement, refunding, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness, including any
additional Indebtedness incurred to pay interest or premiums required
by the instruments governing such existing or future Indebtedness as in
effect at the time of issuance thereof )("Required Premiums") and fees
in connection therewith; provided that any such event shall not (1)
result in an increase in the aggregate principal amount of Permitted
Indebtedness (except to the extent such increase is a result of a
simultaneous incurrence of additional Indebtedness (A) to pay Required
Premiums and related fees or (B) otherwise permitted to be incurred
under this Indenture) of the Company and its Restricted Subsidiaries
and (2) create Indebtedness with a Weighted Average Life to Maturity at
the time such Indebtedness is incurred that
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is less than the Weighted Average Life to Maturity at such time of the
Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or
resold (except that this subclause (2) will not apply in the event the
Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or
resold was originally incurred in reliance upon clause (vi) or (xvi) of
this definition); provided that no Restricted Subsidiary of the Company
that is not a Subsidiary Guarantor may refinance any Indebtedness
pursuant to this clause (x) other than its own Indebtedness, (xi)
Indebtedness (including Capitalized Lease Obligations) incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment
(whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount
outstanding not to exceed $5 million at the time of any incurrence
thereof (which amount may, but need not, be incurred in whole or in
part under the Bank Credit Agreement), (xii) the incurrence by a
Receivables Entity of Indebtedness in a Qualified Receivables
Transaction that is not recourse to the Company or any Subsidiary of
the Company (except for Standard Securitization Undertakings), (xiii)
Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including,
without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers'
compensation claims, (xiv) Indebtedness arising from agreements of the
Company or a Restricted Subsidiary of the Company providing for
indemnification, adjustment of purchase price, earn out or other
similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Restricted Subsidiary
of the Company, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition,
provided that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and its Restricted Subsidiaries in connection
with such disposition, (xv) obligations in respect of performance and
surety bonds and completion guarantees provided by the Company or any
Restricted Subsidiary of the Company in the ordinary course of
business, (xvi) Indebtedness of Vistar constituting Capitalized Lease
Obligations in an aggregate principal amount not to exceed $2 million
and other Indebtedness of Vistar constituting unsecured Indebtedness in
an aggregate principal amount not to exceed $8 million, in each case
which is assumed by the Company upon consummation of the Vistar Merger,
and (xvii) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $10 million
at any one time outstanding (which amount may, but need not, be
incurred in whole or in part under the Bank Credit Agreement)."
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(c) Article I, Section 1.1 is hereby amended to add the following
definitions:
"Distribution" means a dividend of up to $67.2 million on the
Company's outstanding Class A Common Stock, a dividend of
approximately $4.7 million representing accrued and unpaid
dividends on the Company's 8% Cumulative Preferred Stock and a
redemption of the Company's 8% Cumulative Preferred Stock for
an amount equal to approximately $58.2 million, in each case
to be paid no more than five business days prior to the Vistar
Merger.
"Non-Voting Preferred Stock" means the Company's 8% Non-Voting
Preferred Stock, $.01 par value per share, to be issued by the
Company as partial merger consideration in the Vistar Merger.
"Vistar Merger" means the merger contemplated by the Vistar
Merger Agreement.
"Vistar Merger Agreement" means that certain Merger Agreement,
dated as of October 10, 1997, by and between Vistar, Inc. and
the Company.
ARTICLE II
COVENANTS
SECTION 2.1 Limitation on Restricted Payments.
Section 4.4 of the Original Indenture is hereby amended and restated in
its entirety to read as follows:
"(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay
any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock) on or in respect of
shares of Capital Stock of the Company to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock, other
than the exchange of such Capital Stock for Qualified Capital Stock, or
(c) make any Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b) and (c) being referred
to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an
Event of Default shall have occurred and be continuing, (ii) the
Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.3 or
(iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date shall exceed the sum of: (w) 50% of the cumulative
Consolidated Net
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Income (or if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of the Company earned subsequent to the Issue Date
and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period);
plus (x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company) from
the issuance and sale subsequent to the Issue Date and on or prior to
the Reference Date of Qualified Capital Stock of the Company (including
Capital Stock issued upon the conversion of convertible Indebtedness or
in exchange for outstanding Indebtedness); plus (y) without duplication
of any amounts included in clause (iii)(x) above, 100% of the aggregate
net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock (excluding any net cash
proceeds from such equity contribution to the extent used to redeem
Securities in accordance with the optional redemption provisions of the
Securities); plus (z) to the extent that any Investment (other than a
Permitted Investment) that was made after the Issue Date is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the
cash received with respect to such sale, liquidation or repayment of
such Investment (less the cost of such sale, liquidation or repayment,
if any) and (B) the initial amount of such Investment.
(b) Notwithstanding clause (a) above, the provisions set forth in
the immediately preceding paragraph do not prohibit: (1) the payment of
any dividend or the consummation of any irrevocable redemption within
60 days after the date of declaration of such dividend or notice of
such redemption if the dividend or payment of the redemption price, as
the case may be, would have been permitted on the date of declaration
or notice; (2) if no Event of Default shall have occurred and be
continuing as a consequence thereof, the acquisition of any shares of
Capital Stock of the Company, either (i) solely in exchange for shares
of Qualified Capital Stock of the Company, or (ii) through the
application of net proceeds of a substantially concurrent sale (other
than to a Subsidiary of the Company) of shares of Qualified Capital
Stock of the Company; (3) payments for the purpose of and in an amount
equal to the amount required to permit the Company to redeem or
repurchase shares of its Capital Stock or options in respect thereof,
in each case in connection with the repurchase provisions under
employee stock option or stock purchase agreements or other agreements
to compensate management employees; provided that such redemptions or
repurchases pursuant to this clause (3) shall not exceed $2 million
(which amount shall be increased by the amount of any cash proceeds to
the Company from (x) sales of its Capital Stock to management employees
subsequent to the Issue Date and (y) any "key-man" life insurance
policies which are used to make such redemptions or repurchases) in the
aggregate; (4) the payment of fees and compensation as permitted under
clause (i) of Section 4.7(b); (5) so long as no Default or Event of
Default shall have occurred and be continuing, payments not to exceed
$100,000 in the aggregate, to enable the Company to make payments to
holders of its Capital Stock in lieu of issuance of fractional shares
of its Capital Stock; (6) repurchases of Capital Stock deemed to occur
upon the exercise of stock options if such Capital Stock represents a
portion of the exercise price thereof; (7) payments made on the Issue
Date pursuant to
5
<PAGE> 6
the Recapitalization Agreement; and (8) payment of the Distribution. In
determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, (a) amounts expended (to the extent such
expenditure is in the form of cash or other property other than
Qualified Capital Stock) pursuant to clauses (1), (2)(ii) and (3) of
this Section 4.4(b) shall be included in such calculation, provided
that such expenditures pursuant to clause (3) shall not be included to
the extent of cash proceeds received by the Company from any "key-man"
life insurance policies and (b) amounts expended pursuant to clauses
(2)(i), (4), (5), (6), (7) and (8) shall be excluded from such
calculation.
(c) The Company shall not permit the payment of dividends in
respect of its NonVoting Preferred Stock unless the Company exercises
its optional right to redeem the Non-Voting-Preferred Stock (the
payment of such dividends to occur at the time of redemption); provided
that the payment of such dividends will only be permitted if such
payment is in compliance with clauses (a) and (b) of this Section 4.4."
SECTION 2.2 Limitation on Transactions with Affiliates.
Section 4.7 of the Original Indenture is hereby amended and restated in
its entirety to read as follows:
"(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange
of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable than
those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is
not an Affiliate; provided, however, that for a transaction or series
of related transactions with an aggregate value of $2 million or more,
at the Company's option (i) such determination shall be made in good
faith by a majority of the disinterested members of the Board of the
Directors of the Company or (ii) the Board of Directors of the Company
or any such Restricted Subsidiary party to such Affiliate Transaction
shall have received a favorable opinion from a nationally recognized
investment banking firm that such Affiliate Transaction is on terms not
materially less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate; provided, further, that
for a transaction or series of related transactions with an aggregate
value of $5 million or more, the Board of Directors of the Company
shall have received a favorable opinion from a nationally recognized
investment banking firm that such Affiliate Transaction is on terms not
materially less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate.
6
<PAGE> 7
(b) The foregoing restrictions shall not apply to (i) reasonable
fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any
Subsidiary of the Company as determined in good faith by the Company's
Board of Directors or senior management; (ii) transactions exclusively
between or among the Company and any of its Wholly Owned Restricted
Subsidiaries or exclusively between or among such Wholly Owned
Restricted Subsidiaries, provided such transactions are not otherwise
prohibited by this Indenture; (iii) transactions effected as part of a
Qualified Receivables Transaction; (iv) any agreement as in effect as
of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in
any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any
material respect than the original agreement as in effect on the Issue
Date; (v) Restricted Payments permitted by this Indenture; and (vi)
payments made by the Company to, and agreements entered into by the
Company with, Affiliates in connection with the Vistar Merger."
ARTICLE III
EFFECTIVENESS
SECTION 3.1 Effectiveness of First Supplemental Indenture. Upon
(i) the execution and delivery of this First Supplemental Indenture by the
Company and the Trustee and (ii) the delivery of an Officers' Certificate and
Opinion of Counsel as contemplated by Section 7.2 of the Indenture, this First
Supplemental Indenture, including the amendments to the Indenture contained
herein, shall become effective and operative. Notwithstanding anything herein to
the contrary, in the event that the Vistar Merger is not consummated within five
business days of the Distribution and on or before June 30, 1998, this First
Supplemental Indenture shall terminate and be deemed void as of and from the
date of effectiveness of this First Supplemental Indenture.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Ratification of Provisions of Original Indenture. All
provisions of the Original Indenture not specifically herein supplemented or
modified are hereby ratified and reaffirmed by the Company and the Trustee.
SECTION 4.2 Counterparts. This First Supplemental Indenture may
be executed in counterparts, each of which when so executed shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
7
<PAGE> 8
SECTION 4.3 Governing Law. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws.
SECTION 4.4 Trustee. The Trustee accepts the amendment and
modification of the Original Indenture effected by this First Supplemental
Indenture, but only upon the terms and conditions set forth in the Original
Indenture. Without limiting the generality of the foregoing, the Trustee assumes
no responsibility for the correctness of the recitals herein contained, which
shall be taken as the statements of the Company. The Trustee makes no
representation and shall have no responsibility as to the validity and
sufficiency of this First Supplemental Indenture.
SECTION 4.5 Trust Indenture Act Controls. If any provision of
this First Supplemental Indenture limits, qualifies or conflicts with another
provision which is required to be included herein by the TIA, the provision
required by the TIA shall control.
SECTION 4.6 Successors. All agreements of the Company and the
Trustee in this First Supplemental Indenture shall bind their respective
successors.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the day and year first above written.
SAFELITE GLASS CORP.
By: /s/ D. A. Herron
--------------------------------
Name: Douglas A. Herron
Title: Sr. VP & CFO
STATE STREET BANK & TRUST
COMPANY
By: /s/ Robert L. Bice II
---------------------------------
Name: Robert L. Bice II
Title: Vice President
9
<PAGE> 1
EXHIBIT 4.3
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of December 18, 1997,
among SAFELITE GLASS CORP., a Delaware corporation (the "Company"), U.S.A. GLAS,
INC., an Illinois corporation ("USA Glas"), U.S. AUTO GLASS CENTERS, INC., an
Illinois corporation ("US Auto Glas"), CARCOMP SERVICES INC., an Illinois
corporation (together with USA Glas and US Auto Glass, the "New Subsidiary
Guarantors), and STATE STREET BANK AND TRUST COMPANY, a state chartered trust
company under the laws of The Commonwealth of Massachusetts, as successor
trustee to Fleet National Bank (the "Trustee"), amends and supplements the
Indenture, dated as of December 20, 1996 (the "Indenture"), among the Company,
SGC Franchising Corp. (a former subsidiary of the Company) and Fleet National
Bank, a national banking corporation, as trustee, as amended by the First
Supplemental Indenture, dated as of December 12, 1997, between the Company and
the Trustee.
RECITALS
WHEREAS, Section 9.1 of the Indenture provides that the Company and the
Trustee may, among other things, amend the Indenture or the Securities without
notice to or consent of any Securityholder to add Guarantees with respect to the
Securities or to secure the Securities;
WHEREAS, Section 11.1 of the Indenture provides that any Restricted
Subsidiary of the Company that guarantees payment of the Bank Indebtedness must
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Restricted Subsidiary shall agree to be bound by the provisions of Article
XI of the Indenture; and
WHEREAS, each of the New Subsidiary Guarantors has guaranteed payment
of the Bank Indebtedness and shall execute and deliver to the Trustee this
Second Supplemental Indenture.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used and not defined herein shall
have the meaning specified in or pursuant to the Indenture.
2. Guarantee. Each of the New Subsidiary Guarantors hereby agrees to
unconditionally assume all obligations of a Subsidiary Guarantor under the
Indenture as described therein.
3. Trustee. The Trustee accepts the modification of the Indenture
effected by this Second Supplemental Indenture, but only upon the terms and
conditions set forth in the Indenture. Without limiting the generality of the
foregoing, the Trustee assumes no responsibility for the correctness of the
recitals herein contained, which shall be taken as the
1
<PAGE> 2
statements of the Company. The Trustee makes no representation and shall have no
responsibility as to the validity and sufficiency of this Second Supplemental
Indenture.
4. Effect on Indenture. As supplemented by this Second Supplemental
Indenture, the Indenture, as amended by the First Supplemental Indenture, is
hereby ratified and confirmed in all respects.
5. Counterparts. This Second Supplemental Indenture may be executed in
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
6. Governing Law. This Second Supplemental Indenture shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws.
7. Trust Indenture Act Controls. If any provision of this Second
Supplemental Indenture limits, qualifies or conflicts with another provision
which is required to be included herein by the TIA, the provision required by
the TIA shall control.
8. Successors. All agreements of the New Subsidiary Guarantors, the
Company and the Trustee in this Second Supplemental Indenture shall bind their
respective successors.
9. Effectiveness of Second Supplemental Indenture. This Second
Supplemental Indenture shall become effective (i) upon the execution and
delivery of this Second Supplemental Indenture by the Company, the New
Subsidiary Guarantors and the Trustee, (ii) upon the delivery of an Officers'
Certificate and Opinion of Counsel as contemplated by Section 7.2 of the
Indenture and (iii) as of the Effective Time (as defined below) of the merger of
Vistar, Inc., an Illinois corporation ("Vistar"), with and into the Company
pursuant to the terms and conditions of the Merger Agreement, dated as of
October 10, 1997, by and between Vistar and the Company (the "Merger
Agreement"). "Effective Time" shall have the meaning ascribed to such term in
the Merger Agreement.
2
<PAGE> 3
SAFELITE GLASS CORP.
SECOND SUPPLEMENTAL INDENTURE
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the day and year first above written.
SAFELITE GLASS CORP.
[SEAL] By: /s/ Douglas A. Herron
-----------------------------
Douglas A. Herron
Senior Vice President and
Chief Financial Officer
U.S.A. GLAS, INC.
[SEAL] By: /s/ Douglas A. Herron
-----------------------------
Douglas A. Herron
Vice President and Treasurer
U.S. AUTO GLASS CENTERS, INC.
[SEAL] By: /s/ Douglas A. Herron
-----------------------------
Douglas A. Herron
Vice President and Treasurer
CARCOMP SERVICES, INC.
[SEAL] By: /s/ Douglas A. Herron
-----------------------------
Douglas A. Herron
Vice President and Treasurer
3
<PAGE> 4
SAFELITE GLASS CORP.
SECOND SUPPLEMENTAL INDENTURE
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the day and year first above written.
STATE STREET BANK & TRUST COMPANY
[SEAL] By: /s/ Robert L. Bice II
-----------------------------
Name: Robert L. Bice II
Title: Vice President
4
<PAGE> 1
EXHIBIT 10.2
CREDIT AGREEMENT
among
SAFELITE GLASS CORP.,
VARIOUS LENDING INSTITUTIONS,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT,
AND
GOLDMAN SACHS CREDIT PARTNERS L.P.,
AS DOCUMENTATION AGENT,
--------------------------------
Dated as of December 20, 1996, as amended and restated through December 17, 1997
--------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
SECTION 1. Amount and Terms of Credit.......................................................................... 1
1.01 Commitments...................................................................................... 1
1.02 Minimum Borrowing Amounts, etc. ................................................................. 5
1.03 Notice of Borrowing.............................................................................. 5
1.04 Disbursement of Funds............................................................................ 6
1.05 Evidence of Debt................................................................................. 7
1.06 Conversions...................................................................................... 7
1.07 Pro Rata Borrowings.............................................................................. 8
1.08 Interest......................................................................................... 8
1.09 Interest Periods................................................................................. 9
1.10 Increased Costs, Illegality, etc. ............................................................... 10
1.11 Compensation..................................................................................... 12
1.12 Change of Lending Office......................................................................... 13
1.13 Replacement of Banks............................................................................. 13
SECTION 2. Letters of Credit................................................................................... 14
2.01 Letters of Credit................................................................................ 14
2.02 Letter of Credit Requests; Notices of Issuance................................................... 15
2.03 Agreement to Repay Letter of Credit Drawings..................................................... 15
2.04 Letter of Credit Participations.................................................................. 16
2.05 Increased Costs.................................................................................. 18
SECTION 3. Fees; Commitments................................................................................... 19
3.01 Fees .......................................................................................... 19
3.02 Voluntary Termination or Reduction of Commitments................................................ 20
3.03 Mandatory Adjustments of Commitments, etc. ...................................................... 21
SECTION 4. Payments............................................................................................ 21
4.01 Voluntary Prepayments............................................................................ 21
4.02 Mandatory Prepayments............................................................................ 22
4.03 Method and Place of Payment...................................................................... 28
4.04 Net Payments..................................................................................... 29
SECTION 5. Conditions Precedent................................................................................ 30
5.01 Execution of Agreement; Notes.................................................................... 30
5.02 [RESERVED]....................................................................................... 30
5.03 Officer's Certificate............................................................................ 31
5.04 Opinions of Counsel.............................................................................. 31
5.05 Corporate Proceedings............................................................................ 31
5.06 Adverse Change, etc. ............................................................................ 31
5.07 Litigation....................................................................................... 31
5.08 Approvals........................................................................................ 32
5.09 Senior Subordinated Notes Consent Solicitation................................................... 32
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C>
5.10 Security Documents............................................................................... 32
5.11 Fees and Expenses................................................................................ 33
5.12 Mortgages; Title Insurance....................................................................... 33
5.13 Existing Indebtedness Agreements; Shareholders' Agreements; Management
Agreements; Tax Allocation Agreements..................................................... 34
5.14 Solvency Opinions; Evidence of Insurance......................................................... 34
5.15 Pro Forma Balance Sheet.......................................................................... 35
5.16 Projections...................................................................................... 35
5.17 Existing Indebtedness of Borrower................................................................ 35
5.18 Payment of Accrued Interest, Fees; Continuation of Principal..................................... 35
5.20 Officer's Certificate............................................................................ 35
5.21 Opinions of Counsel.............................................................................. 36
5.22 Corporate Proceedings............................................................................ 36
5.23 Adverse Change, etc. ............................................................................ 36
5.24 Litigation....................................................................................... 36
5.25 Approvals........................................................................................ 37
5.26 Consummation of the Transaction.................................................................. 37
5.27 Security Documents............................................................................... 37
5.28 Fees and Expenses................................................................................ 38
5.29 [Reserved]....................................................................................... 38
5.30 Evidence of Insurance............................................................................ 38
5.31 Existing Indebtedness............................................................................ 39
5.32 Payment of Fees.................................................................................. 39
5.33 No Default; Representations and Warranties....................................................... 39
5.34 Notice of Borrowing; Letter of Credit Request.................................................... 39
SECTION 6. Representations, Warranties and Agreements.......................................................... 40
6.01 Corporate Status................................................................................. 40
6.02 Corporate Power and Authority.................................................................... 40
6.03 No Violation..................................................................................... 40
6.04 Litigation....................................................................................... 41
6.05 Use of Proceeds; Margin Regulations.............................................................. 41
6.06 Governmental Approvals........................................................................... 41
6.07 Investment Company Act........................................................................... 42
6.08 Public Utility Holding Company Act............................................................... 42
6.09 True and Complete Disclosure..................................................................... 42
6.10 Financial Condition; Financial Statements........................................................ 42
6.11 Security Interests............................................................................... 44
6.12 Representations and Warranties in Other Documents................................................ 44
6.13 Transaction...................................................................................... 44
6.14 .......................................................................................... 44
6.15 Compliance with ERISA............................................................................ 45
6.16 Capitalization................................................................................... 45
6.17 Subsidiaries..................................................................................... 46
6.18 Intellectual Property............................................................................ 46
6.19 Compliance with Statutes, etc. .................................................................. 46
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
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<S> <C>
6.20 Environmental Matters............................................................................ 46
6.21 Properties....................................................................................... 47
6.22 Labor Relations.................................................................................. 47
6.23 Tax Returns and Payments......................................................................... 47
6.24 Existing Indebtedness............................................................................ 48
6.25 Senior Subordinated Notes........................................................................ 48
SECTION 7. Affirmative Covenants............................................................................... 48
7.01 Information Covenants............................................................................ 49
7.02 Books, Records and Inspections................................................................... 52
7.03 Insurance........................................................................................ 52
7.04 Payment of Taxes................................................................................. 52
7.05 Corporate Franchises............................................................................. 52
7.06 Compliance with Statutes, etc. .................................................................. 52
7.07 Compliance with Environmental Laws............................................................... 53
7.08 ERISA .......................................................................................... 53
7.09 Good Repair...................................................................................... 54
7.10 End of Fiscal Years; Fiscal Quarters............................................................. 54
7.11 Additional Security; Further Assurances.......................................................... 54
7.12 Interest Rate Protection......................................................................... 56
7.13 Foreign Subsidiaries Security.................................................................... 57
7.14 Pledge of Borrower's Stock....................................................................... 57
SECTION 8. Negative Covenants.................................................................................. 58
8.01 Changes in Business.............................................................................. 58
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. ......................................... 58
8.03 Liens .......................................................................................... 60
8.04 Indebtedness..................................................................................... 62
8.05 Designated Senior Debt........................................................................... 63
8.06 Advances, Investments and Loans.................................................................. 63
8.07 Dividends, etc. ................................................................................. 66
8.08 Transactions with Affiliates..................................................................... 67
8.09 Capital Expenditures............................................................................. 68
8.10 .......................................................................................... 69
8.11 Interest Coverage Ratio.......................................................................... 69
8.12 Leverage Ratio................................................................................... 70
8.14 Limitation on Certain Restrictions on Subsidiaries............................................... 72
8.15. Limitation on the Creation of Subsidiaries...................................................... 72
8.16. Limitation on LS Companies...................................................................... 72
8.17. Maintenance of Corporate Separateness; Etc...................................................... 73
SECTION 9. Events of Default................................................................................... 73
9.01 Payments......................................................................................... 73
9.02 Representations, etc. ........................................................................... 73
9.03 Covenants........................................................................................ 73
9.04 Default Under Other Agreements................................................................... 73
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
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<S> <C>
9.05 Bankruptcy, etc. ................................................................................ 74
9.06 ERISA .......................................................................................... 74
9.07 Security Documents............................................................................... 75
9.08 Guaranties....................................................................................... 75
9.09 Judgments........................................................................................ 75
9.10 Ownership........................................................................................ 75
SECTION 10. Definitions........................................................................................ 76
SECTION 11. The Agents.........................................................................................100
11.01 Appointment.....................................................................................100
11.02 Delegation of Duties............................................................................100
11.03 Exculpatory Provisions..........................................................................100
11.04 Reliance by Administrative Agent................................................................101
11.05 Notice of Default...............................................................................101
11.06 Nonreliance on Administrative Agent and other Banks.............................................102
11.07 Indemnification.................................................................................102
11.08 Administrative Agent in its Individual Capacity.................................................103
11.09 Holders.........................................................................................103
11.10 Resignation of the Administrative Agent; Successor Administrative Agent.........................103
11.11 Documentation Agent, Syndication Agent and Co-Agents............................................103
11.12 Letter of Credit Issuer.........................................................................103
SECTION 12. Miscellaneous......................................................................................104
12.01 Payment of Expenses, etc. ......................................................................104
12.02 Right of Setoff.................................................................................104
12.03 Notices.........................................................................................105
12.04 Benefit of Agreement............................................................................105
12.05 No Waiver; Remedies Cumulative..................................................................107
12.06 Payments Pro Rata...............................................................................107
12.07 Calculations; Computations......................................................................108
12.08 Governing Law; Submission to Jurisdiction; Venue................................................108
12.09 Counterparts....................................................................................109
12.10 Effectiveness...................................................................................109
12.11 Headings Descriptive............................................................................109
12.12 Amendment or Waiver; etc. ......................................................................109
12.13 Survival........................................................................................111
12.14 Domicile of Loans...............................................................................111
12.15 Confidentiality.................................................................................111
12.16 Waiver of Jury Trial............................................................................112
12.17 Integration.....................................................................................112
12.18 Syndication.............................................................................112
</TABLE>
(iv)
<PAGE> 6
ANNEX I List of Banks and Commitments
ANNEX II Bank Addresses
SCHEDULE 2.01 Existing Letters of Credit
SCHEDULE 5.16
Projections
SCHEDULE 6.04 Litigation
SCHEDULE 6.16 Capital Stock of the Borrower
SCHEDULE 6.17
Subsidiaries
SCHEDULE 6.21
Real Properties
SCHEDULE 6.24
Existing Indebtedness
SCHEDULE 8.03
Existing Liens
SCHEDULE 8.06
Existing Investments
EXHIBIT A-1
Form of Notice of Borrowing
EXHIBIT A-2
Form of Letter of Credit Request
EXHIBIT B-1
Form of A Term Note
EXHIBIT B-2
Form of B Term Note
EXHIBIT B-3 Form of C Term Note
EXHIBIT B-4
Form of Revolving Note
EXHIBIT B-5
Form of Swingline Note
EXHIBIT C
Form of Section 4.04(b)(ii) Certificate
EXHIBIT D-1
Form of Opinion of Hutchins, Wheeler & Dittmar
(Initial Borrowing Date)
EXHIBIT D-2
Form of Opinion of Hutchins, Wheeler & Dittmar
(Second Borrowing Date)
EXHIBIT E
Form of Officers' Certificate
EXHIBIT F
Form of Pledge Agreement
EXHIBIT G
Form of Security Agreement
EXHIBIT H
Form of Subsidiary Guaranty
(v)
<PAGE> 7
EXHIBIT I
Form of Subordination Provisions
EXHIBIT J
Form of Assignment and Assumption Agreement
EXHIBIT K
Form of Intercompany Note
EXHIBIT L
Form of Shareholder Subordinated Note
(vi)
<PAGE> 8
CREDIT AGREEMENT, dated as of December 20, 1996, as amended
and restated through December 17, 1997, among SAFELITE GLASS CORP., a Delaware
corporation (the "Borrower"), the lenders from time to time party hereto (each a
"Bank" and, collectively, the "Banks"), THE CHASE MANHATTAN BANK, as
Administrative Agent (in such capacity, the "Administrative Agent"), BANKERS
TRUST COMPANY, as Syndication Agent (in such capacity, the "Syndication Agent"),
and GOLDMAN SACHS CREDIT PARTNERS L.P., as Documentation Agent (in such
capacity, the "Documentation Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 10 are used herein as so
defined.
W I T N E S S E T H :
WHEREAS, the Borrower, certain of the Banks (the "Existing
Banks"), the Administrative Agent, the Syndication Agent and the Documentation
Agent are parties to the Credit Agreement dated as of December 20, 1996, as
amended (as in effect immediately prior to the effectiveness of this Agreement,
the "Existing Credit Agreement"), pursuant to which the Existing Banks extended
credit to the Borrower;
WHEREAS, pursuant to the Merger Agreement dated as of October
10, 1997 (as further defined herein, the "Merger Agreement") between Vistar,
Inc., a Delaware corporation ("Vistar"), and the Borrower, it is anticipated
that Vistar will merge (the "Merger") into the Borrower with the Borrower as the
surviving corporation; and
WHEREAS, the parties hereto have elected to amend and restate
the Existing Credit Agreement pursuant to this Agreement rather than enter into
a new credit agreement for their convenience;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. (A) Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees to make a loan or loans
to the Borrower which loans shall be drawn, to the extent such Bank has a
commitment under such Facility, under the A Term Loan Facility, the B Term Loan
Facility, the C Term Loan Facility and the Revolving Credit Facility, as set
forth below:
(a) Each loan under the A Term Loan Facility (each an "A Term
Loan" and, collectively, the "A Term Loans") (i) shall be made pursuant
to a drawing on either the Initial Borrowing Date or the Second
Borrowing Date, (ii) shall be denominated in U.S. Dollars, (iii) shall
be made as Base Rate Loans or Eurodollar Loans and, except as
hereinafter provided, may, at the option of the Borrower, be maintained
as and/or converted into Base Rate Loans or Eurodollar Loans, provided
that (x) all A Term Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of A Term Loans of the same Type, (y) unless the
Administrative Agent has determined that the Syndication Date has
occurred (at which time this clause (y) shall no longer be applicable),
no more than three Borrowings of A Term
<PAGE> 9
Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Initial Borrowing Date (each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month, and the
first of which Borrowings may only be made on the Initial Borrowing
Date, the second of which Borrowings may only be made on the last day
of the Interest Period of the first such Borrowing and the third of
which Borrowings may only be made on the last day of the Interest
Period of the second such Borrowing), and (z) prior to the Second
Borrowing Date, all A Term Loans shall be made as Base Rate Loans, and
(iv) shall not exceed for any Bank at the time of incurrence thereof,
and after giving effect to the repayment of the A Term Loans to be
repaid with the proceeds of subsequent A Term Loans made on the Second
Borrowing Date, that aggregate principal amount which equals the A Term
Loan Commitment, if any, of such Bank at such time. Once repaid, A Term
Loans may not be reborrowed (except as otherwise provided for the
Initial Lending Banks in the immediately following provisions of this
paragraph). Notwithstanding the foregoing, only the Initial Lending
Banks shall make A Term Loans on the Initial Borrowing Date, and the
aggregate amount of the A Term Loans made by each such Bank on the
Initial Borrowing Date shall equal the amount thereof previously agreed
upon by the Borrower and such Bank (which amount may exceed the amount
of such Bank's A Term Loan Commitment set forth on Annex I). The
aggregate amount of the A Term Loans made on the Initial Borrowing Date
shall not exceed $150,000,000, and such amount shall be repaid with the
proceeds of A Term Loans made on the Second Borrowing Date. Each Bank
having an A Term Loan Commitment shall make an A Term Loan on the
Second Borrowing Date in accordance with the preceding provisions of
this paragraph.
(b) Each loan under the B Term Loan Facility (each a "B Term
Loan" and, collectively, the "B Term Loans") (i) shall be made pursuant
to a drawing, on either the Initial Borrowing Date or the Second
Borrowing Date, (ii) shall be denominated in U.S. Dollars, (iii) shall
be made as Base Rate Loans or Eurodollar Loans and, except as
hereinafter provided, may, at the option of the Borrower, be maintained
as and/or converted into Base Rate Loans or Eurodollar Loans, provided
that (x) all B Term Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of B Term Loans of the same Type, (y) unless the
Administrative Agent has determined that the Syndication Date has
occurred (at which time this clause (y) shall no longer be applicable),
no more than three Borrowings of B Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 90th day after the
Initial Borrowing Date (each of which Borrowings of Eurodollar Loans
may only have an Interest Period of one month, and the first of which
Borrowings may only be made on the same date as the initial Borrowing
of A Term Loans that are maintained as Eurodollar Loans, the second of
which Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing and the third of which Borrowings
may only be made on the last day of the Interest Period of the second
such Borrowing) and (z) prior to the Second Borrowing Date, all B Term
Loans shall be made as Base Rate Loans, and (iv) shall not exceed for
any Bank at the time of incurrence thereof, and after giving effect to
the repayment of the B Term Loans to be repaid with the proceeds of
subsequent B Term Loans made on the Second Borrowing Date, that
aggregate principal amount which equals the B Term Loan Commitment, if
any, of such Bank at such time. Once repaid, B Term Loans may not be
reborrowed (except as otherwise provided for the Initial Lending Banks
in the immediately following provisions of this paragraph).
Notwithstanding the foregoing,
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only the Initial Lending Banks shall make B Term Loans on the Initial
Borrowing Date, and the amount of the B Term Loans made by each such
Bank on the Initial Borrowing Date shall equal the amount thereof
previously agreed upon by the Borrower and such Bank (which amount may
exceed the amount of such Bank's B Term Loan Commitment set forth on
Annex I). The aggregate amount of the B Term Loans made on the Initial
Borrowing Date shall not exceed $100,000,000, and such amount shall be
repaid with the proceeds of B Term Loans made on the Second Borrowing
Date. Each Bank having a B Term Loan Commitment shall make a B Term
Loan on the Second Borrowing Date in accordance with the preceding
provisions of this paragraph.
(c) Each loan under the C Term Loan Facility (each a "C Term
Loan" and, collectively, the "C Term Loans") (i) shall be made pursuant
to a drawing on either the Initial Borrowing Date or the Second
Borrowing Date, (ii) shall be denominated in U.S. Dollars, (iii) shall
be made as Base Rate Loans or Eurodollar Loans and, except as
hereinafter provided, may, at the option of the Borrower, be maintained
as and/or converted into Base Rate Loans or Eurodollar Loans, provided
that (x) all C Term Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of C Term Loans of the same Type, (y) unless the
Administrative Agent has determined that the Syndication Date has
occurred (at which time this clause (y) shall no longer be applicable),
no more than three Borrowings of C Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 90th day after the
Initial Borrowing Date (each of which Borrowings of Eurodollar Loans
may only have an Interest Period of one month, and the first of which
Borrowings may only be made on the same date as the initial Borrowing
of A Term Loans that are maintained as Eurodollar Loans, the second of
which Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing and the third of which Borrowings
may only be made on the last day of the Interest Period of the second
such Borrowing) and (z) prior to the Second Borrowing Date, all C Term
Loans shall be made as Base Rate Loans and (iv) shall not exceed for
any Bank at the time of incurrence thereof, and after giving effect to
the repayment of the C Term Loans to be repaid with the proceeds of
subsequent C Term Loans made on the Second Borrowing Date, that
aggregate principal amount which equals the C Term Loan Commitment, if
any, of such Bank at such time. Once repaid, C Term Loans may not be
reborrowed (except as otherwise provided for the Initial Lending Banks
in the immediately following provisions of this paragraph).
Notwithstanding the foregoing, the Initial Lending Banks shall make C
Term Loans on the Initial Borrowing Date, and the amount of the C Term
Loan made by each such Bank on the Initial Borrowing Date shall equal
the amount thereof previously agreed upon by the Borrower and such Bank
(which amount may exceed the amount of such Bank's C Term Loan
Commitment set forth on Annex I). The aggregate amount of the C Term
Loans made on the Initial Borrowing Date shall not exceed $42,000,000,
and such amount shall be repaid with the proceeds of C Term Loans made
on the Second Borrowing Date. Each Bank having a C Term Loan Commitment
shall make a C Term Loan on the Second Borrowing Date in accordance
with the preceding provisions of this paragraph.
(d) Each loan under the Revolving Credit Facility (each a
"Revolving Loan" and, collectively, the "Revolving Loans") (i) shall be
made at any time and from time to time on or after the Initial
Borrowing Date and prior to the Revolving Loan Maturity Date,
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(ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter
provided, may, at the option of the Borrower, be incurred and
maintained as and/or converted into Base Rate Loans or Eurodollar
Loans, provided that (x) all Revolving Loans made as part of the same
Borrowing shall, unless otherwise specifically provided herein, consist
of Revolving Loans of the same Type and (y) unless the Administrative
Agent has determined that the Syndication Date has occurred (at which
time this clause (y) shall no longer be applicable), no more than three
Borrowings of Revolving Loans to be maintained as Eurodollar Loans may
be incurred prior to the 90th day after the Initial Borrowing Date
(each of which Borrowings of Eurodollar Loans may only have an Interest
Period of one month, and the first of which Borrowings may only be made
on the same date as the initial Borrowing of A Term Loans that are
maintained as Eurodollar Loans, the second of which Borrowings may only
be made on the last day of the Interest Period of the first such
Borrowing and the third of which Borrowings may only be made on the
last day of the Interest Period of the second such Borrowing), (iv) may
be repaid and reborrowed in accordance with the provisions hereof and
(v) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which equals such Bank's Revolving
Percentage of the Total Unutilized Revolving Credit Commitment at such
time.
(B) Subject to and upon the terms and conditions herein set
forth, Chase in its individual capacity agrees to make at any time and from time
to time after the Initial Borrowing Date and prior to the Swingline Expiry Date,
a loan or loans to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) shall be denominated in U.S. Dollars, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not exceed
in aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans then outstanding and the
Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to Letters
of Credit which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of such Swingline Loans) at such time,
an amount equal to the Total Revolving Credit Commitment then in effect and (v)
shall not exceed in aggregate principal amount at any time outstanding the
Maximum Swingline Amount. Chase shall not be obligated to make any Swingline
Loans at a time when a Bank Default exists unless Chase has entered into
arrangements satisfactory to it and the Borrower to eliminate Chase's risk with
respect to the Defaulting Bank's or Banks' participation in such Swingline
Loans, including by cash collateralizing such Defaulting Bank's or Banks'
Revolving Percentage of the outstanding Swingline Loans. Chase will not make a
Swingline Loan after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists until such
time as Chase shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default from the Majority Banks under the Revolving
Credit Facility.
(C) On any Business Day, Chase may, in its sole discretion,
give notice to the Revolving Banks that its outstanding Swingline Loans shall be
funded with a Borrowing of Revolving Loans (provided that each such notice shall
be deemed to have been automatically given upon the occurrence of a Default or
an Event of Default under Section 9.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 9), in which case a Borrowing
of Revolving Loans constituting Base Rate Loans (each such Borrowing, a
"Mandatory Borrowing") shall be made on the immediately succeeding Business Day
by all Revolving Banks pro rata based
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on each Revolving Bank's Revolving Percentage, and the proceeds thereof shall be
applied directly to repay Chase for such outstanding Swingline Loans. Each
Revolving Bank hereby irrevocably agrees to make Base Rate Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the date specified in
writing by Chase notwithstanding (i) that the amount of the Mandatory Borrowing
may not comply with the Minimum Borrowing Amount otherwise required hereunder,
(ii) whether any conditions specified in Section 5 are then satisfied, (iii)
whether a Default or an Event of Default has occurred and is continuing, (iv)
the date of such Mandatory Borrowing and (v) any reduction in the Total
Revolving Credit Commitment after any such Swingline Loans were made. In the
event that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each Revolving Bank (other than Chase) hereby agrees that it shall
forthwith purchase from Chase (without recourse or warranty) such assignment of
the outstanding Swingline Loans as shall be necessary to cause the Revolving
Banks to share in such Swingline Loans ratably based upon their respective
Revolving Percentages, provided that all interest payable on the Swingline Loans
shall be for the account of Chase until the date the respective assignment is
purchased and, to the extent attributable to the purchased assignment, shall be
payable to the Revolving Bank purchasing same from and after such date of
purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal
amount of each Borrowing under a Facility shall not be less than the Minimum
Borrowing Amount for such Facility. More than one Borrowing may be incurred on
any day; provided that at no time shall there be outstanding more than twenty
(20) Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
incur Loans under any Facility (excluding Borrowings of Swingline Loans and
Mandatory Borrowings), it shall give the Administrative Agent at its Notice
Office, prior to 3:00 P.M. (New York time), at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans and at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Base Rate Loans to be made hereunder. Each such notice (each a "Notice of
Borrowing") shall, except as provided in Section 1.10, be irrevocable, and, in
the case of each written notice and each confirmation of telephonic notice,
shall be in the form of Exhibit A-1, appropriately completed to specify (i) the
Facility pursuant to which such Borrowing is to be made, (ii) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing, (iii) the
date of such Borrowing (which shall be a Business Day) and (iv) whether the
respective Borrowing shall consist of Base Rate Loans or, to the extent
permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall
promptly give each Bank written notice (or telephonic notice promptly confirmed
in writing) of each proposed Borrowing, of such Bank's proportionate share
thereof, if any, and of the other matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to borrow Swingline
Loans hereunder, it shall give Chase not later than 12:00 Noon (New York time)
on the day such Swingline Loan is to be made, written notice (or telephonic
notice promptly confirmed in writing) of each Swingline Loan to be made
hereunder. Each such notice shall be irrevocable and shall specify in each case
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<PAGE> 13
(x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(C), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set
forth in such Section 1.01(C).
(c) Without in any way limiting the obligation of the Borrower
to confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or Chase (in the case of a Borrowing of Swingline Loans) or
the Letter of Credit Issuer (in the case of the issuance of Letters of Credit),
as the case may be, may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent, Chase or the Letter of Credit Issuer, as the case may be,
in good faith to be from an Authorized Officer of the Borrower. In each such
case, the Borrower hereby waives the right to dispute the Administrative
Agent's, Chase's or the Letter of Credit Issuer's record of the terms of such
telephonic notice (except in the case of gross negligence or bad faith).
1.04 Disbursement of Funds. (a) Not later than 1:00 P.M. (New
York time) on the date specified in each Notice of Borrowing (or (x) in the case
of Swingline Loans, not later than 2:00 P.M. (New York time) on the date
specified in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not
later than 12:00 Noon (New York time) on the date specified in Section 1.01(C)),
each Bank with a Commitment under the respective Facility will make available
its pro rata share, if any, of each Borrowing requested to be made on such date
(or in the case of Swingline Loans, Chase shall make available the full amount
thereof) in the manner provided below. All amounts shall be made available to
the Administrative Agent in U.S. dollars and immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
Borrower by depositing to its account at the Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Administrative
Agent by such Bank and the Administrative Agent has made available same to the
Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from the Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (x) if paid
by such Bank, the overnight Federal Funds rate or (y) if paid by the Borrower,
the then applicable rate of interest, calculated in accordance with Section
1.08, for the respective Loans.
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(b) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any default by such
Bank hereunder.
1.05 Evidence of Debt. (a) Each Bank shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Bank resulting from each Loan of such Bank
from time to time, including the amounts of principal and interest payable and
paid to such Bank from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register
pursuant to subsection 12.04(c), and a subaccount therein for each Bank, in
which shall be recorded (i) the amount of each Revolving Loan and Term Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Bank hereunder and (iii) both the amount of
any sum received by the Administrative Agent hereunder from the Borrower and
each Bank's share thereof.
(c) The entries made in the Register and the accounts of each
Bank maintained pursuant to subsection 1.05(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Bank or the Administrative Agent to maintain the Register or any
such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Bank in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Bank, the Borrower will execute and deliver to such
Bank (i) a promissory note of the Borrower evidencing the Revolving Loans of
such Bank, substantially in the form of Exhibit B-4 with appropriate insertions
as to date and principal amount (a "Revolving Note"), (ii) a promissory note of
the Borrower evidencing the A Term Loan of such Bank, substantially in the form
of Exhibit B-1 with appropriate insertions as to date and principal amount (an
"A-Term Note"), (iii) a promissory note of the Borrower evidencing the B Term
Loan of such Bank, substantially in the form of Exhibit B-2 with appropriate
insertions as to date and principal amount (a "B-Term Note"), (iv) a promissory
note of the Borrower evidencing the C Term Loan of such Bank, substantially in
the form of Exhibit B-3 with appropriate insertions as to date and principal (a
"C-Term Note"), (v) a promissory note of the Borrower evidencing the Swingline
Loan of such Bank, substantially in the form of Exhibit B-5 with appropriate
insertions as to date and principal amount (a "Swingline Note").
1.06 Conversions. The Borrower shall have the option to
convert on any Business Day occurring on or after the Initial Borrowing Date,
all or a portion at least equal to the applicable Minimum Borrowing Amount of
the outstanding principal amount of the Loans (other than Swingline Loans and
Loans made on the Initial Borrowing Date, which at all times shall be maintained
as Base Rate Loans) owing by the Borrower pursuant to a single Facility into a
Borrowing or Borrowings of another Type of Loan under such Facility; provided
that (i) except as otherwise provided in Section 1.10(b), no partial conversion
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans
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<PAGE> 15
may only be converted into Eurodollar Loans if no Default or Event of Default is
in existence on the date of the conversion unless the Required Banks otherwise
agree, (iii) unless the Administrative Agent has determined that the Syndication
Date has occurred (at which time this clause (iii) shall no longer be
applicable), prior to the 90th day after the Initial Borrowing Date, conversions
of Base Rate Loans into Eurodollar Loans may only be made if any such conversion
is effective on the first day of the first, second or third Interest Periods
referred to in clause (y) of each of Sections 1.01(A)(a)(iii), 1.01(A)(b)(iii)
and 1.01(A)(c)(iii) and so long as such conversion does not result in a greater
number of Borrowings of Eurodollar Loans prior to the 90th day after the Initial
Borrowing Date as are permitted under such Sections and (iv) Borrowings of
Eurodollar Loans resulting from this Section 1.06 shall be limited in number as
provided in Section 1.02. Each such conversion shall be effected by the Borrower
by giving the Administrative Agent at its Notice Office, prior to 3:00 P.M. (New
York time), at least three Business Days' (or one Business Day's in the case of
a conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "Notice of Conversion") specifying the
Loans to be so converted, the Type of Loans to be converted into and, if to be
converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans (other than
Swingline Loans) under this Agreement shall be made by the Banks pro rata on the
basis of their A Term Loan Commitments, B Term Loan Commitments, C Term Loan
Commitments or Revolving Credit Commitments, as the case may be, subject to the
provisions of the last three sentences of each of Section 1.01(A)(a), 1.01(A)(b)
and 1.01(A)(c). It is understood that no Bank shall be responsible for any
default by any other Bank of its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans to be made by it hereunder
regardless of the failure of any other Bank to fulfill its commitments
hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base
Rate Loan shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum which shall at all times be the
Applicable Base Rate Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until the earlier of (i)
the maturity (whether by acceleration or otherwise) of such Eurodollar Loan and
(ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at
all times be the Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and other amounts (which other amounts
are overdue more than five days) owed by any Credit Party under the Credit
Documents shall bear interest at a rate per annum equal to (x) in the case of
principal, the rate which is 2% in excess of the rate then borne by such Loans,
(y) in the case of interest, the rate which is 2% in excess of the rate
otherwise applicable to Base Rate Loans of the applicable Facility from time to
time and (z) in the case of such other amounts, the rate which is 2% in excess
of the rate otherwise applicable to Base Rate Loans of the Revolving
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<PAGE> 16
Facility from time to time. Interest which accrues under this Section 1.08(c)
shall be payable on demand.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any prepayment or repayment thereof (on the amount prepaid or repaid), (y)
the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09
or 1.10(b), as applicable (on the amount converted) and (z) the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify the Borrower and the Banks thereof.
1.09 Interest Periods. At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 3:00 P.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be a one, two, three or six month
period. Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall have the
same Interest Period;
(ii) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Base Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(iii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
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(v) no Interest Period for a Borrowing under a Facility may
be elected if it would extend beyond the respective Maturity Date for
such Facility;
(vi) no Interest Period may be elected at any time when a
Default or an Event of Default is then in existence unless the Required
Banks otherwise agree; and
(vii) no Interest Period with respect to any Borrowing of Term
Loans shall extend beyond any date upon which a mandatory prepayment of
such Term Loans is required to be made under Section 4.02(A)(b) (i),
(ii) or (iii), as the case may be, if, after giving effect to the
selection of such Interest Period, the aggregate principal amount of
such Term Loans maintained as Eurodollar Loans with Interest Periods
ending after such date of mandatory repayment would exceed the
aggregate principal amount of such Term Loans permitted to be
outstanding after such mandatory prepayment.
If upon the expiration of any Interest Period, the Borrower has failed to elect,
or is not permitted to elect by virtue of the application of clause (vi) above,
a new Interest Period to be applicable to the respective Borrowing of Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
(x) in the case of clause (i) below, the Administrative Agent or (y) in the case
of clauses (ii) and (iii) below, any Bank, shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that, by reason of any changes arising after the date
of this Agreement affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans (other than any increased cost or
reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of net income taxes, assessments
or similar charges imposed in lieu of net income taxes) because of (x)
any change since the date of this Agreement in any applicable law,
governmental rule, regulation, guideline, order or request (whether or
not having the force of law), or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline, order or request (such as,
for example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the
Eurodollar Rate) and/or (y) other circumstances affecting such Bank,
the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time since the date of this Agreement, that the
making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Bank in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any
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<PAGE> 18
such governmental rule, regulation, guideline or order not having the
force of law but with which such Bank customarily complies even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within five Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and (except in the case of clause (i)) to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter, (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred shall
be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower agrees to pay to such Bank, upon written demand therefor (accompanied
by the written notice referred to below), such additional amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to such Bank, showing the basis for the calculation thereof,
submitted to the Borrower by such Bank shall, absent manifest error, be presumed
to be final and conclusive and binding upon all parties hereto) and (z) in the
case of clause (iii) above, the Borrower shall take one of the actions specified
in Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Administrative
Agent telephonic notice (confirmed promptly in writing) thereof on the same date
that the Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or
(iii)), or (ii) if the affected Eurodollar Loan is then outstanding, upon at
least three Business Days' notice to the Administrative Agent, require the
affected Bank to convert each such Eurodollar Loan into a Base Rate Loan (which
conversion, in the case of the circumstances described in Section 1.10(a)(iii),
shall occur no later than the last day of the Interest Period then applicable to
such Eurodollar Loan (or such earlier date as shall be required by applicable
law)); provided that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the date
hereof, the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank or any corporation controlling such Bank
with any request or directive regarding capital adequacy issued after the date
hereof (whether or not having the force of
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<PAGE> 19
law) of any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Bank's or such other
corporation's capital or assets as a consequence of such Bank's Commitments or
obligations hereunder to a level below that which such Bank or such other
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Bank's or such other corporation's
policies with respect to capital adequacy), then from time to time, upon written
demand by such Bank (with a copy to the Administrative Agent), accompanied by
the notice referred to in the last sentence of this clause (c), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such other corporation for such reduction. Each Bank, upon determining
in good faith that any additional amounts will be payable pursuant to this
Section 1.10(c), will give prompt written notice thereof to the Borrower, which
notice shall set forth the basis of the calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding loss of anticipated profit
with respect to any Eurodollar Loans) which such Bank may sustain: (i) if for
any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of Eurodollar Loans does not occur on a date specified therefor in a
Notice of Borrowing or Notice of Conversion (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment
(including any repayment made pursuant to Section 4.01 or 4.02 or as a result of
an acceleration of the Loans pursuant to Section 9) or conversion of any
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Borrower;
or (iv) as a consequence of (x) any other default by the Borrower to repay its
Eurodollar Loans when required by the terms of this Agreement or (y) an election
made pursuant to Section 1.10(b). Calculation of all amounts payable to a Bank
under this Section 1.11 shall be made as though that Bank had actually funded
its relevant Eurodollar Loan through the purchase of a Eurodollar deposit
bearing interest at the Eurodollar Rate in an amount equal to the amount of that
Loan, having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar deposit from an offshore office of that Bank to
a domestic office of that Bank in the United States of America; provided,
however, that each Bank may fund each of its Eurodollar Loans in any manner it
sees fit and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this Section 1.11. It is further understood and agreed
that if any repayment of Eurodollar Loans pursuant to Section 4.01 or any
conversion of Eurodollar Loans pursuant to Section 1.06 in either case occurs on
a date which is not the last day of an Interest Period applicable thereto, such
repayment or conversion shall be accompanied by any amounts owing to any Bank
pursuant to this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans or
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<PAGE> 20
Letters of Credit affected by such event; provided that such designation is made
on such terms that, in the sole judgment of such Bank, such Bank and its lending
office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequences of the event giving rise to the operation of any such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in Section 1.10,
2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a
Defaulting Bank, (y) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or
Section 4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs in excess of those being generally charged by the other
Banks or (z) in the case of a refusal by a Bank to consent to a proposed change,
waiver, discharge or termination with respect to this Agreement which has been
approved by the Required Banks as provided in Section 12.12(b), the Borrower
shall have the right, if no Default or Event of Default then exists or, in the
case of clause (z) above, would exist after giving effect to such replacement,
to replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferee or Eligible Transferees, none of whom shall constitute a Defaulting
Bank at the time of such replacement (collectively, the "Replacement Bank") and
each of whom shall be reasonably acceptable to the Administrative Agent,
provided that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of,
and in each case participations in Letters of Credit and Swingline Loans by, the
Replaced Bank and, in connection therewith, shall pay to (x) the Replaced Bank
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank, (B) an amount equal to all Unpaid Drawings that have been funded by (and
not reimbursed to) such Replaced Bank, together with all then unpaid interest
with respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01,
(y) the Letter of Credit Issuer an amount equal to such Replaced Bank's
Revolving Percentage of any Unpaid Drawing relating to a Letter of Credit (which
at such time remains an Unpaid Drawing) to the extent such amount was not
theretofore funded by such Replaced Bank and (z) Chase an amount equal to such
Replaced Bank's Revolving Percentage of any Mandatory Borrowing to the extent
such amount was not theretofore funded by such Replaced Bank, and (ii) all
obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Assumption Agreements, the payment of amounts
referred to in clauses (i) and (ii) above, recordation of the assignment on the
Register by the Administrative Agent pursuant to Section 7.13 and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the Borrower, the Replacement Bank shall
become a Bank hereunder and the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Bank.
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<PAGE> 21
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) The Existing Letters of Credit
were issued prior to the Initial Borrowing Date pursuant to the Existing Credit
Agreement. The Existing Letters of Credit shall be deemed to be reissued on the
Initial Borrowing Date and shall become Letters of Credit hereunder. Subject to
and upon the terms and conditions herein set forth, the Borrower may request the
Letter of Credit Issuer at any time and from time to time on or after the
Initial Borrowing Date and prior to the fifth Business Day (or the 30th day in
the case of trade Letters of Credit) preceding the Revolving Loan Maturity Date
to issue, for the account of the Borrower and in support of (i) trade
obligations of the Borrower or any of its Subsidiaries that arise in the
ordinary course of business and are in respect of general corporate purposes of
the Borrower or any of its Subsidiaries, as the case may be, and/or (ii) on a
standby basis, L/C Supportable Indebtedness of the Borrower or any of its
Subsidiaries to any other Person, irrevocable letters of credit in such form as
may be approved by the Letter of Credit Issuer, and subject to and upon the
terms and conditions herein set forth, the Letter of Credit Issuer in each case
agrees to issue from time to time Letters of Credit (each Existing Letter of
Credit and each such letter of credit issued pursuant to this paragraph (a), a
"Letter of Credit" and, collectively, the "Letters of Credit"). Notwithstanding
the foregoing, the Letter of Credit Issuer shall not be under any obligation to
issue any Letter of Credit if at the time of such issuance:
(x) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain the Letter of Credit Issuer from issuing such Letter of Credit
or any requirement of law applicable to the Letter of Credit Issuer or
any request or directive (whether or not having the force of law) from
any governmental authority with jurisdiction over the Letter of Credit
Issuer shall prohibit, or request that the Letter of Credit Issuer
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the Letter of
Credit Issuer with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which the Letter of Credit Issuer
is not otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect
or known to the Letter of Credit Issuer as of the date hereof and which
the Letter of Credit Issuer in good faith deems material to it; or
(y) the Letter of Credit Issuer shall have received notice
from the Borrower or the Required Banks prior to the issuance of such
Letter of Credit of the type described in clause (vi) of Section
2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings relating to Letters of Credit which
are repaid on the date of, and prior to the issuance of, the respective Letter
of Credit) at such time, would exceed either (x) $20,000,000 or (y) when added
to the aggregate principal amount of all Revolving Loans and Swingline Loans
then outstanding, the Total Revolving Credit Commitment at such time; (ii) (x)
each standby Letter of Credit shall have an expiry date occurring not later than
one year after such Letter of Credit's date of issuance, provided that any such
Letter of Credit may be automatically extendable for periods of up to one year
so long as such Letter of Credit provides that the Letter of Credit Issuer
retains an option, satisfactory to the Letter of Credit Issuer, to terminate
such Letter of Credit within a specified
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<PAGE> 22
period of time prior to each scheduled extension date and (y) each trade Letter
of Credit shall have an expiry date occurring not later than 180 days after such
Letter of Credit's date of issuance; (iii)(x) no standby Letter of Credit shall
have an expiry date occurring later than the fifth Business Day next preceding
the Revolving Loan Maturity Date and (y) no trade Letter of Credit shall have an
expiry date occurring later than 30 days prior to the Revolving Loan Maturity
Date; (iv) each Letter of Credit shall be denominated in U.S. Dollars; (v) the
Stated Amount of each Letter of Credit shall not be less than $100,000 or such
lesser amount as is acceptable to the Letter of Credit Issuer; and (vi) the
Letter of Credit Issuer will not issue any Letter of Credit after it has
received written notice from the Borrower or the Required Banks stating that a
Default or an Event of Default exists until such time as the Letter of Credit
Issuer shall have received a written notice of (x) rescission of such notice
from the party or parties originally delivering the same or (y) a waiver of such
Default or Event of Default by the Majority Banks under the Revolving Credit
Facility.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' Revolving Percentage of the applicable Letter of Credit Outstandings.
2.02 Letter of Credit Requests; Notices of Issuance. (a)
Whenever it desires that a Letter of Credit be issued, the Borrower shall give
the Administrative Agent and the Letter of Credit Issuer written notice (or
telephonic notice confirmed in writing) thereof prior to 12:00 Noon (New York
time) at least five Business Days (or such shorter period as may be acceptable
to the Letter of Credit Issuer) prior to the proposed date of issuance (which
shall be a Business Day) which written notice shall be in the form of Exhibit
A-2 (each, a "Letter of Credit Request"). Each Letter of Credit Request shall
include any other documents as the Letter of Credit Issuer customarily requires
in connection therewith. The Administrative Agent shall promptly transmit copies
of each Letter of Credit Request to each Bank.
(b) The Letter of Credit Issuer shall, on the date of each
issuance of, or amendment or modification to, a Letter of Credit issued by it,
give the Administrative Agent, each Bank and the Borrower written notice of the
issuance of, or amendment or modification to, such Letter of Credit, accompanied
by a copy to the Administrative Agent of the Letter of Credit or Letters of
Credit issued by it and each such amendment or modification thereto.
2.03 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by the Letter of Credit
Issuer under any Letter of Credit issued by it (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") no later than two Business Days
following the date of such payment or disbursement, with interest on the amount
so paid or disbursed by the Letter of Credit Issuer, to the extent not
reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not including
the date the Letter of Credit Issuer is reimbursed therefor at a rate per annum
which shall be the Applicable Base Rate Margin plus the Base Rate as in effect
from time to time for Revolving Loans (plus an additional 2% per annum if not
reimbursed by the third Business Day after the date
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<PAGE> 23
of such payment or disbursement), such interest also to be payable on demand.
The Letter of Credit Issuer shall provide the Borrower prompt notice of any
payment or disbursement made by it under any Letter of Credit issued by it,
although the failure of, or delay in, giving any such notice shall not release
or diminish the obligations of the Borrower under this Section 2.03(a) or under
any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.03 to
reimburse the Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or any of its Subsidiaries may have or
have had against the Letter of Credit Issuer, any Agent or any Bank, including,
without limitation, any defense based upon the failure of any drawing under a
Letter of Credit to conform to the terms of the Letter of Credit or any
nonapplication or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Borrower shall not be obligated to
reimburse the Letter of Credit Issuer for any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
2.04 Letter of Credit Participations. (a) Effective on the
Initial Borrowing Date (in the case of each Existing Letter of Credit) and
effective immediately upon the issuance by the Letter of Credit Issuer of any
Letter of Credit (in the case of any Letter of Credit issued on or after the
Initial Borrowing Date), the Letter of Credit Issuer in respect of such Letter
of Credit shall be deemed to have sold and transferred to each other Revolving
Bank, and each such Revolving Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Revolving Percentage, in such
Letter of Credit, each substitute letter of credit, each drawing made thereunder
and the obligations of the Borrower under this Agreement with respect thereto
(although Letter of Credit Fees shall be payable directly to the Administrative
Agent for the account of the Revolving Banks as provided in Section 3.01(b) and
the Participants shall have no right to receive any portion of any Facing Fees
with respect to such Letters of Credit) and any security therefor or guaranty
pertaining thereto. Upon any change in the Revolving Credit Commitments of the
Revolving Banks pursuant to Section 1.13 or 12.04(b), it is hereby agreed that,
with respect to all outstanding Letters of Credit and Unpaid Drawings with
respect thereto, there shall be an automatic adjustment to the participations
pursuant to this Section 2.04 to reflect the new Revolving Percentages of the
assigning and assignee Bank.
(b) In determining whether to pay under any Letter of Credit,
the Letter of Credit Issuer shall not have any obligation relative to the
respective Participants other than to determine that any documents required to
be delivered under such Letter of Credit have been delivered and that they
appear to substantially comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Letter of
Credit Issuer under or in connection with any Letter of Credit if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for the Letter of Credit Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit and the Borrower shall not have reimbursed
such amount in full to the Letter of Credit Issuer pursuant to Section 2.03(a),
the Letter of Credit Issuer shall promptly notify the
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<PAGE> 24
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each such Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of the Letter of
Credit Issuer, the amount of such Participant's Revolving Percentage of such
payment in U.S. Dollars and in same day funds; provided, however, that no
Participant shall be obligated to pay to the Administrative Agent its Revolving
Percentage of such unreimbursed amount for any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer. If the Administrative Agent so notifies any Participant
prior to 11:00 A.M. (New York time) on any Business Day, such Participant shall
make available to the Administrative Agent for the account of the Letter of
Credit Issuer such Participant's Revolving Percentage of the amount of such
payment on such Business Day in same day funds. If and to the extent such
Participant shall not have so made its Revolving Percentage of the amount of
such payment available to the Administrative Agent for the account of the Letter
of Credit Issuer, such Participant agrees to pay to the Administrative Agent for
the account of the Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent for the account of the Letter of
Credit Issuer at the overnight Federal Funds rate. The failure of any
Participant to make available to the Administrative Agent for the account of the
Letter of Credit Issuer its Revolving Percentage of any payment under any Letter
of Credit shall not relieve any other Participant of its obligation hereunder to
make available to the Administrative Agent for the account of the Letter of
Credit Issuer its Revolving Percentage of any payment under any Letter of Credit
on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Administrative Agent for the account of the Letter of Credit Issuer such other
Participant's Revolving Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of
a reimbursement obligation as to which the Administrative Agent has received for
the account of the Letter of Credit Issuer any payments from the Revolving
Participants pursuant to clause (c) above, the Letter of Credit Issuer shall pay
to the Administrative Agent and the Administrative Agent shall promptly pay to
each such Participant which has paid its Revolving Percentage thereof, in U.S.
Dollars and in same day funds, an amount equal to such Participant's Revolving
Percentage of the principal amount thereof and interest thereon accruing after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to
the Administrative Agent for the account of the Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any transferee
of any Letter of Credit (or any Person for whom any such transferee may
be acting), the Administrative Agent, the Letter of Credit Issuer, any
Bank,
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<PAGE> 25
or other Person, whether in connection with this Agreement, any Letter
of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any of its Subsidiaries and the beneficiary named in any such Letter
of Credit);
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Increased Costs. If after the date hereof, the adoption
or effectiveness of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Letter of Credit
Issuer or any Participant with any request or directive issued after the date
hereof (whether or not having the force of law) by any such authority, central
bank or comparable agency shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by the Letter of Credit Issuer or such Participant's participation
therein, or (ii) impose on the Letter of Credit Issuer or any Participant any
other conditions affecting this Agreement, any Letter of Credit or such
Participant's participation therein; and the result of any of the foregoing is
to increase the cost to the Letter of Credit Issuer or such Participant of
issuing, maintaining or participating in any Letter of Credit, or to reduce the
amount of any sum received or receivable by the Letter of Credit Issuer or such
Participant hereunder, then, upon written demand to the Borrower by the Letter
of Credit Issuer or such Participant (a copy of which notice shall be sent by
the Letter of Credit Issuer or such Participant to the Administrative Agent),
accompanied by the certificate described in the last sentence of this Section
2.05, the Borrower shall pay to the Letter of Credit Issuer or such Participant
such additional amount or amounts as will compensate the Letter of Credit Issuer
or such Participant for such increased cost or reduction. A certificate
submitted to the Borrower by the Letter of Credit Issuer or such Participant, as
the case may be (a copy of which certificate shall be sent by the Letter of
Credit Issuer or such Participant to the Administrative Agent), setting forth
the basis for the determination of such additional amount or amounts necessary
to compensate the Letter of Credit Issuer or such Participant as aforesaid shall
be final and conclusive and binding on the Borrower absent manifest error,
although the failure to deliver any such certificate shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to this
Section 2.05 upon subsequent receipt of such certificate.
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<PAGE> 26
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower shall pay to the Administrative
Agent for distribution to each Bank a commitment fee (the "Commitment Fee") for
the period from the Effective Date to but not including the date the Total
Commitment has been terminated, computed at the rate of 1/2 of 1% per annum on
the daily Aggregate Unutilized Commitment of such Bank. Accrued Commitment Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
the date upon which the Total Commitment is terminated. From and after the first
day of any Margin Adjustment Period (the "Start Date") to and including the last
day of such Margin Adjustment Period, the Commitment Fee shall be the respective
percentage per annum set forth in clause (A) or (B) below if, but only if, as of
the last day of the most recent fiscal quarter or year, as the case may be,
ended immediately prior to such Start Date (the "Test Date"), the conditions set
forth in clause (A) or (B) below are met:
(A) 1/2 of 1% per annum if the Leverage Ratio on such Test
Date is greater than 5.00:1.0;
(B) 3/8 of 1% per annum if the Leverage Ratio on such Test
Date is less than or equal to 5.00:1.0.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, (i) the Commitment Fee shall be 1/2 of 1% per annum at any time when
an Event of Default shall exist and (ii) the Commitment Fee shall be 3/8 of 1%
per annum prior to the date which is nine months after the Initial Borrowing
Date.
(b) The Borrower shall pay to the Administrative Agent for the
account of the Revolving Banks pro rata on the basis of their Revolving
Percentages, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee") computed at a rate per annum equal to the Applicable Eurodollar Margin
then in effect with respect to Revolving Loans on the daily Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the first day on or
after the termination of the Total Revolving Credit Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower shall pay to the Administrative Agent for the
account of the Letter of Credit Issuer a fee in respect of each Letter of Credit
issued by the Letter of Credit Issuer (the "Facing Fee") computed at the rate of
1/4 of 1% per annum on the daily Stated Amount of such Letter of Credit,
provided that in no event shall the annual Facing Fee with respect to each
Letter of Credit be less than $500; it being agreed that, on the date of
issuance of any Letter of Credit and on each anniversary thereof prior to the
termination of such Letter of Credit, if $500 will exceed the amount of Facing
Fees that will accrue with respect to such Letter of Credit for the immediately
succeeding 12-month period, the full $500 shall be payable on the date of
issuance of such Letter of Credit and on each such anniversary thereof prior to
the termination of such Letter of Credit. Except as provided in the immediately
preceding sentence, accrued Facing Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day on or after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.
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<PAGE> 27
(d) The Borrower shall pay directly to the Letter of Credit
Issuer upon each issuance of, drawing under, and/or amendment of, a Letter of
Credit such amount as shall at the time of such issuance, drawing or amendment
be the administrative charge which the Letter of Credit Issuer is customarily
charging for issuances of, drawings under or amendments of, letters of credit
issued by it.
(e) The Borrower shall pay to each Agent, for its own account,
such fees as may be agreed to from time to time between the Borrower and such
Agent, when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Termination or Reduction of Commitments. (a)
Upon at least two Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, without premium or penalty, to
terminate or partially reduce the Total Unutilized Revolving Credit Commitment,
provided that (x) any such termination or partial reduction shall apply to
proportionately and permanently reduce the Revolving Credit Commitment of each
of the Revolving Banks and (y) any partial reduction pursuant to this Section
3.02 shall be in the amount of at least $500,000 and increments of $100,000 in
excess thereof.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 12.12(b), the Borrower shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Banks),
to (i) require such Bank to assign its entire Revolving Credit Commitment and
all Loans, Fees and other amounts owing to such Bank to another Bank or Banks
(which would agree to provide the consent refused by the assignor Bank) pursuant
to subsection 12.04(b), if such other Bank or Banks consent to such assignment,
or (ii) terminate the entire Revolving Credit Commitment of such Bank, so long
as all Loans, together with accrued and unpaid interest, Fees and all other
amounts, owing to such Bank are repaid concurrently with the effectiveness of
such termination pursuant to Section 4.01(b) and the Borrower shall pay to the
Administrative Agent at such time an amount in cash and/or Cash Equivalents
equal to such Bank's Revolving Percentage of the outstanding Letters of Credit
(which cash and/or Cash Equivalents shall be held by the Administrative Agent as
security for the obligations of the Borrower hereunder in respect of the
outstanding Letters of Credit pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the Administrative
Agent, which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Administrative Agent until the proceeds are applied to the
secured obligations or are released to the Borrower upon termination of the
respective Letter of Credit) (at which time Annex I shall be deemed modified to
reflect such changed amounts), and at such time, such Bank shall no longer
constitute a "Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.05, 4.04, 12.01 and 12.06), which shall survive as to such repaid
Bank.
-20-
<PAGE> 28
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
Commitment shall terminate in its entirety on January 31, 1998 unless the
Initial Borrowing Date has occurred on or before such date.
(b) Each of the Total A Term Loan Commitment, the Total B Term
Loan Commitment and the Total C Term Loan Commitment shall terminate in its
entirety on the Second Borrowing Date, after giving effect to the making of the
respective Term Loans on such date.
(c) The Total Revolving Credit Commitment (and the Revolving
Credit Commitment of each Revolving Bank) shall terminate in their entirety on
the earlier of (i) the date on which a Change of Control Event occurs and (ii)
the Revolving Loan Maturity Date.
(d) From and after payment in full of the Term Loans, on each
date upon which a mandatory repayment of Term Loans pursuant to Section
4.02(A)(c), (d), (e) or (f) would otherwise be required, the Total Revolving
Credit Commitment shall be permanently reduced by the amount, if any, required
to be applied pursuant to said Sections.
(e) Each reduction of the Total A Term Loan Commitment, the
Total B Term Loan Commitment, the Total C Term Loan Commitment or the Total
Revolving Credit Commitment pursuant to this Section 3.03 shall apply
proportionately to the A Term Loan Commitment, the B Term Loan Commitment, the C
Term Loan Commitment or the Revolving Credit Commitment, as the case may be, of
each Bank.
SECTION 4. Payments.
4.01 Voluntary Prepayments. (a) The Borrower shall have the
right to prepay the Loans, in whole or in part, without premium or penalty
except as otherwise provided in this Agreement, from time to time on the
following terms and conditions: (i) the Borrower shall give the Administrative
Agent at its Notice Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, whether such Loans are
A Term Loans, B Term Loans, C Term Loans, Revolving Loans or Swingline Loans,
the amount of such prepayment and (in the case of Eurodollar Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be given by the Borrower
prior to 3:00 P.M. (New York time) (x) at least one Business Day prior to the
date of such prepayment in the case of Term Loans or Revolving Loans and (y) on
the date of such prepayment in the case of Swingline Loans, which notice shall,
except in the case of Swingline Loans, promptly be transmitted by the
Administrative Agent to each of the Banks; (ii) each prepayment shall be in an
aggregate principal amount of at least $500,000 (or $25,000 in the case of
Swingline Loans) and in increments of $100,000 (or $10,000, in the case of
Swingline Loans) in excess thereof, provided that no partial prepayment of
Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Loans outstanding pursuant to such Borrowing to an
amount less than the Minimum Borrowing Amount applicable thereto; (iii) each
prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
pro rata among such Loans, provided that at the Borrower's election in
connection with any prepayment of Revolving Loans pursuant to this Section
4.01(a), such prepayment shall not be applied to any Revolving Loans of a
Defaulting Bank at any time when the aggregate amount of Revolving Loans of any
Non-Defaulting Bank exceeds such Non-Defaulting Bank's Revolving Percentage of
all Revolving Loans then outstanding; (iv) each prepayment of Term Loans
pursuant
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<PAGE> 29
to this Section 4.01(a) must consist of a prepayment of A Term Loans (in an
amount equal to the A TL Percentage of such prepayment), B Term Loans (in an
amount equal to the B TL Percentage of such prepayment) and C Term Loans (in an
amount equal to the C TL Percentage of such prepayment); (v) each prepayment of
A Term Loans pursuant to this Section 4.01(a) shall reduce the then remaining
Scheduled A Repayments on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled A Repayment); (vi) each prepayment of B
Term Loans pursuant to this Section 4.01(a) shall reduce the then remaining
Scheduled B Repayments on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled B Repayment); and (vii) each prepayment
of C Term Loans pursuant to this Section 4.01(a) shall reduce the then remaining
Scheduled C Repayments on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled C Repayment).
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 12.12(b), the Borrower shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Banks) to
repay all Loans, together with accrued and unpaid interest, Fees and all other
amounts owing to such Bank in accordance with said Section 12.12(b) so long as
(A) in the case of the repayment of Revolving Loans of any Revolving Bank
pursuant to this paragraph (b) the Revolving Credit Commitment of such Revolving
Bank is terminated concurrently with such repayment pursuant to Section 3.02(b)
(at which time Annex I shall be deemed modified to reflect the changed Revolving
Credit Commitments) and (B) in the case the repayment of Loans of any Bank the
consents required by Section 12.12(b) in connection with the repayment pursuant
to this paragraph (b) shall have been obtained.
4.02 Mandatory Prepayments.
(A) Requirements:
(a) If on any date the sum of (i) the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans (after giving effect to
all other repayments thereof on such date) plus (ii) the Letter of Credit
Outstandings on such date exceeds the Total Revolving Credit Commitment as then
in effect, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans in
an aggregate amount equal to such excess. If, after giving effect to the
prepayment of all outstanding Swingline Loans and Revolving Loans, the aggregate
amount of Letter of Credit Outstandings exceeds the Total Revolving Credit
Commitment as then in effect, the Borrower shall pay to the Administrative Agent
on such date an amount in cash and/or Cash Equivalents equal to such excess (up
to the aggregate amount of Letter of Credit Outstandings at such time) and the
Administrative Agent shall hold such payment as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agreement to be entered
into in form and substance reasonably satisfactory to the Administrative Agent
(which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Administrative Agent until the proceeds are applied to the
secured obligations or are released to the Borrower upon termination of the
applicable Letter of Credit).
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<PAGE> 30
(b) (i) The Borrower shall be required to repay the principal
amount of A Term Loans on each date set forth below in the amount set forth
opposite such date below (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(B)(b), a "Scheduled A Repayment"):
<TABLE>
<CAPTION>
Scheduled A Repayment Date Amount
-------------------------- ------
<S> <C>
the last Business Day in September, 1999 $5,000,000.00
the last Business Day in December, 1999 5,000,000.00
the last Business Day in March, 2000 5,000,000.00
the last Business Day in June, 2000 5,000,000.00
the last Business Day in September, 2000 5,000,000.00
the last Business Day in December, 2000 5,000,000.00
the last Business Day in March, 2001 7,500,000.00
the last Business Day in June, 2001 7,500,000.00
the last Business Day in September, 2001 7,500,000.00
the last Business Day in December, 2001 7,500,000.00
the last Business Day in March, 2002 10,000,000.00
the last Business Day in June, 2002 10,000,000.00
the last Business Day in September, 2002 10,000,000.00
the last Business Day in December 2002 10,000,000.00
the last Business Day in March, 2003 12,500,000.00
the last Business Day in June, 2003 12,500,000.00
the last Business Day in September, 2003 12,500,000.00
A Term Loan Maturity Date 12,500,000.00
</TABLE>
(ii) The Borrower shall be required to repay the principal
amount of B Term Loans on each date set forth below in the amount set forth
opposite such date below (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(B)(b), a "Scheduled B Repayment"):
<TABLE>
<CAPTION>
Scheduled B Repayment Date Amount
-------------------------- ------
<S> <C>
the last Business Day in September, 1999 $250,000.00
the last Business Day in December, 1999 250,000.00
the last Business Day in March, 2000 250,000.00
the last Business Day in June, 2000 250,000.00
the last Business Day in September, 2000 250,000.00
the last Business Day in December, 2000 250,000.00
the last Business Day in March, 2001 250,000.00
the last Business Day in June, 2001 250,000.00
</TABLE>
-23-
<PAGE> 31
<TABLE>
<S> <C>
the last Business Day in September, 2001 250,000.00
the last Business Day in December, 2001 250,000.00
the last Business Day in March, 2002 250,000.00
the last Business Day in June, 2002 250,000.00
the last Business Day in September, 2002 250,000.00
the last Business Day in December, 2002 250,000.00
the last Business Day in March, 2003 12,062,500.00
the last Business Day in June, 2003 12,062,500.00
the last Business Day in September, 2003 12,062,500.00
the last Business Day in December, 2003 12,062,500.00
the last Business Day in March, 2004 12,062,500.00
the last Business Day in June, 2004 12,062,500.00
the last Business Day in September, 2004 12,062,500.00
B Term Loan Maturity Date 12,062,500.00
</TABLE>
(iii) The Borrower shall be required to repay the principal
amount of C Term Loans on each date set forth below in the amount set forth
opposite such date below (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(B)(b), a "Scheduled C Repayment"):
<TABLE>
<CAPTION>
Scheduled C Repayment Date Amount
-------------------------- ------
<S> <C>
the last Business Day in September, 1999 $250,000.00
the last Business Day in December, 1999 250,000.00
the last Business Day in March, 2000 250,000.00
the last Business Day in June, 2000 250,000.00
the last Business Day in September, 2000 250,000.00
the last Business Day in December, 2000 250,000.00
the last Business Day in March, 2001 250,000.00
the last Business Day in June, 2001 250,000.00
the last Business Day in September, 2001 250,000.00
the last Business Day in December, 2001 250,000.00
the last Business Day in March, 2002 250,000.00
the last Business Day in June, 2002 250,000.00
the last Business Day in September, 2002 250,000.00
the last Business Day in December, 2002 250,000.00
the last Business Day in March, 2003 250,000.00
the last Business Day in June, 2003 250,000.00
the last Business Day in September, 2003 250,000.00
the last Business Day in December, 2003 250,000.00
</TABLE>
-24-
<PAGE> 32
<TABLE>
<S> <C>
the last Business Day in March, 2004 11,937,500.00
the last Business Day in June, 2004 11,937,500.00
the last Business Day in September, 2004 11,937,500.00
the last Business Day in December, 2004 11,937,500.00
the last Business Day in March, 2005 11,937,500.00
the last Business Day in June, 2005 11,937,500.00
the last Business Day in September, 2005 11,937,500.00
C Term Loan Maturity Date 11,937,500.00
</TABLE>
(c) On the Business Day after the date of receipt thereof by
the Borrower and/or any of its Subsidiaries of Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale
shall be applied as a mandatory repayment of principal of the Term Loans (with
the A TL Percentage of such amount to be applied as a repayment of the A Term
Loans, the B TL Percentage of such amount to be applied as a repayment of the B
Term Loans and the C TL Percentage of such amount to be applied as a repayment
of the C Term Loans, in each case subject to modification of such application as
set forth in Section 4.02(C)), provided that with respect to no more than
$10,000,000 in the aggregate of such Net Cash Proceeds in any fiscal year of the
Borrower, such Net Cash Proceeds shall not be required to be so applied on such
date to the extent that no Default or Event of Default then exists and the
Borrower delivers a certificate to the Administrative Agent on or prior to such
date stating that such Net Cash Proceeds shall be used to purchase assets used
or to be used in the businesses referred to in Section 8.01(a) (including
without limitation (but only to the extent permitted by Section 8.02), capital
stock of a corporation engaged in any such business) within 180 days following
the date of such Asset Sale (which certificate shall set forth the estimates of
the proceeds to be so expended), and provided further, that (1) if all or any
portion of such Net Cash Proceeds not so applied to the repayment of Term Loans
are not so used (or contractually committed to be used) within such 180 day
period, such remaining portion shall be applied on the last day of such period
as a mandatory repayment of principal of outstanding Term Loans as provided
above in this Section 4.02(A)(c) and (2) if all or any portion of such Net Cash
Proceeds are not required to be applied on the 180th day referred to in clause
(1) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination of expiration as a mandatory repayment of principal of
outstanding Term Loans as provided above in this Section 4.02(A)(c).
Notwithstanding the foregoing, and in addition to the exemption from repayment
described in the immediately preceding sentence, Net Cash Proceeds from any
Asset Sale in the ordinary course of business shall not be required to be
applied to the making of mandatory repayments pursuant to this paragraph (c) as
long as no Default or Event of Default then exists or would exist after giving
effect thereto.
(d) On the Business Day after the date of the receipt thereof
by the Borrower and/or any of its Subsidiaries, an amount equal to 100% of the
cash proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) of the incurrence of Indebtedness or the
issuance or sale of equity securities by the Borrower and/or any of its
Subsidiaries (other than Indebtedness permitted to be incurred by Section 8.04
as such section is in effect on the Effective Date) shall be applied as a
mandatory repayment of principal of the Term Loans (with the A TL Percentage of
such amount to be applied as a repayment of the A Term
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<PAGE> 33
Loans, the B TL Percentage of such amount to be applied as a repayment of the B
Term Loans and the C TL Percentage of such amount to be applied as a repayment
of the C Term Loans, in each case subject to modification of such application as
set forth in Section 4.02(C)); provided that proceeds of equity applied in
accordance with Section 8.07(iii) and/or Section 8.13 shall not be required to
be applied as a mandatory prepayment pursuant to this Section 4.02(A)(d).
(e) On each Excess Cash Payment Date, an amount equal to 50%
of Excess Cash Flow of the Borrower and its Subsidiaries for the most recent
Excess Cash Flow Period ending prior to such Excess Cash Payment Date shall be
applied as a mandatory repayment of principal of the Term Loans (with the A TL
Percentage of such amount to be applied as a repayment of the A Term Loans, the
B TL Percentage of such amount to be applied as a repayment of the B Term Loans
and the C TL Percentage of such amount to be applied as a repayment of the C
Term Loans, in each case subject to modification of such application as set
forth in Section 4.02(C)).
(f) Within 10 days following each date on which the Borrower
or any of its Subsidiaries receives any proceeds from any Recovery Event, an
amount equal to 100% of the proceeds of such Recovery Event (net of reasonable
costs and taxes incurred in connection with such Recovery Event) shall be
applied as a mandatory repayment of principal of the Term Loans (with the A TL
Percentage of such amount to be applied as a repayment of the A Term Loans, the
B TL Percentage of such amount to be applied as a repayment of the B Term Loans
and the C TL Percentage of such amount to be applied as a repayment of the C
Term Loans, in each case subject to modification of such application as set
forth in Section 4.02(C)), provided that so long as no Default or Event of
Default then exists, such proceeds shall not be required to be so applied on
such date to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such proceeds shall
be used to replace or restore any properties or assets in respect of which such
proceeds were paid within 360 days following the date of the receipt of such
proceeds (which certificate shall set forth the estimates of the proceeds to be
so expended), and provided further, that (i) if all or any portion of such
proceeds not required to be applied to the repayment of Term Loans pursuant to
the preceding proviso are not so used (or contractually committed to be used)
within 360 days after the date of the receipt of such proceeds, such remaining
portion shall be applied on the last day of such period as a mandatory repayment
of principal of the Term Loans as provided above in this Section 4.02(A)(f) and
(ii) if all or any portion of such proceeds are not required to be applied on
the 360th day referred to in clause (i) above because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, then such remaining
portion shall be applied on the date of such termination or expiration as a
mandatory repayment of principal of outstanding Term Loans as provided in this
Section 4.02(A)(f).
(g) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) all then outstanding Swingline Loans shall be
repaid in full on the Swingline Expiry Date and (ii) all other then outstanding
Loans of the respective Facility shall be repaid in full on the Maturity Date
for such Facility.
(h) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, all A Term Loans, B Term Loans and C Term Loans
made on the Initial Borrowing Date shall be repaid with the proceeds of the A
Term Loans, B Term Loans and C Term Loans, respectively, made on the Second
Borrowing Date.
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<PAGE> 34
(i) In the event the amount of any prepayment required to be
made pursuant to paragraph (c) or (d) above shall exceed the aggregate principal
amount of the Base Rate Loans outstanding under the Facilities required to be
prepaid (the amount of any such excess being called the "Excess Amount"), the
Borrower shall have the right, in lieu of making such prepayment in full, to
prepay all the outstanding applicable Base Rate Loans and to deposit an amount
equal to the Excess Amount with the Administrative Agent in a cash collateral
account maintained (pursuant to documentation reasonably satisfactory to the
Administrative Agent) by and in the sole dominion and control of the
Administrative Agent. Any amounts so deposited shall be held by the
Administrative Agent as collateral for the Obligations and applied to the
prepayment of the applicable Eurodollar Loans at the end of the current Interest
Periods applicable thereto. On any Business Day on which (x) collected amounts
remain on deposit in or to the credit of such cash collateral account after
giving effect to the payments made on such day pursuant to this paragraph (i)
and (y) the Borrower shall have delivered to the Administrative Agent a written
request or a telephonic request (which shall be promptly confirmed in writing)
that such remaining collected amounts be invested in the Cash Equivalents
specified in such request, the Administrative Agent shall use its reasonable
efforts to invest such remaining collected amounts in such Cash Equivalents;
provided, however, that the Administrative Agent shall have continuous dominion
and full control over any such investments (and over any interest that accrues
thereon) to the same extent that it has dominion and control over such cash
collateral account and no Cash Equivalent shall mature after the end of the
Interest Period for which it is to be applied. The Borrower shall not have the
right to withdraw any amount from such cash collateral account until the
applicable Eurodollar Loans and accrued interest thereon are paid in full or if
a Default or Event of Default then exists or would result. Notwithstanding the
foregoing, no prepayment (or portion thereof) required pursuant to paragraph (c)
or (d) above may be deferred pursuant to this paragraph (i) by more than 30
days.
(B) Application:
(a) Any amount required to be applied to A Term Loans, B Term
Loans or C Term Loans, as the case may be, shall apply to the repayment of the
outstanding principal amount of A Term Loans, B Term Loans and C Term Loans,
respectively, of the respective Facility.
(b) All repayments of A Term Loans, B Term Loans and C Term
Loans pursuant to Section 4.02(A)(c), (d), (e) or (f) shall be applied to reduce
the then remaining Scheduled Repayments of the respective Facility pro rata
based on the then remaining Scheduled Repayments of the respective Facility.
(c) With respect to each repayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans which are to be
repaid and the specific Borrowing(s) under the affected Facility pursuant to
which made; provided that (i) Eurodollar Loans made pursuant to a specific
Facility may be designated for repayment pursuant to this Section 4.02 only on
the last day of an Interest Period applicable thereto unless all Eurodollar
Loans made pursuant to such Facility with Interest Periods ending on such date
of required prepayment and all Base Rate Loans made pursuant to such Facility
have been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant
to a single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount, such Borrowing
shall be immediately converted into Base Rate Loans; and (iii) each repayment of
any Loans made pursuant
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<PAGE> 35
to a Borrowing shall be applied pro rata among such Loans; provided that no
repayment pursuant to Section 4.02(A)(a) shall be applied to any Revolving Loans
of a Defaulting Bank at any time when the aggregate amount of the Revolving
Loans of any Non-Defaulting Bank exceeds such Non-Defaulting Bank's Revolving
Percentage of Revolving Loans then outstanding. In the absence of a designation
by the Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole discretion with a
view, but no obligation, to minimize breakage costs owing under Section 1.11.
(C) Waiver of Certain Mandatory Repayments
by B Banks and C Banks
Notwithstanding anything to the contrary contained in this
Section 4.02 or elsewhere in this Agreement (including, without limitation, in
Section 12.12), Banks with outstanding B Term Loans (the "B Banks") or
outstanding C Term Loans (the "C Banks") may waive a mandatory repayment of such
Loans pursuant to Section 4.02(A)(c), (d), (e) and/or (f) (each such repayment,
a "Waivable Mandatory Repayment") upon the terms and provisions set forth in
this Section 4.02(C). The Borrower shall give to the Administrative Agent
written notice of its intention to make a Waivable Mandatory Repayment at least
five Business Days prior to such repayment, which notice the Administrative
Agent shall promptly forward to all B Banks and C Banks (indicating in such
notice the amount of such repayment to be applied to each such Bank's
outstanding Term Loans under such Facilities). Any B Bank and C Bank may waive
all or any part of any such Waivable Mandatory Repayment. In the event any such
B Bank or C Bank desires to waive such Bank's right to receive any such Waivable
Mandatory Repayment in whole or in part, such Bank shall so advise the
Administrative Agent no later than the close of business two Business Days after
the date of such notice from the Administrative Agent, which notice shall also
include the amount such Bank desires to receive in respect of such repayment. If
any Bank does not reply to the Administrative Agent within the two Business
Days, it will be deemed not to have waived any part of such repayment. If any
Bank does not specify an amount it wishes to receive, it will be deemed to have
accepted 100% of the total payment. In the event that any such Bank waives all
or part of such right to receive any such Waivable Mandatory Repayment, the
Administrative Agent shall apply 100% of the amount so waived by such Bank to
the A Term Loans in accordance with Section 4.02(B).
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Administrative Agent for the ratable account of the Banks entitled thereto,
not later than 12:00 Noon (New York time) on the date when due and shall be made
in immediately available funds and in U.S. Dollars at the Payment Office, it
being understood that written, telex or facsimile transmission notice by the
Borrower to the Administrative Agent to make a payment from the funds in the
Borrower's account at the Payment Office shall constitute the making of such
payment to the extent of such funds held in such account. Any payments under
this Agreement which are made later than 12:00 Noon (New York time) shall be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately prior
to such extension.
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4.04 Net Payments. (a) All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Bank pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Bank is located
or any subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such nonexcluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank pursuant to the laws
of the jurisdiction in which the principal office or applicable lending office
of such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located and for any withholding of taxes as such
Bank shall determine are payable by, or withheld from, such Bank in respect of
such amounts so paid to or on behalf of such Bank pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrower will furnish to the Administrative Agent
within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective Date, or in the case
of a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 12.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to
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the Borrower and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate. Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 4.04(a) hereof to
gross-up payments to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 4.04(b). Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 4.04 and except
as set forth in Section 12.04(b), the Borrower agrees to pay additional amounts
and to indemnify each Bank in the manner set forth in Section 4.04(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent. The obligation of each Bank
to make each Loan to the Borrower hereunder, and the obligation of the Letter of
Credit Issuer to issue each Letter of Credit hereunder, is subject, at the time
of each such Credit Event (except as otherwise hereinafter indicated), to the
satisfaction of the following conditions:
(a) Conditions to Initial Borrowing Date.
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each Bank
which has requested such Notes, the appropriate A Term Note, B Term Note, C Term
Note and Revolving Note, if any, and to Chase, the Swingline Note, in each case
executed by the Borrower and in the amount, maturity and as otherwise provided
herein.
5.02 [RESERVED]
5.03 Officer's Certificate. On the Initial Borrowing Date, the
Administrative Agent shall have received a certificate dated such date signed by
an appropriate officer of the Borrower stating that all of the applicable
conditions set forth in Sections 5.07, 5.08, 5.09 and 5.33 exist as of such
date.
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5.04 Opinions of Counsel. On the Initial Borrowing Date, the
Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Initial Borrowing Date,
from (i) Hutchins, Wheeler & Dittmar, counsel to the Credit Parties, which
opinion shall cover the matters contained in Exhibit D-1 and such other matters
incident to the transactions contemplated herein as the Administrative Agent may
reasonably request and (ii) local and other counsel to the Credit Parties and/or
the Administrative Agent reasonably satisfactory to the Administrative Agent,
which opinions shall cover such matters incident to the transactions
contemplated herein and in the other Credit Documents as the Administrative
Agent may reasonably request and shall be in form and substance reasonably
satisfactory to the Administrative Agent.
5.05 Corporate Proceedings. (a) On the Initial Borrowing Date,
the Administrative Agent shall have received from each Credit Party a
certificate, dated the Initial Borrowing Date, signed by the chairman, a vice
chairman, the president or any vice-president of such Credit Party, and attested
to by the secretary or any assistant secretary of such Credit Party, in the form
of Exhibit E with appropriate insertions, together with copies of the
Certificate of Incorporation and By-Laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate and all of the
foregoing (including each such Certificate of Incorporation and By-Laws) shall
be reasonably satisfactory to the Administrative Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents to be
consummated on and as of the Initial Borrowing Date shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates,
bring-down certificates and any other records of corporate proceedings and
governmental approvals, if any, which the Administrative Agent reasonably may
have requested in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental authorities.
5.06 Adverse Change, etc. Since September 27, 1997, nothing
shall have occurred that has had or could reasonably be expected to have a
Material Adverse Effect. Since September 30, 1997, nothing shall have occurred
that has had or could reasonably be expected to have a material adverse effect
on the business, properties, assets, liabilities or condition (financial or
otherwise) of Vistar and its Subsidiaries taken as a whole.
5.07 Litigation. On the Initial Borrowing Date, there shall be
no actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or (b) which the Administrative Agent or the
Required Banks shall determine could reasonably be expected to (i) have a
Material Adverse Effect or (ii) have a material adverse effect on the
Transaction, the rights or remedies of the Banks or the Administrative Agent
hereunder or under any other Credit Document or on the ability of any Credit
Party to perform its respective obligations to the Banks or the Administrative
Agent hereunder or under any other Credit Document.
5.08 Approvals. On or prior to the Initial Borrowing Date, all
necessary governmental (domestic and foreign) and third party approvals in
connection with the Transaction,
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the transactions contemplated by the Documents and otherwise referred to herein
or therein shall have been obtained and remain in effect (other than any such
approvals with respect to the Merger which the Borrower reasonably believes both
individually and in the aggregate are not material to the operations of the
Borrower and its Subsidiaries taken as a whole), and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Transaction, the transactions contemplated by the
Documents and otherwise referred to herein or therein. Additionally, there shall
not exist any judgment, order, injunction or other restraint issued or filed or
a hearing seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the consummation of
the Transaction or the making of Loans or the issuance of the Letters of Credit.
5.09 Senior Subordinated Notes Consent Solicitation. On the
Initial Borrowing Date, the Senior Subordinated Note Indenture shall have been
amended in accordance with the Senior Subordinated Notes Consent Solicitation in
order to permit the Transaction.
5.10 Security Documents. (a) On the Initial Borrowing Date the
Borrower shall have duly authorized, executed and delivered a Pledge Agreement
in the form of Exhibit F (as modified, amended or supplemented from time to time
in accordance with the terms thereof and hereof, the "Pledge Agreement") and
shall have delivered to the Collateral Agent, as pledgee thereunder, all of the
Pledged Securities referred to therein, endorsed in blank in the case of
promissory notes or accompanied by executed and undated stock powers in the case
of capital stock, and the Pledge Agreement shall be in full force and effect.
(b) On the Initial Borrowing Date, the Borrower and each of
its material Subsidiaries, if any, shall have duly authorized, executed and
delivered a Security Agreement in the form of Exhibit G (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Security Agreement") covering all of the Security Agreement Collateral,
together with:
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the
UCC or appropriate local equivalent of each jurisdiction as may be
necessary to perfect the security interests purported to be created by
the Security Agreement;
(B) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, each of a recent date listing all
effective financing statements that name the Borrower or any of its
Domestic Subsidiaries or Vistar or any of its Domestic Subsidiaries as
debtor and that are filed in the jurisdictions referred to in clause
(A) above or as otherwise identified by the Administrative Agent,
together with copies of such financing statements that name the
Borrower or any of its Domestic Subsidiaries or Vistar or any of its
Domestic Subsidiaries as debtor (none of which shall cover the
Collateral except (x) those with respect to which appropriate
termination statements executed by the secured lender thereunder have
been delivered to the Administrative Agent and (y) to the extent
evidencing Permitted Liens);
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(C) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to perfect the security interests purported to be created by
the Security Agreement; and
(D) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests purported to be created by the Security Agreement
have been taken;
and the Security Agreement shall be in full force and effect.
(c) On the Initial Borrowing Date, each of the Borrower's
material Subsidiaries, if any then exist, shall have duly authorized, executed
and delivered a Subsidiary Guaranty in the form of Exhibit H (as modified,
amended or supplemented from time to time in accordance with the terms thereof
and hereof, the "Subsidiary Guaranty").
5.11 Fees and Expenses. The aggregate amount of all fees and
expenses to be paid in connection with the Transaction on or prior to the
Initial Borrowing Date shall not exceed $15,000,000.
5.12 Mortgages; Title Insurance. (a) On the Initial Borrowing
Date, the Collateral Agent shall have received fully executed counterparts of
each Mortgage delivered in connection with the Existing Credit Agreement (the
"Original Mortgages"), as amended and restated as of the Initial Borrowing Date
in form and substance satisfactory to the Collateral Agent (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Restated Mortgages"), covering each of the Mortgaged Properties (other than
Mortgaged Properties owned by Vistar or any of its Subsidiaries), and
arrangements reasonably satisfactory to the Collateral Agent shall be in place
to provide that counterparts of the Restated Mortgages shall be recorded in all
places to the extent necessary or desirable, in the judgment of the Collateral
Agent, effectively to continue a valid and enforceable first priority mortgage
Lien, subject only to Permitted Encumbrances, on each such Mortgaged Property in
favor of the Collateral Agent (or such other trustee as may be required or
desired under local law) for the ratable benefit of the Secured Creditors.
(b) On the Initial Borrowing Date, the Collateral Agent shall
have received in respect of each of the mortgagee title insurance policies
issued to the Collateral Agent in connection with the Original Mortgages (the
"Original Mortgage Policies"), either (i) a mortgage modification endorsement
thereto or (ii) a title policy "datedown" or update thereof, in the reasonable
discretion of the Collateral Agent, and in each case indicating no new Liens or
other encumbrances of record against such Mortgaged Property (other than
Permitted Liens) after the effective date of the Original Mortgage Policies.
5.13 Existing Indebtedness Agreements; Shareholders'
Agreements; Management Agreements; Tax Allocation Agreements. On or prior to the
Initial Borrowing Date, there shall have been delivered to the Administrative
Agent copies, certified as true and correct by an appropriate officer of the
Borrower, of:
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(a) all agreements evidencing or relating to the Existing
Indebtedness that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Existing
Indebtedness Agreements");
(b) all agreements entered into by the Borrower or any of its
Subsidiaries or Vistar or any of its Subsidiaries governing the terms
and relative rights of its capital stock, and any agreements entered
into by shareholders relating to any such entity with respect to their
capital stock, in each case that are to remain in effect after giving
effect to the consummation of the Transaction (collectively, the
"Shareholders' Agreements");
(c) any material agreements (or the forms thereof) with
members of, or with respect to, the management of the Borrower or any
of its Subsidiaries that are to remain in effect after giving effect to
the consummation of the Transaction (collectively, the "Management
Agreements");
(d) any tax sharing or tax allocation agreements entered into
by the Borrower or any of its Subsidiaries (collectively, the "Tax
Allocation Agreements");
all of which Existing Indebtedness Agreements, Shareholders' Agreements,
Management Agreements and Tax Allocation Agreements shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall be in
full force and effect on the Initial Borrowing Date.
5.14 Solvency Opinions; Evidence of Insurance. On the Initial
Borrowing Date, the Administrative Agent shall have received:
(a) a solvency opinion from Murray, Devine & Co, addressed to
the Agents and each of the Banks and dated the Initial Borrowing Date
and supporting the conclusions, that, after giving effect to the
Transaction and the incurrence of all financings contemplated herein,
the Borrower (on a stand alone basis) and the Borrower and its
Subsidiaries are solvent; and
(b) evidence of insurance complying with the requirements of
Section 7.03 for the business and properties of the Borrower and its
Subsidiaries, in scope, form and substance reasonably satisfactory to
the Administrative Agent and the Required Banks and naming the
Collateral Agent as an additional insured and/or loss payee, and
stating that such insurance shall not be cancelled or revised without
at least 30 days' (or 10 days' in the case of non-payment of premium)
prior written notice by the insurer to the Collateral Agent.
5.15 Pro Forma Balance Sheet. On or prior the Initial
Borrowing Date, there shall have been delivered to the Administrative Agent, an
unaudited pro forma consolidated balance sheet of the Borrower and its
Subsidiaries (including the Vistar Subsidiaries) after giving effect to the
Transaction and prepared in accordance with GAAP, together with a related
statement of operations, which pro forma balance sheets and statement of
operations shall be reasonably satisfactory in form and substance to the
Administrative Agent and the Required Banks.
5.16 Projections. On or prior to the Initial Borrowing Date,
the Banks shall have received the financial projections (the "Projections") set
forth on Schedule 5.16, which include the
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projected results of the Borrower and its Subsidiaries for the five fiscal years
ended after the Initial Borrowing Date.
5.17 Existing Indebtedness of Borrower. On the Initial
Borrowing Date and after giving effect to those portions of the Transaction
which are expected to be consummated on the Initial Borrowing Date and the Loans
incurred on the Initial Borrowing Date, neither the Borrower nor any of its
Subsidiaries shall have any preferred stock or Indebtedness outstanding except
for the Obligations and the Existing Indebtedness of the Borrower. On and as of
the Initial Borrowing Date, all of the Existing Indebtedness of the Borrower
shall remain outstanding after giving effect to those portions of the
Transaction which are expected to be consummated on the Initial Borrowing Date
and the other transactions contemplated hereby without any default or event of
default existing thereunder or arising as a result of the Transaction and the
other transactions contemplated hereby, and there shall not be any amendments or
modifications to the Existing Indebtedness Agreements other than as requested or
approved by the Administrative Agent or the Required Banks.
5.18 Payment of Accrued Interest, Fees; Continuation of
Principal. (a) All unpaid principal, interest, fees and other amounts (other
than principal) accrued through the Initial Borrowing Date and other amounts
payable pursuant to the Existing Credit Agreement shall have been paid.
(b) On the Initial Borrowing Date, all costs, fees and
expenses, and all other compensation contemplated by this Agreement, due to the
Agents or the Banks (including, without limitation, legal fees and expenses)
shall have been paid to the extent due.
(b) Conditions to Second Borrowing Date.
5.19 Confirmation. The Borrower (after giving effect to the
Merger) shall have delivered a written confirmation, in form satisfactory to the
Administrative Agent, of all of its payment and performance obligations under
the Credit Documents. The Initial Borrowing Date shall have occurred.
5.20 Officer's Certificate. On the Second Borrowing Date, the
Administrative Agent shall have received a certificate dated such date signed by
an appropriate officer of the Borrower stating that all of the applicable
conditions set forth in Sections 5.24, 5.25, 5.26 and 5.33 exist as of such
date.
5.21 Opinions of Counsel. On the Second Borrowing Date, the
Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Initial Borrowing Date,
from (i) Hutchins, Wheeler & Dittmar, counsel to the Credit Parties, which
opinion shall cover the matters contained in Exhibit D-2 and such other matters
incident to the transactions contemplated herein as the Administrative Agent may
reasonably request, and (ii) local and other counsel to the Credit Parties
and/or the Administrative Agent reasonably satisfactory to the Administrative
Agent, which opinions shall cover such matters incident to the transactions
contemplated herein and in the other Credit Documents as the Administrative
Agent may reasonably request and shall be in form and substance reasonably
satisfactory to the Administrative Agent. In addition, on the Second Borrowing
Date, the
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Administrative Agent shall have received copies of the opinions delivered
pursuant to the Merger Agreement, either addressed to the Administrative Agent
and each of the Banks or accompanied by a reliance letter from the counsel
delivering any such opinion stating that the Administrative Agent and the Banks
may rely on such opinion as if it were addressed to them.
5.22 Corporate Proceedings. (a) On the Second Borrowing Date,
the Administrative Agent shall have received from each Vistar Subsidiary which
is a Credit Party a certificate, dated the Second Borrowing Date, signed by the
chairman, a vice chairman, the president or any vice-president of such Credit
Party, and attested to by the secretary or any assistant secretary of such
Credit Party, in the form of Exhibit E with appropriate insertions, together
with copies of the Certificate of Incorporation and By-Laws of such Credit Party
and the resolutions of such Credit Party referred to in such certificate and all
of the foregoing (including each such Certificate of Incorporation and By-Laws)
shall be reasonably satisfactory to the Administrative Agent.
(b) On the Second Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates,
bring-down certificates and any other records of corporate proceedings and
governmental approvals, if any, which the Administrative Agent reasonably may
have requested in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental authorities.
5.23 Adverse Change, etc. Since September 27, 1997, nothing
shall have occurred that has had or could reasonably be expected to have a
Material Adverse Effect (other than the effect of consummating portions, but not
all, of the Transaction on the Initial Borrowing Date). Since September 30,
1997, nothing shall have occurred that has had or could reasonably be expected
to have a material adverse effect on the business, properties, assets,
liabilities or condition (financial or otherwise) of Vistar and its Subsidiaries
taken as a whole.
5.24 Litigation. On the Second Borrowing Date, there shall be
no actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or (b) which the Administrative Agent or the
Required Banks shall determine could reasonably be expected to (i) have a
Material Adverse Effect or (ii) have a material adverse effect on the
Transaction, the rights or remedies of the Banks or the Administrative Agent
hereunder or under any other Credit Document or on the ability of any Credit
Party to perform its respective obligations to the Banks or the Administrative
Agent hereunder or under any other Credit Document.
5.25 Approvals. On or prior to the Second Borrowing Date, all
necessary governmental (domestic and foreign) and third party approvals in
connection with the Transaction, the transactions contemplated by the Documents
and otherwise referred to herein or therein shall have been obtained and remain
in effect (other than any such approvals with respect to the Merger which the
Borrower reasonably believes both individually and in the aggregate are not
material to the operations of the Borrower and its Subsidiaries taken as a
whole), and all applicable waiting
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periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Transaction, the transactions contemplated by the
Documents and otherwise referred to herein or therein. Additionally, there shall
not exist any judgment, order, injunction or other restraint issued or filed or
a hearing seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the consummation of
the Transaction or the making of Loans or the issuance of the Letters of Credit.
5.26 Consummation of the Transaction. (a) On the Second
Borrowing Date, the Merger shall have been consummated in accordance with the
Merger Documents and all applicable laws, and each of the conditions precedent
to the consummation of the Merger (including, without limitation, the accuracy
in all material respects of the representations and warranties contained in the
Merger Agreement) shall have been satisfied and no material provision of the
Merger Documents shall have been waived, amended, supplemented or otherwise
modified, except in each case with the consent of the Administrative Agent and
the Required Banks, to the satisfaction of the Administrative Agent and the
Required Banks. The aggregate consideration to be received by the shareholders
of Vistar from the Borrower in connection with the Merger shall consist of (i)
$65,000,000 in cash, (ii) the Borrower Preferred Stock and (iii) Borrower Common
Stock having an aggregate value on the Second Borrowing Date of approximately
8,649,000 shares of the Borrower's Class A Voting Common Stock and Class B
Non-Voting Common Stock.
(b) On or prior to the Second Borrowing Date, there shall have
been delivered to the Administrative Agent true and correct copies of all
Documents entered into on or prior to such date in connection with the
Transaction, and all of the terms and conditions of such Documents (including
Documents with respect to the Borrower Preferred Stock), as well as the
structure of the Transaction and the ownership interests in the Borrower prior
to and after giving effect to the Transaction, shall be in form and substance
reasonably satisfactory to the Agents and the Required Banks (it being
acknowledged that the terms and conditions of the Merger Agreement as in effect
on the date hereof are satisfactory to the Agents).
(c) On the Second Borrowing Date, the Agents shall have
received evidence in form, scope and substance reasonably satisfactory to them
that the matters set forth in this Section 5.26 have been satisfied on such
date.
5.27 Security Documents. (a) On the Second Borrowing Date the
Vistar Subsidiaries which own any Capital Stock in any Domestic Subsidiary of or
first-tier Foreign Subsidiary of Vistar shall have duly authorized, executed and
delivered the Pledge Agreement and shall have delivered to the Collateral Agent,
as pledgee thereunder, all of the Pledged Securities referred to therein,
endorsed in blank in the case of promissory notes or accompanied by executed and
undated stock powers in the case of capital stock, and the Pledge Agreement
shall be in full force and effect. On the Second Borrowing Date the Borrower
shall have duly authorized, executed and delivered an amendment to the Pledge
Agreement in order to add as Collateral thereunder any capital stock in any
Subsidiary acquired by it in connection with the Vistar Merger and shall have
delivered to the Collateral Agent, as pledgee under the Pledge Agreement, all of
such capital stock, accompanied by executed and undated stock powers.
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(b) On the Second Borrowing Date, the material Vistar
Subsidiaries, if any, shall have duly authorized, executed and delivered the
Security Agreement covering all of the Security Agreement Collateral owned by
them, together with:
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the
UCC or appropriate local equivalent of each jurisdiction as may be
necessary to perfect the security interests purported to be created by
the Security Agreement;
(B) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to perfect the security interests in the Security Agreement
Collateral of such Subsidiary purported to be created by the Security
Agreement; and
(C) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests in the Security Agreement Collateral of such
Subsidiary purported to be created by the Security Agreement have been
taken;
and the Security Agreement and such Financing Statements shall be in full force
and effect. On the Second Borrowing Date the Borrower shall have duly
authorized, executed and delivered an amendment to the Security Agreement in
order to add as Collateral thereunder any Security Agreement Collateral acquired
by it in connection with the Vistar Merger and to perfect the security interests
therein.
(c) On the Second Borrowing Date, each of the material Vistar
Subsidiaries, if any, shall have duly authorized, executed and delivered a
Subsidiary Guaranty in the form of Exhibit H (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Subsidiary Guaranty").
5.28 Fees and Expenses. The aggregate amount of all fees and
expenses to be paid in connection with the Transaction shall not exceed
$32,000,000.
5.29 [Reserved].
5.30 Evidence of Insurance. On the Second Borrowing Date, the
Administrative Agent shall have received evidence of insurance complying with
the requirements of Section 7.03 for the business and properties of the Borrower
and its Subsidiaries, in scope, form and substance reasonably satisfactory to
the Administrative Agent and the Required Banks and naming the Collateral Agent
as an additional insured and/or loss payee, and stating that such insurance
shall not be cancelled or revised without at least 30 days' (or 10 days' in the
case of non-payment of premium) prior written notice by the insurer to the
Collateral Agent.
5.31 Existing Indebtedness. On the Second Borrowing Date and
after giving effect to the Transaction and the Loans incurred on the Second
Borrowing Date, neither the Borrower nor any of its Subsidiaries shall have any
preferred stock or Indebtedness outstanding except for the Borrower Preferred
Stock, the Obligations and the Existing Indebtedness. Vistar's existing credit
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agreement shall have been repaid in full from the proceeds of the Term Loans
and, together with any security interests granted in connection therewith,
terminated pursuant to documentation in form and substance satisfactory to the
Administrative Agent. On and as of the Second Borrowing Date, all of the
Existing Indebtedness shall remain outstanding after giving effect to the
Transaction and the other transactions contemplated hereby without any default
or event of default existing thereunder or arising as a result of the
Transaction and the other transactions contemplated hereby, and there shall not
be any amendments or modifications to the Existing Indebtedness Agreements other
than as requested or approved by the Administrative Agent or the Required Banks.
On and as of the Second Borrowing Date, the Administrative Agent and the
Required Banks shall be satisfied with the terms and conditions of the Borrower
Preferred Stock and the amount of and the terms and conditions of all Existing
Indebtedness.
5.32 Payment of Fees. On the Second Borrowing Date, all costs,
fees and expenses, and all other compensation contemplated by this Agreement,
due to the Agents or the Banks (including, without limitation, legal fees and
expenses) shall have been paid to the extent due.
(c) Conditions to each Credit Event.
5.33 No Default; Representations and Warranties. At the time
of each Credit Event and also after giving effect thereto (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
5.34 Notice of Borrowing; Letter of Credit Request. The
Administrative Agent shall have received a Notice of Borrowing satisfying the
requirements of Section 1.03 with respect to each incurrence of Loans; and the
Administrative Agent and the Letter of Credit Issuer shall have received a
Letter of Credit Request satisfying the requirements of Section 2.02 with
respect to each issuance of a Letter of Credit.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by each Credit Party to the
Administrative Agent and each of the Banks that all of the applicable conditions
specified above exist as of the date of such Credit Event. All of the
certificates, legal opinions and other documents and papers referred to in this
Section 5, unless otherwise specified, shall be delivered to the Administrative
Agent at its Notice Office for the account of each of the Banks and, except for
the Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Administrative Agent and the Required
Banks.
SECTION 6. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans and
issue and/or participate in the Letters of Credit provided for herein, the
Borrower makes the following representations, warranties and agreements with the
Banks in each case after giving effect to the Transaction, all of which shall
survive the execution and delivery of this Agreement, the making of the Loans
and the
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issuance of the Letters of Credit (with the occurrence of each Credit Event
being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects on and
as of the date of each such Credit Event, unless stated to relate to a specific
earlier date, in which case all representations and warranties specifically
relating to an earlier date shall be true and correct in all material respects
as of such earlier date and provided that references to the Borrower and its
Subsidiaries shall exclude Vistar and its Subsidiaries prior to the Second
Borrowing Date except to the extent otherwise specifically provided and except
the representation made in Section 6.10(c) is made only on and after the Second
Borrowing Date):
6.01 Corporate Status. Each of the Borrower and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization, (ii) has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Credit Party has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a party nor
compliance by any Credit Party with the terms and provisions thereof, nor the
consummation of the transactions contemplated herein or therein, (i) will
materially contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will materially conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of the Borrower
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement, credit agreement or any other material agreement
or instrument to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its property or assets are bound or to which it may be
subject, except for such conflicts, inconsistencies, breaches or defaults which,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, or (iii) will violate any provision of the
Certificate of Incorporation or By-Laws of the Borrower or any of its
Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, with respect to the Borrower or any of its Subsidiaries (i) that are
likely to have a Material Adverse Effect or (ii) that could
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reasonably be expected to have a material adverse effect on the rights or
remedies of any Agent or the Banks or on the ability of any Credit Party to
perform its respective obligations to the Agents or the Banks hereunder and
under the other Credit Documents to which it is, or will be, a party.
Additionally, there does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the occurrence of any Credit Event.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Term Loans incurred on the Initial Borrowing Date shall be utilized to
finance the Pre-Merger Stock Payments, to refinance certain existing
indebtedness of the Borrower and its Subsidiaries in an aggregate principal
amount not to exceed $150,000,000 and to pay fees and expenses incurred in
connection therewith and the financing thereof.
(b) The proceeds of all Term Loans incurred on the Second
Borrowing Date will be utilized to refinance Term Loans made on the Initial
Borrowing Date, to finance the cash consideration price to be paid to the
shareholders of Vistar in connection with the Merger, to refinance certain
existing indebtedness of Vistar and its Subsidiaries in an aggregate amount not
to exceed $20,000,000 and to pay the fees and expenses incurred in connection
therewith and the financing thereof.
(c) The proceeds of all Revolving Loans and Swingline Loans
shall be utilized for working capital purposes and general corporate purposes of
the Borrower and its Subsidiaries. Letters of Credit shall be utilized solely in
the ordinary course of business of the Borrower and its Subsidiaries. Up to
$45,000,000 of Revolving Loans may be incurred on the Second Borrowing Date.
(d) Neither the making of any Loan, nor the use of the
proceeds thereof, will violate the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. All orders, consents, approvals,
licenses, authorizations, or validations of, or filings, recordings or
registrations with, or exemptions by, any foreign or domestic governmental or
public body or authority, or any subdivision thereof, which may be required to
authorize (i) the execution, delivery and performance by the Borrower or any
Subsidiary of any Document or (ii) the legality, validity, binding effect or
enforceability of any Document have been obtained or made, except that the
Documentation relating to the Merger must be filed contemporaneously with the
Second Borrowing Date.
6.07 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
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6.09 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower or any of its Subsidiaries in writing to any Agent or any Bank
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Persons in writing to any Agent or any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided.
6.10 Financial Condition; Financial Statements. (a) On and as
of each of the Initial Borrowing Date and the Second Borrowing Date, on a pro
forma basis after giving effect to the portion of the Transaction consummated on
or prior to the Initial Borrowing Date or the Second Borrowing Date, as the case
may be, and to all Indebtedness incurred, and to be incurred, and Liens created,
and to be created, by each Credit Party in connection therewith on the Initial
Borrowing Date or the Second Borrowing Date, as the case may be, with respect to
the Borrower and its Subsidiaries (on a consolidated basis) and of the Borrower
(on a stand alone basis) (x) the sum of the assets, at a fair valuation, of each
of the Borrower and its Subsidiaries and of the Borrower (on a stand alone
basis) will exceed its debts, (y) it has not incurred nor intended to, nor
believes that it will, incur debts beyond its ability to pay such debts as such
debts mature and (z) it will have sufficient capital with which to conduct its
business. For purposes of this Section 6.10, "debt" means any liability on a
claim, and "claim" means (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) The consolidated balance sheets of the Borrower and its
Subsidiaries at each of FYE 1996, 1995, 1994 and at September 27, 1997 and the
related consolidated statements of income, stockholders' equity and cash flows
of the Borrower and its Subsidiaries for the fiscal year or nine-month period,
as the case may be, ended as of said dates (all of which FYE financial
statements have been audited by Deloitte & Touche LLP and all of which September
27, 1997 financial statements have been certified by the chief financial officer
of the Borrower), copies of which have heretofore been furnished to each Bank,
are true and correct in all material respects and present fairly in all material
respects the combined financial position of Safelite and its Subsidiaries at the
dates of said statements and the results for the periods covered thereby. All
such financial statements have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes to said
financial statements and subject, in the case of the September 27, 1997
statements, to normal year-end audit adjustments and the absence of footnotes.
(c) The consolidated balance sheets of Vistar and its
Subsidiaries at fiscal year ending March 31, 1997, March 31, 1996 and March 31,
1995 and at September 30, 1997 and the related statements of income and cash
flows of Vistar and its Subsidiaries for the fiscal year or six-month period, as
the case may be, ended as of said dates (all of which FYE financial statements
have been audited by Arthur Andersen LLP and all of which September 30, 1997
financial
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statements have been certified by the chief financial officer of Vistar), copies
of which have heretofore been furnished to each Bank, are true and correct in
all material respects and present fairly in all material respects the
consolidated financial position of Vistar and its Subsidiaries at the dates of
said statements and the results for the periods covered thereby. All such
financial statements have been prepared in accordance with GAAP consistently
applied except to the extent provided in the notes to said financial statements
and subject, in the case of the September 30, 1997 statements, to normal
year-end audit adjustments and the absence of footnotes.
(d) The pro forma consolidated balance sheet of the Borrower
and its Subsidiaries at September 27, 1997 and the related pro forma
consolidated statements of income for the fiscal nine-month period ended
September 27, 1997 and the fiscal year ended December 28, 1996 (all of which
financial statements have been certified by the chief financial officer of the
Borrower), copies of which have heretofore been furnished to each Bank, reflect
the pro forma financial position of the Borrower and its Subsidiaries after
giving effect to (i) the Transaction, including the Merger, and (y) the sale of
Lear Siegler by the Borrower on September 12, 1997, as if such transaction had
occurred on September 27, 1997 for such balance sheet and as of December 31,
1995 for such income statements. Such financial statements are based on
available information and on assumptions that the Borrower believes are
reasonable.
(e) Since September 27, 1997, except as permitted or
contemplated by the Transaction, nothing has occurred that has had or could
reasonably be expected to have a Material Adverse Effect.
(f) Except as fully reflected in the financial statements
described in Sections 5.15(a) and 6.10(b), (c) and (d) and the Indebtedness
incurred under this Agreement, there were as of each of the Initial Borrowing
Date and the Second Borrowing Date (and after giving effect to any Loans made on
either such date), no liabilities or obligations (excluding current obligations
incurred in the ordinary course of business) with respect to the Borrower or any
of its Subsidiaries or Vistar or any of its Subsidiaries (whether absolute,
accrued, contingent or otherwise and whether or not due), and neither the
Borrower nor any of its Subsidiaries know of any basis for the assertion against
the Borrower or any of its Subsidiaries or Vistar or any of its Subsidiaries, as
the case may be, of any such liability or obligation, which, either individually
or in the aggregate, are or would be reasonably likely to have, a Material
Adverse Effect.
(g) The Projections are based on good faith estimates and
assumptions made by the management of the Borrower, and on each of the Initial
Borrowing Date and the Second Borrowing Date such management believed that the
Projections were reasonable and attainable, it being recognized by the Banks,
however, that projections as to future events are not to be viewed as facts and
that the actual results during the period or periods covered by the Projections
probably will differ from the projected results and that the differences may be
material.
6.11 Security Interests. On and after the Initial Borrowing
Date, each of the Security Documents creates (or after the execution and
delivery thereof will create), as security for the Obligations, a valid and
enforceable perfected security interest in and Lien on all of the Collateral
subject thereto, superior to and prior to the rights of all third Persons, and
subject to no other Liens (except that the Security Agreement Collateral, the
Mortgaged Properties and the Collateral covered by the Additional Security
Documents may be subject to Permitted Liens
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relating thereto), in favor of the Collateral Agent. No filings or recordings
are required in order to perfect the security interests created under any
Security Document except for filings or recordings required in connection with
any such Security Document which shall have been made on or prior to the Initial
Borrowing Date as contemplated by Section 5.10(b) or the Second Borrowing Date
as contemplated by Section 5.27(b) or on or prior to the execution and delivery
thereof as contemplated by Sections 7.11, 7.13 and 8.15.
6.12 Representations and Warranties in Other Documents. All
representations and warranties of the Credit Parties set forth in the other
Documents, and, to the knowledge of the Borrower, all representations and
warranties of the other parties set forth in the other Documents, were true and
correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of each of the Initial Borrowing Date and the Second Borrowing Date as if such
representations and warranties were made on and as of such date, unless stated
to relate to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date.
6.13 Transaction. At the time of consummation thereof, the
Transaction shall have been consummated in accordance with the terms of the
respective Documents and all applicable laws. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required to make or consummate the Transaction have been
obtained, given, filed or taken or waived and are or will be in full force and
effect (or effective judicial relief with respect thereto has been obtained)
except where the failure to obtain, give, file, or take would not reasonably be
expected to have a Material Adverse Effect. All applicable waiting periods with
respect thereto have or, prior to the time when required, will have, expired
without, in all such cases, any action being taken by any competent authority
which restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or the occurrence of any Credit Event or the performance by any
Credit Party of their obligations under the Documents and all applicable laws.
The Transaction has been consummated in accordance with the respective Documents
and all applicable laws.
6.14 [Reserved]
6.15 Compliance with ERISA. (a) Except for any noncompliance,
liabilities and obligations that would not individually or in the aggregate have
a Material Adverse Effect: each Plan is in substantial compliance with ERISA and
the Code; no Reportable Event has occurred with respect to a Plan during the
five year period prior to the date on which this representation is made or
deemed made with respect to any Plan; no Multiemployer Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability; no Plan has an
accumulated or waived funding deficiency, has permitted decreases in its funding
standard account or has applied for a waiver of the minimum funding standard or
an extension of any amortization period within the meaning of Section 412 of the
Code during the five year period prior to the date on which this representation
is made or deemed made with respect to any Plan; all contributions required to
be made with respect to each Plan, Multiemployer Plan and Foreign Pension Plan
have been timely made; neither the Borrower nor any of its Subsidiaries nor any
ERISA Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
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4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the
Code or reasonably expects to incur any material liability (including any
indirect, contingent or secondary liability) under any of the foregoing Sections
with respect to any Plan (other than liabilities of any ERISA Affiliate which
could not, by operation of law or otherwise, become a liability of the Borrower
or any of its Subsidiaries); no proceedings have been instituted to terminate,
or to appoint a trustee to administer, any Plan; no condition exists which
presents a material risk to the Borrower or any of its Subsidiaries or any ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; using actuarial assumptions and
computation methods consistent with subpart 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of the Borrower and its Subsidiaries and its
ERISA Affiliates to all Plans which are multiemployer plans (as defined in
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not result in a Material Adverse
Effect; no lien imposed under the Code or ERISA on the assets of the Borrower or
any of its Subsidiaries or any ERISA Affiliate exists or is likely to arise on
account of any Plan; and the Borrower and its Subsidiaries do not maintain or
contribute to any Retiree Welfare Plan.
(b) Except for any noncompliance, liabilities and obligations
that would not individually or in the aggregate have a Material Adverse Effect:
any Foreign Pension Plan has been maintained in substantial compliance with its
terms and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities. Neither the Borrower nor any of its
Subsidiaries has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Pension Plan. The present value of
the accrued benefit liabilities (whether or not vested) under any Foreign
Pension Plan which is funded, determined as of the end of the most recently
ended fiscal year of the Borrower on the basis of actuarial assumptions, each of
which is reasonable, did not exceed the current value of the assets of such
Foreign Pension Plan, and for any Foreign Pension Plan which is not funded, the
obligations of such Foreign Pension Plan are properly accrued.
6.16 Capitalization. On each of the Initial Borrowing Date and
the Second Borrowing Date and after giving effect to the portion of the
Transaction expected to be consummated on each such date and the other
transactions contemplated hereby, the authorized and issued capital stock of the
Borrower shall be as set forth on Schedule 6.16. All outstanding shares of
capital stock of the Borrower have been duly and validly issued, and are fully
paid and nonassessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock,
except as set forth on Schedule 6.16.
6.17 Subsidiaries. (a) Prior to the consummation of the
Transaction the Borrower has no Subsidiaries.
(b) On and as of the Second Borrowing Date and after giving
effect to the consummation of the Transaction, Vistar shall have been merged
into the Borrower in accordance with the Merger Documents and the Borrower shall
have no Subsidiaries other than the
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Subsidiaries listed on Schedule 6.17 as Subsidiaries remaining after the Second
Borrowing Date; the net book value of each such Subsidiary is set forth on
Schedule 6.17. Schedule 6.17 correctly sets forth, as of the Second Borrowing
Date and after giving effect to the Transaction, the percentage ownership
(direct and indirect) of the Borrower in each class of capital stock of each of
its Subsidiaries and also identifies the direct owner thereof.
6.18 Intellectual Property. Each of the Borrower and each of
its Subsidiaries owns or holds a valid license to use all the material patents,
trademarks, permits, service marks, trade names, technology, know-how and
formulas or other rights with respect to the foregoing, free from restrictions
that are materially adverse to the use thereof, that are used in the operation
of the business of the Borrower and each of its Subsidiaries as presently
conducted.
6.19 Compliance with Statutes, etc. The Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including compliance with all applicable Environmental Laws
with respect to any Real Property or governing its business and the requirements
of any permits issued under such Environmental Laws with respect to any such
Real Property or the operations of the Borrower or any of its Subsidiaries),
except such non-compliance as is not likely to, individually or in the
aggregate, have a Material Adverse Effect.
6.20 Environmental Matters. (a) Each of the Borrower and each
of its Subsidiaries has complied with, and on the date of each Credit Event is
in compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or, to
the best knowledge of the Borrower, past or threatened Environmental Claims
against the Borrower or any of its Subsidiaries or any Real Property owned or
operated by the Borrower or any of its Subsidiaries. There are no facts,
circumstances, conditions or occurrences on any Real Property owned or operated
by the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, on any property adjoining or in the vicinity of any such Real Property
that would reasonably be expected (i) to form the basis of an Environmental
Claim against the Borrower or any of its Subsidiaries or any such Real Property
or (ii) to cause any such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Property by the
Borrower or any of its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by the Borrower or any of its Subsidiaries where such generation,
use, treatment or storage has violated or would reasonably be expected to
violate any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by the Borrower or any
of its Subsidiaries in a manner that would reasonably be expected to form the
basis for an Environmental Claim against the Borrower or any of its
Subsidiaries. There are not now any underground storage tanks located on any
Real Property owned or operated by the Borrower or any of its Subsidiaries which
could reasonably be expected to form the basis for an Environmental Claim
against the Borrower or any of its Subsidiaries.
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(c) Notwithstanding anything to the contrary in this Section
6.20, the representations made in this Section 6.20 shall only be untrue if the
aggregate effect of all conditions, failures, noncompliances, Environmental
Claims, Releases and presence of underground storage tanks, in each case of the
types described above, would reasonably be expected to have a Material Adverse
Effect.
6.21 Properties. All Real Property owned by the Borrower or
any of its Subsidiaries and all material Leaseholds leased by the Borrower or
any of its Subsidiaries, in each case as of each of the Initial Borrowing Date
and the Second Borrowing Date and after giving effect to the Transaction, and
the nature of the interest therein, is correctly set forth in Schedule 6.21.
Each of the Borrower and each of its Subsidiaries has good and marketable title
to, or a validly subsisting leasehold interest in, all material properties owned
or leased by it, including all Real Property reflected in Schedule 6.21 or in
the financial statements referred to in Section 6.10(b), free and clear of all
Liens, other than Permitted Liens.
6.22 Labor Relations. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against the Borrower or any of its Subsidiaries or,
to the best knowledge of the Borrower, threatened against any of them, before
the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against the Borrower or any of its Subsidiaries or,
to the best knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries and (iii) to the best knowledge of the Borrower, no union
representation question existing with respect to the employees of the Borrower
or any of its Subsidiaries and, to the best knowledge of the Borrower, no union
organizing activities are taking place, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.
6.23 Tax Returns and Payments. All Federal, material state and
other material returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of the Borrower and/or any of its Subsidiaries have been timely filed (taking
into account all extensions of due dates) with the appropriate taxing authority.
The Returns accurately reflect all liability for taxes of the Borrower and its
Subsidiaries for the periods covered thereby. The Borrower and each of its
Subsidiaries have paid all taxes payable by them other than immaterial taxes and
other taxes which are not yet due and payable, and other than taxes contested in
good faith and for which adequate reserves have been established in accordance
with GAAP. Except as disclosed in the financial statements referred to in
Section 6.10(b), there is no material action, suit, proceeding, investigation,
audit, or claim now pending or, to the knowledge of the Borrower, threatened by
any authority regarding any material taxes relating to the Borrower or any of
its Subsidiaries. As of each of the Initial Borrowing Date and the Second
Borrowing Date, and neither the Borrower nor any of its Subsidiaries has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of material taxes of the Borrower or any of its Subsidiaries, or is
aware of any circumstances that would cause the taxable years or other taxable
periods of the Borrower or any of its Subsidiaries not to be subject to the
normally
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applicable statute of limitations. Neither the Borrower nor any of its
Subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. Neither the Borrower nor any of its
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction and the other transactions contemplated hereby.
6.24 Existing Indebtedness. Schedule 6.24 sets forth a true
and complete list of all Indebtedness of the Borrower and its Subsidiaries
(other than Indebtedness which in the aggregate does not exceed $100,000) as of
each of the Initial Borrowing Date and the Second Borrowing Date and which is to
remain outstanding after giving effect to the Transaction and the incurrence of
Loans on each such date (excluding the Loans and the Letters of Credit, the
"Existing Indebtedness"), in each case showing the aggregate principal amount
thereof and the name of the respective borrower and any other entity which
directly or indirectly guaranteed such debt.
6.25 Senior Subordinated Notes. The subordination provisions
contained in the Senior Subordinated Note Documents are enforceable against the
Borrower, the respective Guarantors and the holders thereof, and all Obligations
and Guaranteed Obligations (as defined herein and in the Subsidiary Guaranty)
are within the definition of "Senior Indebtedness" or "Guarantor Senior
Indebtedness," as the case may be, included in such subordination provisions.
This Agreement is the Bank Credit Agreement under the Senior Subordinated Note
Indenture.
SECTION 7. Affirmative Covenants. The Borrower hereby
covenants and agrees that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been cash collateralized in a manner reasonably
satisfactory to the Letter of Credit Issuer) or Notes are outstanding and the
Loans and Unpaid Drawings, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 12.13 which are not
then due and payable) incurred hereunder, are paid in full:
7.01 Information Covenants. The Borrower will furnish to each
Bank:
(a) Monthly Reports. Within 45 days (or for each fiscal month
ending on or prior to December 31, 1998 the earlier of (i) 60 days and
(ii) the date, if any, on which the applicable financial statements
described in this paragraph are required to be delivered to the holders
of the Senior Subordinated Notes pursuant to the Senior Subordinated
Note Indenture) after the end of each fiscal month of the Borrower
(commencing with the fiscal month ending on FYE 1997), the consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal month and the related consolidated statements of income and
retained earnings and of cash flows for such fiscal month and for the
elapsed portion of the fiscal year ended with the last day of such
fiscal month, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year and comparable
budgeted figures for such fiscal month, all of which shall be certified
by the chief financial officer or other Authorized Officer of the
Borrower, subject to normal year-end audit adjustments and the absence
of footnotes.
(b) Quarterly Financial Statements. (i) Within 45 days (or for
each fiscal quarter ending on or prior to December 31, 1998 the earlier
of (i) 60 days and (ii) the date, if any,
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on which the applicable financial statements described in this
paragraph are required to be delivered to the holders of the Senior
Subordinated Notes pursuant to the Senior Subordinated Note Indenture)
after the close of each quarterly accounting period in each fiscal year
of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and of
cash flows for such quarterly accounting period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
accounting period; all of which shall be in reasonable detail and
certified by the chief financial officer or other Authorized Officer of
the Borrower that they fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as of the
dates indicated and the results of their operations and changes in
their cash flows for the periods indicated, subject to normal year-end
audit adjustments and the absence of footnotes.
(ii) Within 45 days after the close of each quarterly
accounting period in each fiscal year of the Borrower, Consolidated
EBITDA for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly accounting
period; all of which shall be in reasonable detail and certified by the
chief financial officer or other Authorized Officer of the Borrower
that they fairly represent the information contained therein for the
periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Annual Financial Statements. (i) Within 90 days after the
close of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year and setting forth
comparative consolidated figures for the preceding fiscal year (except
for the financial statements delivered for FYE 1997) and comparable
budgeted figures for such fiscal year and (except for such comparable
budgeted figures) certified by Deloitte & Touche LLP or such other
independent certified public accountants of recognized national
standing as shall be reasonably acceptable to the Administrative Agent,
in each case to the effect that such statements fairly present the
financial condition of the Borrower and its Subsidiaries as of the
dates indicated and the results of their operations and changes in cash
flows, together with a certificate of such accounting firm stating that
in the course of its regular audit of the business of the Borrower and
its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, no Default or Event of Default
which has occurred and is continuing has come to their attention or, if
such a Default or an Event of Default has come to their attention a
statement as to the nature thereof.
(ii) Within 90 days after the close of each fiscal year of
the Borrower, Consolidated EBITDA for such fiscal year; all of which
shall be in reasonable detail and certified by the chief financial
officer or other Authorized Officer of the Borrower that they fairly
present the information contained therein for the periods indicated.
(d) Budgets, etc. Not more than 60 days (90 days in the case
of FYE 1998) after the commencement of each fiscal year of the
Borrower, budgets of the Borrower and its Subsidiaries in reasonable
detail for each of the four fiscal quarters of such fiscal year and
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for the immediately succeeding fiscal year taken as a whole, in each
case as customarily prepared by management for its internal use setting
forth, with appropriate discussion, the principal assumptions upon
which such budgets are based. Together with each delivery of financial
statements pursuant to Section 7.01(b) and (c), a comparison of the
current year to date financial results (other than in respect of the
balance sheets included therein) against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.01(b) and (c), (i) a
certificate of the chief financial officer or other Authorized Officer
of the Borrower to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying
the nature and extent thereof, which certificate shall set forth the
calculations required to establish whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections
8.04(e), 8.06 and 8.09 through and including 8.12, as at the end of
such fiscal quarter or year, as the case may be and (ii) a narrative
discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries for the period covered
by such financial statements, as compared to the portion of the
Projections covering such period and to the comparable period of the
previous year. In addition, at the time of the delivery of the
financial statements provided for in Section 7.01(c)(i), a certificate
of the chief financial officer or other Authorized Officer of the
Borrower setting forth (i) the amount of, and calculations required to
establish the amount of, Excess Cash Flow for the Excess Cash Flow
Period ending on the last day of the respective fiscal year and (ii)
the calculations required to establish whether the Borrower was in
compliance with Section 4.02(A)(c) for the respective fiscal year.
(f) Notice of Default or Litigation. Promptly, and in any
event within three Business Days (or 10 Business Days in the case of
clause (y) below) after any officer of the Borrower obtains knowledge
thereof, notice of (x) the occurrence of any event which constitutes a
Default or an Event of Default, which notice shall specify the nature
thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto and (y) the commencement of, or
threat of, or any significant development in, any litigation or
governmental proceeding pending against the Borrower or any of its
Subsidiaries (i) in which the amount involved is $5,000,000 or more or
(ii) which is likely to have a Material Adverse Effect, or a material
adverse effect on the ability of any Credit Party to perform its
respective obligations hereunder or under any other Credit Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy
of each report or "management letter" submitted to the Borrower or any
of its Subsidiaries by its independent accountants in connection with
any annual, interim or special audit made by them of the books of the
Borrower or any of its Subsidiaries.
(h) Environmental Matters. Promptly after obtaining knowledge
of any of the following, written notice of:
(i) any pending or threatened material Environmental
Claim against the Borrower or any of its Subsidiaries or any
Real Property owned or operated by the Borrower or any of its
Subsidiaries;
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(ii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries
that (x) results in material noncompliance by the Borrower or
any of its Subsidiaries with any applicable Environmental Law
or (y) could reasonably be anticipated to form the basis of a
material Environmental Claim against the Borrower or any of
its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries
that could reasonably be anticipated to cause such Real
Property to be subject to any material restrictions on the
ownership, occupancy, use or transferability by the Borrower
or its Subsidiary, as the case may be, of its interest in such
Real Property under any Environmental Law; and
(iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or operated by
the Borrower or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and the Borrower's response thereto. In addition, the Borrower
agrees to provide the Banks with copies of all material written
communications by the Borrower or any of its Subsidiaries with any
Person, government or governmental agency relating to any of the
matters set forth in clauses (i)-(iv) above, and such detailed reports
relating to any of the matters set forth in clauses (i)-(iv) above as
may reasonably be requested by the Administrative Agent or the Required
Banks.
(i) Other Information. Promptly upon transmission thereof,
copies of any filings and registrations with, and reports to, the SEC
by the Borrower or any of its Subsidiaries and copies of all financial
statements, proxy statements, notices and reports as the Borrower or
any of its Subsidiaries shall send generally to analysts, the holders
of their capital stock or of the Senior Subordinated Notes in their
capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement) and, with reasonable
promptness, such other information or documents (financial or
otherwise) as the Administrative Agent on its own behalf or on behalf
of the Required Banks may reasonably request from time to time.
7.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, permit, upon two Business Days' prior
notice to the chief financial officer or other Authorized Officer of the
Borrower (except when a Default or Event of Default has occurred and is
continuing, in which case, no notice shall be required), officers and designated
representatives of any Agent or any Bank to visit and inspect any of the
properties or assets of the Borrower and any of its Subsidiaries in whomsoever's
possession, and to examine the books of account of the Borrower and any of its
Subsidiaries and discuss the affairs, finances and accounts of the Borrower and
of any of its Subsidiaries with, and be advised as to the same by, their
officers and independent accountants, all at such reasonable times and intervals
and to such reasonable extent as any Agent or any Bank may desire, provided that
all such visits and inspections shall be coordinated through an Agent.
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7.03 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, at all times from and after the Effective Date maintain in full
force and effect insurance with reputable and solvent insurance carriers in such
amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice, and
shall furnish to the Administrative Agent upon written request full information
as to the insurance so carried.
7.04 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful claims for sums that
have become due and payable which, if unpaid, might become a Lien not otherwise
permitted under Section 8.03(a) or charge upon any properties of the Borrower or
any of its Subsidiaries; provided that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with GAAP.
7.05 Corporate Franchises. The Borrower will do, and will
cause each of its Subsidiaries to do, or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its material
rights, franchises and authority to do business; provided, however, that any
transaction permitted by Section 8.02 will not constitute a breach of this
Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) except for such noncompliance as would not have a Material Adverse
Effect or a material adverse effect on the ability of any Credit Party to
perform its obligations under any Credit Document to which it is a party.
7.07 Compliance with Environmental Laws. (a) The Borrower will
pay, and will cause each of its Subsidiaries to pay, all costs and expenses
incurred by it in keeping in compliance with all Environmental Laws, and will
keep or cause to be kept all Real Properties owned or operated by the Borrower
or any of its Subsidiaries free and clear of any Liens imposed pursuant to such
Environmental Laws; and (b) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of, Hazardous Materials
on any Real Property owned or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property, unless the failure to comply with the
requirements specified in clause (a) or (b) above, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
If the Borrower or any of its Subsidiaries, or any tenant or occupant of any
Real Property owned or operated by the Borrower or any of its Subsidiaries,
cause or permit any intentional or unintentional act or omission resulting in
the presence or Release of any Hazardous Material (except in compliance with
applicable Environmental Laws), the Borrower agrees to undertake, and/or to
cause any of its Subsidiaries, tenants or occupants to undertake, at their sole
expense, any clean up, removal, remedial or other action required pursuant to
Environmental Laws
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to remove and clean up any Hazardous Materials from any Real Property except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect; provided that neither the Borrower nor any of its Subsidiaries
shall be required to comply with any such order or directive which is being
contested in good faith and by proper proceedings so long as it has maintained
adequate reserves with respect to such compliance to the extent required in
accordance with GAAP.
7.08 ERISA. As soon as possible and, in any event, within 10
days after the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following events to
the extent that one or more of such events is reasonably likely to result in a
material liability to the Borrower or any Subsidiary of the Borrower, the
Borrower will deliver to each of the Banks a certificate of the chief financial
officer or other Authorized Officer of the Borrower setting forth details as to
such occurrence and the action, if any, which the Borrower, such Subsidiary or
such ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred, that
an accumulated funding deficiency has been incurred or an application may be or
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan; that a contribution required to be made to a Plan, Multiemployer Plan
or Foreign Pension Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien under
ERISA or the Code; that proceedings may be or have been instituted by the PBGC
to terminate or appoint a trustee to administer a Plan; that a proceeding has
been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Multiemployer Plan; that the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate will or could reasonably be expected to incur
any material liability (including any contingent or secondary liability) to or
on account of the termination of or withdrawal from a Plan or Multiemployer Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409, 502(i) or 502(l) of ERISA; or that the Borrower or any Subsidiary
of the Borrower has or may incur any material liability under any Retiree
Welfare Plan or Foreign Pension Plan. At the request of any Bank, the Borrower
will deliver to such Bank a complete copy of the annual report (Form 5500) of
each Plan required to be filed with the Internal Revenue Service. In addition to
any certificates or notices delivered to the Banks pursuant to the first
sentence hereof, copies of annual reports and any notices received by the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate with respect
to any Plan or Foreign Pension Plan shall be delivered to the Banks no later
than 10 days after the date such report has been filed with the Internal Revenue
Service or received by the Borrower or the Subsidiary or the ERISA Affiliate.
7.09 Good Repair. The Borrower will, and will cause each of
its Subsidiaries to, ensure that its material properties and equipment used in
its business are kept in good repair, working order and condition, normal wear
and tear and damage by casualty excepted, and, subject to Section 8.09, that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto, to the extent and in the manner useful or customary
for companies in similar businesses.
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7.10 End of Fiscal Years; Fiscal Quarters. The Borrower will,
for financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on FYE of each year and (ii) each of its, and
each of its Subsidiaries', fiscal quarters to end on FQE1, FQE2, FQE3 and FYE of
each year. Notwithstanding the foregoing, the Borrower may change its FYE and
FQE1, FQE2 and FQE3 to correspond to a March 31 or similar fiscal year end as
long as in connection therewith this Agreement is amended in a manner reasonably
requested by the Administrative Agent and mutually available to the Borrower and
the Administrative Agent and mutually acceptable to the Borrower and the
Administrative Agent in order to appropriately adjust the covenants set forth
herein as a result of such change.
7.11 Additional Security; Further Assurances. (a) The Borrower
will, and will cause each of its Domestic Subsidiaries (and subject to Section
7.13, each of its Foreign Subsidiaries) to, grant to the Collateral Agent
security interests and mortgages in such assets and properties of the Borrower
and its Subsidiaries as are not covered by the original Security Documents, and
as may be requested from time to time by the Administrative Agent or the
Required Banks (collectively, the "Additional Security Documents"). All such
security interests and mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Administrative Agent and
shall constitute valid and enforceable perfected security interests and
mortgages superior to and prior to the rights of all third Persons and subject
to no other Liens except for Permitted Liens. The Additional Security Documents
or instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to the Additional Security Documents and all taxes, fees and other
charges payable in connection therewith shall have been paid in full.
(b) The Borrower will, and will cause each of its Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
Borrower shall cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be reasonably
requested by the Administrative Agent to assure themselves that this Section
7.11 has been complied with.
(c) If the Administrative Agent or the Required Banks
determine that they are required by law or regulation to have appraisals
prepared in respect of the Real Property of the Borrower and its Subsidiaries
constituting Collateral, the Borrower shall provide to the Administrative Agent
appraisals which satisfy the applicable requirements of the Real Estate
Appraisal Reform Amendments of the Financial Institution Reform, Recovery and
Enforcement Act of 1989 and which shall be in form and substance reasonably
satisfactory to the Administrative Agent.
(d) The Borrower agrees that each action required above by
this Section 7.11 shall be completed within 90 days after such action is either
requested to be taken by the Administrative Agent or the Required Banks or
required to be taken by the Borrower and its Subsidiaries pursuant to the terms
of this Section 7.11; provided that in no event shall the Borrower be required
to take
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any action, other than using its reasonable commercial efforts, to obtain
consents from third parties with respect to its compliance with this Section
7.11.
(e) Within 60 days following the Initial Borrowing Date, the
Borrower shall cause to be delivered to the Collateral Agent a current ALTA/ACSM
surveys in form and substance reasonably satisfactory to the Collateral Agent of
each Mortgaged Property mortgaged pursuant to paragraph (f) below, certified in
a manner reasonably satisfactory to the Collateral Agent by a licensed
professional surveyor reasonably satisfactory to the Collateral Agent. At the
time of the delivery of such surveys for such Mortgaged Properties, the Mortgage
Policies with respect to such Mortgaged Properties shall be amended in a manner
reasonably satisfactory to the Collateral Agent to remove therefrom any "survey
exception" noted therein or cause the title company providing such Mortgage
Policies to insure over the same in a manner reasonably satisfactory to the
Collateral Agent.
(f) Within 60 days following the Initial Borrowing Date, the
Borrower shall cause to be delivered to the Collateral Agent fully executed
counterparts of (i) a Mortgage in form and substance satisfactory to the
Collateral Agent with respect to each of the Mortgaged Properties acquired by
the Borrower in connection with the Merger or owned by the Vistar Subsidiaries,
and arrangements reasonably satisfactory to the Collateral Agent shall be in
place to provide that counterparts of such Mortgages shall be recorded within
such period in all places to the extent necessary or desirable, in the judgment
of the Collateral Agent, effectively to create a valid and enforceable first
priority mortgage Lien, subject only to Permitted Liens, on each such Mortgaged
Property in favor of the Collateral Agent (or such other trustee as may be
required or desired under local law) for the benefit of the Secured Creditors;
and (ii) a Uniform Commercial Code financing statement (form UCC-1) and/or
fixture filing (the "Financing Statements") in form and substance satisfactory
to the Collateral Agent with respect to the personal property and fixtures
located on or arising from each of the Mortgaged Properties acquired by the
Borrower in connection with the Merger or owned by the Vistar Subsidiaries, and
arrangements reasonably satisfactory to the Collateral Agent shall be in place
to provide that counterparts of the Financing Statements shall be recorded
within such period in all places to the extent necessary or desirable, in the
judgment of the Collateral Agent, effectively to perfect the security interest
Lien, subject only to Permitted Liens, on such personal property and fixtures in
favor of the Collateral Agent for the ratable benefit of the Secured Creditors.
(g) Within 60 days following the Initial Borrowing Date, the
Borrower shall cause to be delivered to the Collateral Agent mortgagee title
insurance policies (or binding commitments to issue such title insurance
policies) issued by title insurers reasonably satisfactory to the Collateral
Agent (the "Mortgage Policies") in amounts reasonably satisfactory to the
Collateral Agent and assuring the Collateral Agent that the Mortgages referred
to in paragraph (f) above are valid and enforceable first priority mortgage
Liens on the respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens. Such Mortgage Policies shall be in form and
substance reasonably satisfactory to the Collateral Agent and (i) shall include
(to the extent available in the respective jurisdiction of each such Mortgaged
Property) an endorsement for future advances under this Agreement, the Notes and
the Mortgages, and for such other matters that the Collateral Agent in its
discretion may reasonably request, (ii) shall not include an exception for
mechanics' liens, and (iii) shall provide for affirmative insurance (including
direct
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vehicular access to a public road) and such reinsurance as the Collateral Agent
in its discretion may reasonably request.
(h) Within 60 days following the Second Borrowing Date, the
Borrower shall cause Glass Express, Inc., a Michigan corporation, to be
dissolved and its assets transferred to the Borrower and its other Subsidiaries.
During such period (i) Glass Express, Inc. shall not be required to become a
Credit Party and shall not own assets having an aggregate value in excess of
$100,000, and (ii) the capital stock of Glass Express Inc. shall not be required
to be pledged pursuant to the Pledge Agreement.
(i) Notwithstanding any other provisions of the Credit
Documents to the contrary, the Borrower shall not be required to deliver the
stock certificate(s) evidencing the shares of CarComp to the Collateral Agent in
pledge pursuant to the Pledge Agreement until the Borrower obtains possession of
such certificate(s), which it agrees to use its best efforts to do. Prior to the
time of such delivery the Borrower will not permit the aggregate value of the
assets of CarComp to exceed $100,000 and will not transfer, or permit any
Subsidiary to transfer, assets to CarComp.
7.12 Interest Rate Protection. No later than (i) 90 days
following the Initial Borrowing Date at least 40% of the sum of outstanding Term
Loans and other Indebtedness of the Borrower (other than the Revolving Loans)
shall be subject to Interest Rate Protection Agreements, satisfactory to the
Administrative Agent, with a term of at least three years from the Initial
Borrowing Date (or, with respect to Interest Rate Protection Agreements entered
into in connection with the Existing Credit Agreement, such shorter term as
shall exist on the Initial Borrowing Date as long as such Interest Rate
Protection Agreements are at their expiry renewed to, or replaced by other
Interest Rate Protection Agreements satisfactory to the Administrative Agent
which extend to, a date which is at least three years from the Initial Borrowing
Date), or shall be subject to a fixed or maximum interest rate (with a term of
at least three years from the Initial Borrowing Date) acceptable to the
Administrative Agent and (ii) the first anniversary of the Initial Borrowing
Date at least 50% of the sum of outstanding Term Loans and other Indebtedness of
the Borrower (other than the Revolving Loans) shall be subject to Interest Rate
Protection Agreements, satisfactory to the Administrative Agent, with a term of
at least three years from the Initial Borrowing Date, or shall be subject to a
fixed or maximum interest rate (with a term of at least three years from the
Initial Borrowing Date) acceptable to the Administrative Agent. The
Administrative Agent acknowledges that the fixed interest rate applicable to the
Senior Subordinated Notes is satisfactory to the Administrative Agent.
7.13 Foreign Subsidiaries Security. If following a change in
the relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Administrative Agent does not within 30
days after a request from the Administrative Agent or the Required Banks deliver
evidence, in form and substance mutually satisfactory to the Administrative
Agent and the Borrower, with respect to any Foreign Subsidiary of the Borrower
which has not already had all of its stock pledged pursuant to the Pledge
Agreement that (i) a pledge (x) of 66-2/3% or more of the total combined voting
power of all classes of capital stock of such Foreign Subsidiary entitled to
vote, and (y) of any promissory note issued by such Foreign Subsidiary to the
Borrower or any of its Domestic Subsidiaries, (ii) the entering into by such
Foreign Subsidiary of a security agreement in substantially the form of the
Security Agreement and (iii) the entering into by such
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Foreign Subsidiary of a guaranty in substantially the form of the Subsidiary
Guaranty, in any such case would cause the undistributed earnings of such
Foreign Subsidiary as determined for Federal income tax purposes to be treated
as a deemed dividend to such Foreign Subsidiary's United States parent for
Federal income tax purposes, then in the case of a failure to deliver the
evidence described in clause (i) above, that portion of such Foreign
Subsidiary's outstanding capital stock or any promissory notes so issued by such
Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge
Agreement shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement
in substantially similar form, if needed), and in the case of a failure to
deliver the evidence described in clause (ii) above, such Foreign Subsidiary
shall execute and deliver the Security Agreement (or another security agreement
in substantially similar form, if needed), granting the Secured Creditors a
security interest in all of such Foreign Subsidiary's assets and securing the
Obligations of the Borrower under the Credit Documents and under any Interest
Rate Protection Agreement or Other Hedging Agreement and, in the event the
Subsidiary Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described in clause (iii) above, such Foreign Subsidiary
shall execute and deliver the Subsidiary Guaranty (or another guaranty in
substantially similar form, if needed), guaranteeing the Obligations of the
Borrower under the Credit Documents and under any Interest Rate Protection
Agreement or Other Hedging Agreement, in each case to the extent that the
entering into such Security Agreement or Subsidiary Guaranty is permitted by the
laws of the respective foreign jurisdiction and with all documents delivered
pursuant to this Section 7.13 to be in form and substance reasonably
satisfactory to the Administrative Agent.
7.14 Pledge of Borrower's Stock. In the event that at any time
after the Initial Borrowing Date a holding company shall be formed to own the
voting stock of the Borrower, the Borrower will promptly cause such holding
company to pledge to the Collateral Agent, for the benefit of the Secured
Creditors, all voting stock of the Borrower pursuant to documentation (including
legal opinions related thereto) reasonably satisfactory to the Collateral Agent.
SECTION 8. Negative Covenants. The Borrower hereby covenants
and agrees that as of the Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit (other than Letters of Credit, together with all Fees that have accrued
and will accrue thereon through the stated termination date of such Letters of
Credit, which have been cash collateralized in a manner reasonably satisfactory
to the Letter of Credit Issuer) or Notes are outstanding and the Loans, together
with interest, Fees and all other Obligations (other than any indemnities
described in Section 12.13 which are not then due and payable) incurred
hereunder, are paid in full:
8.01 Changes in Business. The Borrower and its Subsidiaries
will not engage in any businesses which are not the same, similar, related or
ancillary to (a) the businesses in which the Borrower and its Subsidiaries are
engaged on the Initial Borrowing Date or (b) from and after the Second Borrowing
Date, the businesses in which the Borrower and its Subsidiaries are engaged on
the Second Borrowing Date.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or
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agree to do any of the foregoing at any future time) all or any part of its
property or assets (other than inventory in the ordinary course of business), or
enter into any partnerships, joint ventures or sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials, equipment and databases in the ordinary course of
business) of any Person, except that the following shall be permitted:
(a) the consummation of the Transaction;
(b) the Borrower and its Subsidiaries may, as lessee, enter
into operating leases in the ordinary course of business with respect
to real or personal property;
(c) Capital Expenditures by the Borrower and its Subsidiaries
to the extent not in violation of Section 8.09;
(d) the advances, investments and loans permitted pursuant to
Section 8.06;
(e) the Borrower and its Subsidiaries may sell assets,
provided that (i) the aggregate sale proceeds from all assets subject
to such sales pursuant to this clause (e) (other than in the ordinary
course of business, the Net Cash Proceeds of which are not required to
be applied to the making of mandatory prepayments pursuant to the last
sentence of Section 4.02(A)(c)) shall not exceed $10,000,000 in any
fiscal year of the Borrower and (ii) the Net Cash Proceeds from sales
described in (i) above are either applied to repay Term Loans as
provided in Section 4.02(A)(c) or reinvested in replacement assets to
the extent permitted by Section 4.02(A)(c);
(f) the Borrower and its Subsidiaries may sell other assets,
provided that the aggregate sale proceeds from all such asset sales
pursuant to this clause (f) does not exceed $250,000 in any fiscal year
of the Borrower;
(g) the Borrower and its Subsidiaries may sell or discount, in
each case without recourse, accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or
collection thereof;
(h) the Borrower and its Subsidiaries may sell or exchange any
item of equipment, so long as the purpose of each such sale or exchange
is to acquire (and results within 90 days before or after such sale or
exchange in the acquisition of) replacement items of equipment which
are the functional equivalent of the item of equipment so sold or
exchanged;
(i) the Borrower and its Subsidiaries may, in the ordinary
course of business, license patents, trademarks, copyrights and
know-how to third Persons and to one another, so long as each such
license is permitted to be assigned pursuant to the Security Agreement
(to the extent that a security interest in such patents, trademarks,
copyrights and know-how is granted thereunder) and does not otherwise
prohibit the granting of a Lien by the Borrower or any of its
Subsidiaries pursuant to the Security Agreement in the intellectual
property covered by such license;
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(j) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Subsidiary Guarantors (provided that the
wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation);
(k) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other wholly owned
Subsidiary Guarantor;
(l) the Borrower may dissolve any Subsidiary that is inactive
and holds minimal assets and the continued existence of which is of no
value to the Borrower, any other Credit Party or the interests of the
Banks;
(m) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may acquire assets or the capital
stock of any Person (any such acquisition permitted by this clause (m),
a "Permitted Acquisition"), other than any of the LS Companies,
provided that (i) such Person (or the assets so acquired) was,
immediately prior to such acquisition, engaged (or used) primarily in
the business permitted pursuant to Section 8.01, (ii) if such
acquisition is structured as a stock acquisition, then either (A) the
Person so acquired becomes a Wholly-Owned Domestic Subsidiary of the
Borrower or (B) such Person is merged with and into a Wholly-Owned
Domestic Subsidiary of the Borrower (with such Wholly-Owned Domestic
Subsidiary being the surviving corporation of such merger), and in any
case, all of the provisions of Section 8.14 have been complied with in
respect of such Person, (iii) any Liens or Indebtedness assumed or
issued in connection with such acquisition are otherwise permitted
under Section 8.03 or 8.04, as the case may be, and (iv) the aggregate
amount expended (including any deferred compensation or payment
arrangements) by the Borrower for all such acquisitions shall not
exceed $15,000,000; and
(n) leases or subleases granted by the Borrower or any of its
Subsidiaries to third Persons not interfering in any material respect
with the business of the Borrower or any of its Subsidiaries.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
in each case shall be sold or otherwise disposed of free and clear of the Liens
created by the Security Documents and the Administrative Agent shall take such
actions (including, without limitation, directing the Collateral Agent to take
such actions) as are appropriate in order to effectuate the release and
discharge of such Liens as to such Collateral.
8.03 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind (real or personal, tangible
or intangible) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its
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Subsidiaries) or assign any right to receive income, except for the following
(collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with GAAP;
(b) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law which were incurred in the
ordinary course of business and which have not arisen to secure
Indebtedness for borrowed money, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, and other similar Liens
arising in the ordinary course of business, and which either (x) do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any of its Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or
asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the
Security Documents;
(d) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Schedule 8.03,
without giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09;
(f) Liens incurred or deposits made (x) in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, government contracts, performance and return-of-money bonds and
other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money); and (y) to secure the performance of leases of Real Property,
to the extent incurred or made in the ordinary course of business;
(g) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Borrower
or any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
(j) any interest or title of a licensor, lessor or sublessor
under any license or lease permitted by this Agreement;
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(k) Liens created pursuant to Capital Leases permitted
pursuant to Section 8.04(e);
(l) Permitted Encumbrances;
(m) Liens arising pursuant to purchase money mortgages or
security interests securing Indebtedness representing the purchase
price (or financing of the purchase price within 90 days after the
respective purchase) of assets acquired after the Initial Borrowing
Date, provided that (i) any such Liens attach only to the assets so
purchased, (ii) the Indebtedness secured by any such Lien does not
exceed 100%, nor is less than 70%, of the lesser of the fair market
value or the purchase price of the property being purchased at the time
of the incurrence of such Indebtedness and (iii) the Indebtedness
secured thereby is permitted to be incurred pursuant to Section
8.04(e);
(n) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is acquired pursuant
to a Permitted Acquisition, provided that (i) any Indebtedness that is
secured by such Liens is permitted to exist under Section 8.04(k), and
(ii) such Liens are not incurred in connection with, or in
contemplation or anticipation of, such Permitted Acquisition and do not
attach to any other asset of the Borrower or any of its Subsidiaries;
and
(o) additional Liens incurred by the Borrower and its
Subsidiaries so long as the value of the property subject to such
Liens, and the Indebtedness and other obligations secured thereby, do
not exceed $500,000 in the aggregate at any time.
8.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(b) Existing Indebtedness outstanding on the Initial Borrowing
Date and listed on Schedule 6.24, without giving effect to any
subsequent extension, renewal or refinancing thereof;
(c) Indebtedness of the Borrower and the Subsidiary Guarantors
incurred under one or more Senior Subordinated Note Indentures and
Senior Subordinated Notes and the other Senior Subordinated Note
Documents delivered in connection therewith so long as (A) all of the
terms and conditions (and the documentation) in connection therewith
(including, without limitation, the issuer, amortization, maturities,
interest rates, limitations on cash interest payable, covenants,
defaults, remedies, sinking fund provisions, subordination provisions
and other terms), taken as a whole, are not materially less favorable
to the Borrower, and the subordination provisions thereof are not less
favorable to the Banks, than those set forth in the Senior Subordinated
Note Indenture as in effect on the Initial Borrowing Date and (B) the
aggregate principal amount of outstanding Senior Subordinated Notes
under the Senior Subordinated Note Indenture shall not exceed
$100,000,000 at any
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time plus the amount of additional Senior Subordinated Notes issued to
pay interest in lieu of payment of interest in cash;
(d) Indebtedness under Interest Rate Protection Agreements
entered into to protect the Borrower against fluctuations in interest
rates in respect of the Obligations;
(e) Capitalized Lease Obligations and Indebtedness of the
Borrower and its Subsidiaries incurred pursuant to purchase money Liens
permitted under Section 8.03(m), provided that (i) all such Capitalized
Lease Obligations are permitted under Section 8.09, and (ii) the sum of
(x) the aggregate Capitalized Lease Obligations outstanding at any time
plus (y) the aggregate principal amount of such purchase money
Indebtedness outstanding at such time shall not exceed $10,000,000;
(f) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.06(h);
(g) Indebtedness of the Borrower under the Shareholder
Subordinated Notes to the extent permitted by Section 8.07(ii);
(h) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with
the Borrower's or any of its Subsidiaries' operations so long as
management of the Borrower or such Subsidiary, as the case may be, has
determined that the entering into of such Other Hedging Agreements are
bona fide hedging activities;
(i) Indebtedness of Foreign Subsidiaries to the Borrower or
any of its Domestic Subsidiaries as a result of any investment made
pursuant to Section 8.06(l);
(j) Indebtedness consisting of guaranties (x) by the Borrower
of Indebtedness, leases and any other obligation or liability permitted
to be incurred by Wholly-Owned Domestic Subsidiaries of the Borrower,
(y) by Domestic Subsidiaries of the Borrower of Indebtedness, leases
and any other obligation or liability permitted to be incurred by the
Borrower or other Wholly-Owned Domestic Subsidiaries of the Borrower,
and (z) by Foreign Subsidiaries of the Borrower of Indebtedness, leases
and any other obligation or liability permitted to be incurred by other
Wholly-Owned Foreign Subsidiaries of the Borrower;
(k) Indebtedness of a Subsidiary acquired pursuant to a
Permitted Acquisition (or Indebtedness assumed at the time of a
Permitted Acquisition of an asset securing such Indebtedness), provided
that (i) such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition and (ii)
at the time of such Permitted Acquisition such Indebtedness does not
exceed 10% of the total value of the assets of the Subsidiary so
acquired, or of the asset so acquired, as the case may be;
(l) Insurance Debt;
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(m) additional Indebtedness of the Borrower and its
Subsidiaries not otherwise permitted hereunder not exceeding
$10,000,000 in aggregate principal amount at any time outstanding;
(n) additional Indebtedness of the Borrower not exceeding
$10,000,000 in aggregate principal amount at any time outstanding
provided that such Indebtedness matures no earlier than the first
anniversary of the C Term Loan Maturity Date and is subordinated to the
Obligations to at least the same extent as are the Shareholder
Subordinated Notes; and
(o) Indebtedness consisting of reimbursement obligations in
respect of letters of credit to the extent payment of such
reimbursement obligations is supported by a Letter of Credit.
8.05 Designated Senior Debt. The Borrower will not, and will
not permit any of its Subsidiaries to, designate any Indebtedness (other than
the Obligations) as "Designated Senior Debt" for purposes of, and as defined in,
the Senior Subordinated Note Documents.
8.06 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, or purchase or own a futures contract or otherwise become liable for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract, or hold any cash, Cash Equivalents or Foreign Cash
Equivalents, except:
(a) the Borrower and its Subsidiaries may invest in cash and
Cash Equivalents, and Foreign Subsidiaries of the Borrower may invest
in Foreign Cash Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms (including the dating of receivables and
extensions of payment in the ordinary course of business consistent
with past practices) of the Borrower or such Subsidiary;
(c) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into in
compliance with Section 8.04(d) shall be permitted;
(e) advances, loans and investments in existence on the
Initial Borrowing Date and listed on Schedule 8.06 shall be permitted,
without giving effect to any additions thereto or replacements thereof;
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(f) (i) the Borrower may acquire and hold obligations of one
or more officers or other employees of the Borrower or its Subsidiaries
in connection with such officers' or employees' acquisition of shares
of the Borrower Common Stock so long as no cash is paid by the Borrower
or any of its Subsidiaries in connection with the acquisition of any
such obligations, (ii) the Borrower may extend loans to officers and
employees of the Borrower and its Subsidiaries on or after the date on
which any such officers and employees exercise their options to
purchase capital stock of the Borrower issued to them in connection
with the Transaction so long as the proceeds of such loans are promptly
used by such officers and employees to pay taxes payable by them as a
result of such exercise and (iii) investments consisting of loans by
the Borrower or its Subsidiaries to employees of the Borrower or its
Subsidiaries made solely for the purpose of funding purchases by such
employees of Borrower Common Stock; provided that the aggregate
principal amount at any time outstanding of the obligations and loans
extended pursuant to clauses (i), (ii) and (iii) shall not exceed
$3,000,000;
(g) deposits made in the ordinary course of business
consistent with past practices to secure the performance of leases
shall be permitted;
(h) the Borrower may make intercompany loans and advances to
any of its Subsidiaries and any Subsidiary of the Borrower may make
intercompany loans and advances to the Borrower or any other Subsidiary
of the Borrower (collectively, "Intercompany Loans"), provided that (w)
at no time shall the aggregate outstanding principal amount of all
Intercompany Loans made pursuant to this clause (h) when added to the
amount of contributions, capitalizations and forgiveness theretofore
made pursuant to Section 8.06(n), exceed $3,000,000 (determined without
regard to any write-downs or write-offs of such loans and advances),
(x) each Intercompany Loan made by a Foreign Subsidiary or a
non-Wholly-Owned Domestic Subsidiary to the Borrower or a Wholly-Owned
Domestic Subsidiary of the Borrower shall contain the subordination
provisions set forth on Exhibit I, (y) each Intercompany Loan shall be
evidenced by an Intercompany Note and (z) each such Intercompany Note
(other than (1) Intercompany Notes issued by Foreign Subsidiaries of
the Borrower to the Borrower or any of its Domestic Subsidiaries and
(2) Intercompany Notes held by Foreign Subsidiaries of the Borrower, in
each case except to the extent provided in Section 7.13) shall be
pledged to the Collateral Agent pursuant to the Pledge Agreement;
(i) loans and advances by the Borrower and its Subsidiaries to
employees of the Borrower and its Subsidiaries for moving and travel
expenses and other similar expenses, in each case incurred in the
ordinary course of business, in an aggregate outstanding principal
amount not to exceed $5,000,000 at any time (determined without regard
to any write-downs or write-offs of such loans and advances), shall be
permitted;
(j) Other Hedging Agreements entered into in compliance with
Section 8.04(h) shall be permitted;
(k) Permitted Acquisitions shall be permitted;
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(l) the Borrower and its Subsidiaries may make investments in
their respective Subsidiaries in connection with the transfers of those
assets permitted to be transferred pursuant to Section 8.02(k), it
being understood that the Borrower and its Subsidiaries may convert any
investment initially made as an equity investment to intercompany
Indebtedness held by the Borrower or such Subsidiary;
(m) [Reserved]
(n) the Borrower and its Wholly-Owned Domestic Subsidiaries
may make cash capital contributions to non-Wholly-Owned Domestic
Subsidiaries and Foreign Subsidiaries of the Borrower, and may
capitalize or forgive any Indebtedness owed to them by a
non-Wholly-Owned Domestic Subsidiary or Foreign Subsidiary of the
Borrower, and outstanding under clause (h) of this Section 8.06,
provided that the aggregate amount of such contributions,
capitalizations and forgiveness, when added to the aggregate
outstanding principal amount of Intercompany Loans made under such
clause (h) (determined without regard to any write-downs or write-offs
thereof), shall not exceed $3,000,000;
(o) the Borrower may contribute cash to one or more of its
Wholly-Owned Domestic Subsidiaries, formed after the Initial Borrowing
Date in accordance with Section 8.14, so long as the aggregate amount
of such cash so contributed to all such Wholly-Owned Domestic
Subsidiaries does not exceed $500,000;
(p) the Borrower and its Subsidiaries may own the capital
stock of their respective Subsidiaries created or acquired in
accordance with the terms of this Agreement; and
(q) the Borrower may consummate the Transaction.
8.07 Dividends, etc. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or pay any dividends (other than
dividends payable solely in common stock of the Borrower or any such Subsidiary,
as the case may be) or return any capital to, its stockholders or authorize or
make any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for a consideration, any shares of any class of its capital
stock, now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or set aside any funds
for any of the foregoing purposes, and the Borrower will not permit any of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or any Subsidiary, as the case
may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "Dividends"), except that:
(i) any Subsidiary of the Borrower may pay Dividends
to the Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) the Borrower may redeem or purchase shares of
Borrower Common Stock and Additional Permitted Preferred Stock or
options to purchase Borrower Common Stock or Additional Permitted
Preferred Stock, as the case may be, held by former employees of
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the Borrower or any of its Subsidiaries following the termination of
their employment and/or by existing employees of the Borrower or any of
its Subsidiaries who satisfy the "deemed hardship distribution
standards" within the meaning of Treas. Reg. Section
1.401(k)-1(d)(2)(iv) and who the Borrower designates, in its
discretion, as eligible for such redemption or purchase; provided that
(w) the only consideration paid by the Borrower in respect of such
redemptions and/or purchases shall be cash and Shareholder Subordinated
Notes, (x) the sum of (A) the aggregate amount paid by the Borrower in
cash in respect of all such redemptions and/or purchases plus (B) the
aggregate amount of all principal and interest payments made (other
than payments solely in the form of additional Shareholder Subordinated
Notes) on Shareholder Subordinated Notes shall not exceed $1,500,000 in
any fiscal year of the Borrower, provided that such amount shall be
increased by an amount (not to exceed $5,000,000 for purposes of this
clause (ii)) equal to the proceeds received by the Borrower after the
Initial Borrowing Date and during such fiscal year from the sale or
issuance of Borrower Common Stock or Additional Permitted Preferred
Stock, as the case may be, to management of the Borrower or any of its
Subsidiaries and (y) at the time of any cash payment permitted to be
made pursuant to this Section 8.07(ii), including any cash payment
under a Shareholder Subordinated Note, no Default or Event of Default
shall then exist or result therefrom;
(iii) so long as no Default or Event of Default then
exists or would result therefrom, the Borrower may redeem shares of
Preferred Stock (together with unpaid dividends thereon which have
accumulated in accordance with the terms of such Preferred Stock (as
such terms are in effect on the Closing Date or as otherwise permitted
by this Agreement) to the date fixed for such redemption) (x) with the
proceeds of Borrower Common Stock, if, after giving pro forma effect to
such sale of common stock and such redemption of Preferred Stock as if
such events had occurred on the last day of the most recently ended
Test Period, the Leverage Ratio would be less than or equal to 4.5 to
1.0 and (y) with the proceeds of Additional Permitted Preferred Stock;
(iv) Borrower Preferred Stock issued as a dividend on
other Borrower Preferred Stock;
(v) so long as no Default or Event of Default then
exists or would result therefrom, the Borrower may make the Pre-Merger
Stock Payments; and
(vi) so long as no Default or Event of Default then
exists or would result therefrom, the Borrower may pay the cash portion
of the consideration for the Merger in accordance with the Merger
Agreement.
8.08 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of transactions with any Affiliate other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
reasonably expected to be obtainable by the Borrower or such Subsidiary at the
time in a comparable arm's-length transaction with a Person other than an
Affiliate; provided that the following shall in any event be permitted: (i) the
Transaction; (ii) the payment on the Second Borrowing Date of one time fees to
Lee and/or the Lee Affiliates in an aggregate amount (for all such Persons taken
together) not to exceed $4,000,000 (plus reasonable out-of-pocket expenses
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<PAGE> 74
incurred by such Persons in providing services to the Borrower); (iii) the
payment, on a quarterly basis, of management fees to Lee and/or Lee Affiliates
and Belron and/or Belron Affiliates in an aggregate amount (for all such Persons
taken together) not to exceed $500,000 in any fiscal quarter of the Borrower,
provided that if during any fiscal quarter of the Borrower a Default or an Event
of Default exists, only one-half of such fee for such fiscal quarter may be paid
and the remaining one-half of such fee may be paid at such time as all Defaults
and Events of Default have been cured or waived; (iv) the reimbursement of Lee
and/or Lee Affiliates and Belron and/or Belron Affiliates for their reasonable
out-of-pocket expenses incurred by them in connection with performing management
services to the Borrower and its Subsidiaries; (v) the payment of fees to and
expenses of Belron and the Belron Affiliates in connection with the Transaction
as long as the payment of such fees and expenses does not result in the
aggregate amount of fees and expenses paid in connection with the Transaction to
exceed the amount set forth in Section 5.28; (vi) the Transaction Bonuses; (vii)
the payment of fees and expenses of The Windsor Park Group in connection with
the Transaction so long as the payment of such fees and expenses does not result
in the aggregate amount of fees and expenses paid in connection with the
Transaction to exceed the amount set forth in Section 5.28; and (viii) payments
to Vistar employees in connection with the Merger pursuant to severance
agreements, long-term incentive plans and executive bonus plans. Notwithstanding
anything to the contrary contained in this Section 8.08, at no time will the
Borrower or any of its Subsidiaries make any payments to Lee and/or any of its
Affiliates and Belron and/or Belron Affiliates in an amount which would exceed
that amount permitted to be paid pursuant to the Senior Subordinated Note
Indenture at such time.
8.09 Capital Expenditures. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, make any Capital Expenditures, except
that during any fiscal year set forth below, the Borrower and its Subsidiaries
may make Capital Expenditures so long as the aggregate amount of such Capital
Expenditures does not exceed in any fiscal year set forth below the amount set
forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
FYE 1998 $27,000,000.00
FYE 1999 27,000,000.00
FYE 2000 22,000,000.00
FYE 2001 23,000,000.00
FYE 2002 24,000,000.00
FYE 2003 25,000,000.00
FYE 2004 26,000,000.00
FYE 2005 27,000,000.00
</TABLE>
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<PAGE> 75
(b) Notwithstanding the foregoing (i) the amount of Capital
Expenditures permitted to be made by the Borrower and its Subsidiaries pursuant
to clause (a) above in any fiscal year may be increased by the amount of Capital
Expenditures which the Borrower and its Subsidiaries are permitted by clause (a)
above to make in the next succeeding fiscal year (and the amount permitted for
the next fiscal year shall be correspondingly reduced) and (ii) in the event
that the amount of Capital Expenditures permitted to be made by the Borrower and
its Subsidiaries pursuant to clause (a) above in any fiscal year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b) and after giving effect to any reduction in such permitted capital
expenditure amount pursuant to this clause (b)) is greater than the amount of
such Capital Expenditures made by the Borrower and its Subsidiaries during such
fiscal year, such excess (the "Rollover Amount") may be carried forward and
utilized to make Capital Expenditures in succeeding fiscal years; provided that
in no event shall the aggregate amount of Capital Expenditures made by the
Borrower and its Subsidiaries during any fiscal year pursuant to Section 8.09(a)
exceed 125% of the amount set forth opposite such fiscal year as set forth in
the table in such Section 8.09(a).
(c) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the Net
Cash Proceeds of Asset Sales to the extent such proceeds are not required to be
applied to repay Term Loans pursuant to Section 4.02(A)(c).
(d) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the
insurance proceeds received by the Borrower or any of its Subsidiaries from any
Recovery Event so long as such Capital Expenditures are to replace or restore
any properties or assets in respect of which such proceeds were paid within 360
days following the date of the receipt of such insurance proceeds to the extent
such insurance proceeds are not required to be applied to repay Term Loans
pursuant to Section 4.02(A)(f).
(e) Notwithstanding the foregoing, the Borrower may make
Capital Expenditures (which Capital Expenditures will not be included in any
determination under the foregoing clause (a)) constituting Permitted
Acquisitions.
(f) Notwithstanding the foregoing, the Borrower may make
Capital Expenditures (which Capital Expenditures will not be included in any
determination under the foregoing clause (a)) in an amount equal to the net cash
proceeds of any equity offering by the Borrower not required to be prepaid
pursuant to Section 4.02(A)(d).
8.10 [Reserved]
8.11 Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio for any Test Period ending on a date set forth below to
be less than the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
FQE3 1998 2.00:1.00
</TABLE>
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<PAGE> 76
<TABLE>
<S> <C>
FYE 1998 2.00:1.00
FQE1 1999 2.00:1.00
FQE2 1999 2.00:1.00
FQE3 1999 2.00:1.00
FYE 1999 2.00:1.00
FQE1 2000 2.00:1.00
FQE2 2000 2.25:1.00
FQE3 2000 2.25:1.00
FYE 2000 2.50:1.00
FQE1 2001 2.50:1.00
FQE2 2001 2.50:1.00
FQE3 2001 2.50:1.00
FYE 2001 2.75:1.00
FQE1 2002 2.75:1.00
FQE2 2002 2.75:1.00
FQE3 2002 2.75:1.00
FYE 2002 3.00:1.00
FQE1 2003 3.00:1.00
FQE2 2003 3.00:1.00
FQE3 2003 3.00:1.00
FYE 2003 3.00:1.00
FQE1 2004 3.00:1.00
FQE2 2004 3.00:1.00
FQE3 2004 3.00:1.00
FYE 2004 3.00:1.00
FQE1 2005 3.00:1.00
FQE2 2005 3.00:1.00
FQE3 2005 3.00:1.00
FYE 2005 3.00:1.00
</TABLE>
8.12 Leverage Ratio. The Borrower will not permit the Leverage
Ratio on the last day of any fiscal quarter ending on or about any date set
forth below to be more than the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
FQE3 1998 5.75:1.00
FYE 1998 5.75:1.00
FQE1 1999 5.75:1.00
FQE2 1999 5.50:1.00
FQE3 1999 5.25:1.00
FYE 1999 5.25:1.00
FQE1 2000 5.00:1.00
FQE2 2000 5.00:1.00
FQE3 2000 4.75:1.00
FYE 2000 4.75:1.00
</TABLE>
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<PAGE> 77
<TABLE>
<S> <C>
FQE1 2001 4.50:1.00
FQE2 2001 4.50:1.00
FQE3 2001 4.25:1.00
FYE 2001 4.25:1.00
FQE1 2002 4.00:1.00
FQE2 2002 4.00:1.00
FQE3 2002 4.00:1.00
FYE 2002 3.75:1.00
FQE1 2003 3.50:1.00
FQE2 2003 3.50:1.00
FQE3 2003 3.50:1.00
FYE 2003 3.25:1.00
FQE1 2004 3.00:1.00
FQE2 2004 3.00:1.00
FQE3 2004 3.00:1.00
FYE 2004 3.00:1.00
FQE1 2005 3.00:1.00
FQE2 2005 3.00:1.00
FQE3 2005 3.00:1.00
FYE 2005 3.00:1.00
</TABLE>
8.13 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; Issuances of Capital Stock; etc. The Borrower will not, and
will not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption or
defeasance or acquisition for value of (including, without limitation,
by way of depositing with the trustee with respect thereto or any other
Person money or securities before due for the purpose of paying when
due) any Existing Indebtedness or any Senior Subordinated Note;
(ii) make (or give any notice in respect of) any
prepayment or redemption or acquisition for value or defeasance as a
result of any asset sale, change of control or similar event
(including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before due
for the purpose of paying when due) with respect to any Senior
Subordinated Note; or pay interest in cash on any Senior Subordinated
Note to the extent the relevant obligor has an option to make such
payment by the issuance of additional Senior Subordinated Notes;
(iii) make (or give any notice in respect of) any
principal or interest payment on, or any redemption or acquisition for
value of, any Shareholder Subordinated Note, except to the extent
permitted by Section 8.07(ii);
(iv) amend or modify, or permit the amendment or
modification of, any provision of any Senior Subordinated Note Document
or any Shareholder Subordinated Notes which is in any way adverse to
the interest of the Banks in the opinion of the Administrative Agent in
its sole discretion; provided that this clause (iv) shall not prohibit
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<PAGE> 78
or restrict the Senior Subordinated Notes Consent Solicitation or the
amendment of the Senior Subordinated Note Documents pursuant thereto;
(v) amend, modify or change in any way adverse to the
interests of the Banks, any Tax Allocation Agreement, any Management
Agreement, any Recapitalization Document, any Merger Document, its
Certificate of Incorporation (including, without limitation, by the
filing or modification of any certificate of designation) or By-Laws,
or any agreement entered into by it, with respect to its capital stock
(including any Shareholders' Agreement), or enter into any new
agreement with respect to its capital stock which in any way could be
adverse to the interests of the Banks; and
(vi) issue any class of capital stock other than
non-redeemable common stock, the Borrower Preferred Stock and
Additional Permitted Preferred Stock.
Notwithstanding the foregoing (a) the Senior Subordinated Notes may be
refinanced in accordance with the provisions of Section 8.04(c) without
limitation by this Section 8.13 and (b) so long as no Default or Event of
Default exists or would result after giving effect thereto, (i) the Senior
Subordinated Notes and accrued interest thereon may be repaid with the proceeds
of the issuance of common stock by the Borrower and (ii) the Senior Subordinated
Notes issued under the Senior Subordinated Note Indenture and accrued interest
thereon may be repaid with the proceeds of the sale of common stock by the
Borrower to the extent permitted by the "equity clawback" provisions of the
Senior Subordinated Note Indenture; provided that in the case of any repayment
with proceeds of common stock under the foregoing clauses (i) or (ii), after
giving pro forma effect to the sale of such common stock and such repayment as
if such events had occurred on the last day of the most recently ended Test
Period, the Leverage Ratio would have been less than or equal to 4.5 to 1.0.
8.14 Limitation on Certain Restrictions on Subsidiaries. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries or (c) transfer any of its properties or assets to the
Borrower or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of the
Borrower or a Subsidiary of the Borrower, (iv) customary provisions restricting
assignment of any licensing agreement entered into by the Borrower or a
Subsidiary of the Borrower in the ordinary course of business, (v) the Senior
Subordinated Note Documents, (vi) the Existing Indebtedness Agreements and (vii)
customary provisions restricting the transfer of assets subject to Liens
permitted under Sections 8.03(k) and (m).
8.15. Limitation on the Creation of Subsidiaries.
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower will not, and will not permit any of its Subsidiaries to, establish,
create or acquire after the Second Borrowing Date any Subsidiary; provided that
the Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish
or
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<PAGE> 79
create (x) Subsidiaries as a result of investments made pursuant to Section
8.06(n), (o), (p) and (r) and (y) Wholly-Owned Subsidiaries so long as (i) at
least 30 days' prior written notice thereof is given to the Administrative
Agent, (ii) the capital stock of such new Subsidiary is pledged pursuant to, and
to the extent required by, the Pledge Agreement and the certificates
representing such stock, together with stock powers duly executed in blank, are
delivered to the Collateral Agent, (iii) such new Subsidiary (other than a
Foreign Subsidiary except to the extent otherwise required pursuant to Section
7.13) executes a counterpart of the Subsidiary Guaranty, the Pledge Agreement
and the Security Agreement, and (iv) to the extent requested by the
Administrative Agent or the Required Banks, takes all actions required pursuant
to Section 7.11. In addition, each new Wholly-Owned Subsidiary shall execute and
deliver, or cause to be executed and delivered, all other relevant documentation
of the type described in Section 5 as such new Subsidiary would have had to
deliver if such new Subsidiary were a Credit Party on the Initial Borrowing
Date.
8.16. Limitation on LS Companies. Notwithstanding anything to
the contrary contained in this Agreement, and except (i) for the LS Tax Sharing
Agreement, (ii) the performance by the Borrower of its obligations in connection
with its existing assumption of pension plan obligations of the LS Companies and
(iii) the purchase of insurance for the LS Companies as required pursuant to the
terms of the Recapitalization Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, engage in any of the following transactions,
activities or relationships with any of the LS Companies: (a) any transaction of
merger or consolidation, (b) any conveyance, sale, lease, grant of a security or
other interest in or other disposition of (or agree to do any of the foregoing
at any future time) all or part of its property, assets or liabilities, (c)
enter into any partnership, joint venture, or sale-leaseback transaction, (d)
any acquisition of any property, assets or liabilities, (e) borrow from or loan
any money or credit or make advances to, (f) purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to or investment in, (g) capitalize or forgive any Indebtedness or
other obligation owed, (h) pay any dividends to, (i) guaranty any obligations of
or (j) enter into or engage in any other transactions, relationship or activity.
8.17. Maintenance of Corporate Separateness; Etc. The Borrower
will not, and will not permit any of its Subsidiaries to, (a) fail to satisfy
customary corporate formalities, including, without limitation, (i) the holding
of regular board of directors' and shareholders' meetings, (ii) the maintenance
of separate corporate offices and records and (iii) the maintenance of separate
bank accounts in its own name; (b) fail to act solely in its own corporate name
and through its authorized officers and agents; (c) permit any individual who is
an officer, employee, director or shareholder of the Borrower or any of its
Subsidiaries to be an officer, employee, director or shareholder of any LS
Company; (d) commingle any money or other assets of the Borrower or any of its
Subsidiaries with any money or other assets of any LS Company; (e) distribute
financial statements to any creditor which fail to clearly establish the
separateness of each LS Company from the Borrower and each of its Subsidiaries;
or (f) take any action, or conduct its affairs in a manner, which could
reasonably be expected to result in the separate corporate existence of each of
the Borrower and each of its Subsidiaries from the LS Companies being ignored,
or the assets and liabilities of the Borrower of any of its Subsidiaries being
substantively consolidated with those of any LS Company in a bankruptcy,
reorganization or other insolvency proceeding.
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<PAGE> 80
SECTION 9. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of the Loans or (ii) default, and such default shall
continue for three or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document;
9.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
9.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.11, 7.14 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by any Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) The Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause any such
Indebtedness to become due prior to its stated maturity; or (b) any Indebtedness
(other than the Obligations) of the Borrower or any of their Subsidiaries shall
be declared to be due and payable, or shall be required to be prepaid other than
by a regularly scheduled required prepayment or as a mandatory prepayment
(unless such required prepayment or mandatory prepayment results from a default
thereunder or an event of the type that constitutes an Event of Default), prior
to the stated maturity thereof; provided that it shall not constitute an Event
of Default pursuant to clause (a) or (b) of this Section 9.04 unless the
principal amount of any one issue of such Indebtedness, or the aggregate amount
of all such Indebtedness referred to in clauses (a) and (b) above, exceeds
$5,000,000 at any one time; or
9.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Borrower or any of its Subsidiaries and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Subsidiaries; or the Borrower or any of its
Subsidiaries commences any other proceeding under any reorganization,
bankruptcy, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar
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<PAGE> 81
law of any jurisdiction whether now or hereafter in effect relating to the
Borrower or any of its Subsidiaries; or there is commenced against the Borrower
or any of its Subsidiaries any such proceeding which remains undismissed for a
period of 60 days; or the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Borrower or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by the Borrower or
any of its Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan is, shall have been or is likely to
be terminated or the subject of termination proceedings under ERISA, any Plan
shall have an Unfunded Current Liability, a contribution required to be made to
a Plan or a Foreign Pension Plan has not been timely made, the Borrower or any
of its Subsidiaries or any ERISA Affiliate has incurred or is likely to incur a
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971,
4975 or 4980 of the Code, or the Borrower or any of its Subsidiaries has
incurred or is likely to incur liabilities pursuant to one or more Retiree
Welfare Plans or Foreign Pension Plans; (b) there shall result from any such
event or events the imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability; and (c) which lien,
security interest or liability which arises from such event or events will have
a Material Adverse Effect; or
9.07 Security Documents. (a) Except in each case to the extent
resulting from the failure of the Collateral Agent to retain possession of the
applicable Pledged Securities, any Security Document shall cease to be in full
force and effect, or shall cease to give the Collateral Agent the Liens, rights,
powers and privileges purported to be created thereby in favor of the Collateral
Agent, (including, without limitation, a perfected security interest in, and
Lien on, all of the Collateral, other than Collateral with an aggregate value of
less than or equal to $100,000), or (b) any Credit Party shall default in the
due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any such Security Document and such default
(except to the extent that same will adversely affect the continued perfection
and priority of the Liens created by any such Security Document in Collateral
with an aggregate value in excess of $100,000, in which case clause (a) of this
Section 9.07 will be applicable) shall continue unremedied for a period of 30
days; or
9.08 Guaranties. The Guaranties or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under any Guaranty or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving a liability
(to the extent not paid or not fully covered by insurance) in excess of
$5,000,000 for all such judgments and decrees and all such judgments or
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<PAGE> 82
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days from the entry thereof; or
9.10 Ownership. A Change of Control Event shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of any Agent or
any Bank to enforce its claims against any Guarantor or the Borrower, except as
otherwise specifically provided for in this Agreement (provided, that if an
Event of Default specified in Section 9.05 shall occur with respect to the
Borrower or a Subsidiary Guarantor, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice): (i)
declare the Total Commitment terminated, whereupon the Commitment of each Bank
shall forthwith terminate immediately and any Commitment Fees shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans and all
Obligations owing hereunder (including Unpaid Drawings) to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) enforce, as Collateral Agent (or direct the Collateral Agent to
enforce), any or all of the Liens and security interests created pursuant to the
Security Documents; (iv) terminate any Letter of Credit which may be terminated
in accordance with its terms; and (v) direct the Borrower to pay (and the
Borrower hereby agrees upon receipt of such notice, or upon the occurrence of
any Event of Default specified in Section 9.05, to pay) to the Collateral Agent
at the Payment Office such additional amounts of cash, to be held as security
for the Borrower's reimbursement obligations in respect of Letters of Credit
then outstanding, equal to the aggregate Stated Amount of all Letters of Credit
then outstanding.
SECTION 10. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Loan" shall have the meaning provided in Section
1.01(A)(a).
"A Term Loan Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "A Term Loan Commitment," as the same may be terminated
pursuant to Section 3.03 and/or Section 9.
"A Term Loan Facility" shall mean the Facility evidenced by
the Total A Term Loan Commitment.
"A Term Loan Maturity Date" shall mean the sixth anniversary
of the Initial Borrowing Date.
"A Term Note" shall have the meaning provided in Section
1.05(a).
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"A TL Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is equal to the sum of the
aggregate principal amount of all A Term Loans outstanding at such time and the
denominator of which is equal to the sum of the aggregate principal amount of
all Term Loans outstanding at such time.
"Additional Permitted Preferred Stock" shall mean preferred
stock of the Borrower the terms of which shall be required to be reasonably
acceptable to the Administrative Agent.
"Additional Security Documents" shall have the meaning
provided in Section 7.11(a).
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to the Agent
appointed pursuant to Section 11.10.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise. In addition, for the purpose of
this Agreement, an Affiliate of Lee shall include any Lee Investor or any
investment fund under common control with the Lee Investors, and an Affiliate of
Belron shall include any Belron Investor or any investment fund under common
control with the Belron Investors. Notwithstanding the foregoing, none of the
Banks or any of their respective affiliates shall be deemed to be Affiliates of
the Borrower or its Subsidiaries.
"Agents" shall mean the Administrative Agent, the Collateral
Agent, the Documentation Agent and the Syndication Agent.
"Aggregate Unutilized Commitment" with respect to any Bank at
any time shall mean the sum of (i) such Bank's A Term Loan Commitment at such
time, if any, (ii) such Bank's B Term Loan Commitment at such time, if any,
(iii) such Bank's C Term Loan Commitment at such time, if any, and (iv) such
Bank's Revolving Credit Commitment at such time, if any, less the sum of (x) the
aggregate outstanding principal amount of all Revolving Loans made by such Bank
and (y) such Bank's Revolving Percentage of the Letter of Credit Outstandings at
such time.
"Agreement" shall mean this Credit Agreement, as the same may
be from time to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean initially (i) in the
case of A Term Loans, Revolving Loans and Swingline Loans, .50%, (ii) in the
case of B Term Loans, 1.00% and (iii) in the case of C Term Loans, 1.25%;
provided that from and after the day which is nine months after the Initial
Borrowing Date, the Applicable Base Rate Margin will be determined pursuant to
the Pricing Grid.
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"Applicable Eurodollar Margin" shall mean initially (i) in the
case of A Term Loans and Revolving Loans, 1.50%, (ii) in the case of B Term
Loans, 2.00% and (iii) in the case of C Term Loans, 2.25%; provided that from
and after the day that is nine months after the Initial Borrowing Date, the
Applicable Eurodollar Margin will be determined pursuant to the Pricing Grid.
"Arranger" shall mean Chase Securities Inc.
"Asset Sale" shall mean any sale, transfer or other
disposition by the Borrower or any of its Subsidiaries to any Person other than
the Borrower or any Wholly-Owned Subsidiary of the Borrower of any asset
(including, without limitation, any capital stock or other securities of another
Person, but excluding the sale by such Person of its own capital stock) of the
Borrower or any such Subsidiary other than (i) sales, transfers or other
dispositions of inventory made in the ordinary course of business and (ii) sales
of assets pursuant to Sections 8.02(f), (g), (h), (i) and (k).
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit J
(appropriately completed).
"Authorized Officer" shall mean any senior officer of the
Borrower designated as such in writing to the Administrative Agent by the
Borrower, in each case to the extent reasonably acceptable to the Agent.
"B Banks" shall have the meaning provided in Section 4.02(C).
"B Term Loan" shall have the meaning provided in Section
1.01(A)(b).
"B Term Loan Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "B Term Loan Commitment," as the same may be terminated
pursuant to Section 3.03 and/or Section 9.
"B Term Loan Facility" shall mean the Facility evidenced by
the Total B Term Loan Commitment.
"B Term Loan Maturity Date" shall mean the seventh anniversary
of the Initial Borrowing Date.
"B Term Note" shall have the meaning provided in Section
1.05(a).
"B TL Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is equal to the aggregate
principal amount of all B Term Loans outstanding at such time and the
denominator of which is equal to the sum of the aggregate principal amount of
all Term Loans outstanding at such time.
"Bank" shall have the meaning provided in the first paragraph
of this Agreement.
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"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Revolving Bank to make available its portion of any Borrowing
(including any Mandatory Borrowing) or to fund its portion of any unreimbursed
payment under Section 2.04(c) or (ii) a Revolving Bank having notified the
Administrative Agent and/or the Borrower that it does not intend to comply with
the obligations under Section 1.01(A)(d), 1.01(C) or 2.04(c), in the case of
either clause (i) or (ii) above as a result of the appointment of a receiver or
conservator with respect to such Bank at the direction or request of any
regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" for any day shall mean the higher of (x) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate in effect on
such day and (y) the Prime Rate in effect on such day.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"Belron" shall mean Belron (USA) BV, a Dutch corporation.
"Belron Affiliates" shall mean any Affiliate of Belron,
provided that for purposes of the definition of "Change of Control Event", the
term Belron Affiliate shall not include any portfolio company of either Belron
or any Affiliate of Belron.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement. "Borrower Common Stock" shall be as described in
Schedule 6.16.
"Borrower Preferred Stock" shall be as described in Schedule
6.16, provided that such preferred stock shall only pay non-cash dividends
(except to the extent accumulated dividends may be redeemed pursuant to
subsection 8.07(iii)).
"Borrowing" shall mean the incurrence of one Type of Loan
pursuant to a single Facility by the Borrower from all of the Banks having
Commitments with respect to such Facility on a pro rata basis on a given date
(or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period; provided that Base Rate Loans
incurred pursuant to Section 1.10(b) shall be considered part of any related
Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"C Banks" shall have the meaning provided in Section 4.02(C).
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"C Term Loan" shall have the meaning provided in Section
1.01(A)(c).
"C Term Loan Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "C Term Loan Commitment," as the same may be terminated
pursuant to Section 3.03 and/or Section 9.
"C Term Loan Facility" shall mean the Facility evidenced by
the Total C Term Loan Commitment.
"C Term Loan Maturity Date" shall mean the eighth anniversary
of the Initial Borrowing Date.
"C Term Note" shall have the meaning provided in Section
1.05(a).
"C TL Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is equal to the aggregate
principal amount of all C Term Loans outstanding at such time and the
denominator of which is equal to the sum of the aggregate principal amount of
all Term Loans outstanding at such time.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person for plant, property and equipment which should
be capitalized in accordance with GAAP (including, without limitation,
expenditures for maintenance and repairs which should be capitalized in
accordance with GAAP).
"Capital Lease," as applied to any Person, shall mean any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations
under Capital Leases of the Borrower or any of its Subsidiaries in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"CarComp" shall mean CarComp Services, Inc., an Illinois
corporation.
"Cash Equivalents" shall mean (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) having maturities of
not more than one year from the date of acquisition, (ii) U.S. dollar
denominated time deposits, certificates of deposit and bankers acceptances of
(x) any Bank or (y) any bank, or holding company of such bank, whose short-term
commercial paper rating or that of its parent company from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank or Bank, an "Approved Bank"), in each case with
maturities of not more than one year from the date of acquisition, (iii)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's,
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or guaranteed by any industrial company with a long term unsecured debt rating
of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within one year after the date of
acquisition, (iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's and (v) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale,
the aggregate cash payments (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset Sale,
other than the portion of such deferred payment constituting interest, but only
as and when so received) received by the Borrower and/or any of its Subsidiaries
from such Asset Sale.
"Change of Control Event" shall mean the occurrence of any of
the following: (i) prior to the Second Borrowing Date (a) prior to the date of
an initial registered public offering by the Borrower of Borrower Common Stock,
the Permitted Holders shall cease to own on a fully diluted basis in the
aggregate at least 51% of the economic and voting interest in the Borrower's
capital stock free of Liens except Liens, if any, created by the Pledge
Agreement or (b) on or after the date of an initial registered public offering
by the Borrower of Borrower Common Stock, (A) any other Person or "group"
(within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act
of 1934, as in effect on the Initial Borrowing Date) shall own more than 20% of
the voting and/or economic interest in the Borrower's capital stock, (B) the
Board of Directors of the Borrower shall cease to consist of a majority of
Continuing Directors or (C) the Permitted Holders shall cease to own on a fully
diluted basis in the aggregate at least 50.5% of the voting interest and at
least 50.5% of the economic interest in the Borrower's capital stock free of
Liens except Liens, if any, created by the Pledge Agreement; (ii) from and after
the Second Borrowing Date (a) prior to the date of an initial registered public
offering by the Borrower of Borrower Common Stock, the Permitted Holders shall
cease to own on a fully diluted basis in the aggregate at least 50.5% of the
voting interest and at least 50.5% of the economic interest in the Borrower's
capital stock free of Liens except Liens, if any, created by the Pledge
Agreement or shall cease to own on a fully diluted basis sufficient shares of
capital stock of the Borrower as entitle it to elect at least a majority of the
members of the Board of Directors of the Borrower, (b) on or after the date of
an initial registered public offering by the Borrower of Borrower Common Stock,
(A) any other Person or "group" (within the meaning of Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, as in effect on the Initial Borrowing
Date) shall own more than 20% of the voting and/or economic interest in the
Borrower's capital stock (other than the Permitted Holders who are not Qualified
Permitted Holders), (B) the Board of Directors of the Borrower shall cease to
consist of a majority of Continuing Directors or (C) the Permitted Holders shall
cease to own on a fully diluted basis in the aggregate at least 40% of the
economic or voting interest in the Borrower's capital stock free of Liens except
Liens, if any, created by the Pledge Agreement; or (iii) a "change of control"
or similar event shall occur as provided in the Senior Subordinated Note
Indenture.
"Chase" shall mean The Chase Manhattan Bank, in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the Code amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in
each of the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting
as collateral agent for the Secured Creditors.
"Commitment" shall mean, with respect to each Bank, such
Bank's A Term Loan Commitment, B Term Loan Commitment, C Term Loan Commitment
and Revolving Credit Commitment.
"Commitment Fee" shall have the meaning provided in Section
3.01(a).
"Confidential Information Memorandum" shall mean the
Confidential Information Memorandum dated December 1997 relating to the
Facilities.
"Consolidated Current Assets" shall mean, at any time, the
current assets (other than cash, Cash Equivalents and deferred income taxes to
the extent included in current assets) of the Borrower and its Subsidiaries at
such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time,
the current liabilities of the Borrower and its Subsidiaries determined on a
consolidated basis, but excluding deferred income taxes and the current portion
of and accrued but unpaid interest on any Indebtedness under this Agreement and
any other long-term Indebtedness which would otherwise be included therein.
"Consolidated Debt" shall mean, at any time, all Indebtedness
(excluding Indebtedness of the type described in clause (vii) of the definition
of Indebtedness) of the Borrower and its Subsidiaries determined on a
consolidated basis which would be reflected on a consolidated balance sheet at
such time in accordance with GAAP.
"Consolidated EBIT" shall mean, for any period, Consolidated
Net Income of the Borrower and its Subsidiaries, before total interest expense
(whether cash or non-cash) and provisions for taxes based on income, and
determined (i) without giving effect to any extraordinary gains or losses but
with giving effect to gains or losses from sales of assets sold in the ordinary
course of business, (ii) without giving effect to any impact from the LIFO
method of inventory accounting, (iii) without giving effect to any noncash
charge (other than depreciation or amortization) deducted in determining
Consolidated Net Income for such period, including non-cash charges related to
the issuance by the Borrower or any of its Subsidiaries of stock, warrants or
options to management (or any exercise of any such warrants or options), (iv)
without giving effect to any compensation expense incurred in connection with
the Merger or the Recapitalization (including, without limitation, the
Transaction Bonuses), (v) without giving effect to nonrecurring charges, noncash
charges or documented cash charges, in each case deducted in determining
Consolidated Net Income for such period and related to the Transaction
(including, for example,
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one-time expenses associated with the integration of corporate systems,
temporary service fees and training, moving, relocation and other costs and
expenses in connection with the Merger) and (vi) without giving effect to
management fees permitted to be paid to Lee and the Lee Affiliates and Belron
and the Belron Affiliates pursuant to Section 8.08.
"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT, adjusted by adding thereto the amount of all depreciation expense and
amortization expense that were deducted in determining Consolidated EBIT for
such period.
"Consolidated Interest Expense" shall mean, for any period,
total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of the Borrower and its Subsidiaries determined on a
consolidated basis with respect to all outstanding Indebtedness of the Borrower
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs or benefits under Interest Rate Protection
Agreements, but excluding, however, amortization of original issue discount, any
payments made to obtain any Interest Rate Protection Agreement, deferred
financing costs and any interest expense on deferred compensation arrangements
and any other non-cash interest to the extent included in total interest
expense.
"Consolidated Net Income" shall mean, for any period, the net
income (or loss), after provision for taxes and before any pay-in-kind or
non-cash accumulating dividend on Preferred Stock, of the Borrower and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period, but excluding any unrealized losses and gains for such period
resulting from mark-to-market of Other Hedging Agreements.
"Contingent Obligations" shall mean as to any Person any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection or standard contractual
indemnities entered into, in each case in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean (i) prior to the Second
Borrowing Date, the directors of the Borrower on the Initial Borrowing Date and
(ii) on and after the Second Borrowing Date, the directors of the Borrower on
the Second Borrowing Date and each other director if such
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director's nomination for the election to the Board of Directors of the Borrower
is recommended by a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a
Revolving Loan made pursuant to a Mandatory Borrowing) or the issuance of a
Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary
Guarantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Deficiency" shall have the meaning provided in Section
8.09(b).
"Dividends" shall have the meaning provided in Section 8.07.
"Documentation Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Documents" shall mean the Credit Documents, the Merger
Documents and the Senior Subordinated Note Documents.
"Domestic Subsidiary" shall mean each Subsidiary of the
Borrower (and, prior to the Second Borrowing Date, of Vistar) incorporated or
organized in the United States or any State or territory thereof.
"Effective Date" shall have the meaning provided in Section
12.10.
"Eligible Transferee" shall mean and include (i) a commercial
bank, financial institution, fund which is regularly engaged in making,
purchasing or investing in loans of the type provided for herein or other
"qualified institutional buyer" (as defined in Rule 144A of the Securities Act)
and (ii) any other Person approved by the Borrower (such approval not to be
unreasonably withheld).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by the Borrower or any of its
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit
issued to the Borrower or any of its Subsidiaries under any such law, including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution,
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indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Law" shall mean any federal, state or local
policy, statute, law, rule, regulation, ordinance, code or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
("collectively, Laws")), relating to the environment, or Hazardous Materials or
health and safety to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or any of its
Subsidiaries would be deemed, at any time following the Initial Borrowing Date,
to be a "single employer" within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at
the rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan, (i) the rate per annum equal to the rate at which
Chase is offered Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period (and rounded upward to the
next whole multiple of 1/16 of 1%) divided by (ii) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any basic, marginal, emergency, supplemental, special or
other reserves under any regulations of the Board of Governors of the Federal
Reserve System or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to a "Eurocurrency Liabilities" in Regulation D of such
Board) maintained by a member bank of such System.
"Event of Default" shall have the meaning provided in Section
9.
"Excess Cash Flow" shall mean, for any period cash flows from
operating activities, as defined by GAAP, minus an amount equal to the sum of
(i) all Capital Expenditures (other than Capital Expenditures made pursuant to
Section 8.09(d), (e) or (f) made during such period that are not financed by
Indebtedness (including Capitalized Lease Obligations but excluding Loans
hereunder), (ii) the amount expended with respect to Permitted Acquisitions
during such period, except to the extent constituting Capital Expenditures,
(iii) the aggregate principal amount
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of permanent principal payments of Indebtedness for borrowed money of the
Borrower and its Subsidiaries (other than repayments of Loans, provided that
repayments of Loans shall be deducted in determining Excess Cash Flow if such
repayments were (x) required as a result of a Scheduled A Repayment, a Scheduled
B Repayment or a Scheduled C Repayment under Section 4.02(A)(b) or (y) made as a
voluntary prepayment with internally generated funds (but in the case of a
voluntary prepayment of Revolving Loans, only to the extent accompanied by a
voluntary reduction to the Total Revolving Credit Commitment)), and (iv) the
amount of unusual or non-recurring charges that decreased Working Capital during
such period.
"Excess Cash Flow Period" shall mean each fiscal year of the
Borrower commencing with the fiscal year ending FYE 1998.
"Excess Cash Payment Date" shall mean the date occurring 90
days after the last day of a fiscal year of the Borrower (beginning with its
fiscal year ending FYE 1998).
"Existing Indebtedness" shall have the meaning provided in
Section 6.24.
"Existing Indebtedness Agreements" shall have the meaning
provided in Section 5.13.
"Existing Letters of Credit" shall mean the letters of credit
described in Schedule 2.01.
"Expenditures for Intangible Assets" shall mean, with respect
to any Person, the amount of expenditures which are not classified as Capital
Expenditures but which were capitalized and not expensed during such period,
including the expenditures for the acquisition or development of data bases and
for research and development.
"FQE1", "FQE2" or "FQE3" shall mean, respectively, the last
day of the Borrower's first, second and third fiscal quarters. The first fiscal
quarter of each fiscal year begins on the Saturday closest to the last day of
the prior calendar year, and continues for 13 calendar weeks. The second and
third fiscal quarters continue for successive periods of 13 weeks each, and the
fourth fiscal quarter continues for the period of 13 or 14 weeks, as the case
may be, until the end of such fiscal year.
"FYE" shall mean the end of the designated fiscal year of the
Borrower. Each fiscal year ends on the Saturday following closest to the last
day of the designated year (which Saturday may fall in the succeeding calendar
year).
"Facility" shall mean any of the credit facilities established
under this Agreement, i.e., the A Term Loan Facility, the B Term Loan Facility,
the C Term Loan Facility or the Revolving Credit Facility.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System
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arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. Any change in the
Base Rate due to a change in the Federal Funds Effective Rate shall be effective
as of the opening of business on the effective day of such change in the Federal
Funds Effective Rate.
"Fees" shall mean all amounts payable pursuant to, or referred
to in, Section 3.01.
"Foreign Cash Equivalents" shall mean certificates of deposit
or bankers acceptances of any bank organized under the laws of Canada, Japan or
any country that is a member of the European Economic Community whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof, in each case with
maturities of not more than six months from the date of acquisition.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Borrower
or any one or more of its Subsidiaries primarily for the benefit of employees of
the Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the
Borrower other than a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as promulgated by FASB and as in effect from time
to time; it being understood and agreed that determinations in accordance with
GAAP for purposes of Section 8, including defined terms as used therein, are
subject (to the extent provided therein) to Section 12.07(a).
"Guaranteed Creditors" shall mean and include each of the
Administrative Agent, the Documentation Agent, the Collateral Agent, the Banks
and each party (other than any Credit Party) party to an Interest Rate
Protection Agreement or Other Hedging Agreement to the extent that such party
constitutes a Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the principal and
interest on each Note issued by the Borrower to each Bank, and Loans made, under
this Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower to such
Bank, the Administrative Agent, the Documentation Agent and the Collateral Agent
now existing or hereafter incurred under, arising out of or in connection with
this Agreement or any other Credit Document and the due performance and
compliance with all the terms, conditions and agreements contained in the Credit
Documents by the Borrower and (ii) all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of
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the Borrower or any of its Subsidiaries owing under any Interest Rate Protection
Agreement or Other Hedging Agreement entered into by the Borrower or any of its
Subsidiaries with any Bank or any affiliate thereof (even if such Bank
subsequently ceases to be a Bank under this Agreement for any reason) so long as
such Bank or affiliate participates in such Interest Rate Protection Agreement
or Other Hedging Agreement, and their subsequent assigns, if any, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Guarantor" shall mean each Subsidiary Guarantor.
"Guaranty" shall mean each Subsidiary Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "restricted hazardous materials," "extremely hazardous
wastes," "restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) the deferred
purchase price of assets or services payable to the sellers thereof or any of
such seller's assignees which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person but excluding deferred rent
as determined in accordance with GAAP, (iii) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, i.e., take-or-pay
and similar obligations, (vii) all obligations under Interest Rate Protection
Agreements and Other Hedging Agreements and (viii) all Contingent Obligations of
such Person, provided that Indebtedness shall not include trade payables and
accrued expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the
initial Term Loans are incurred hereunder.
"Initial Lending Bank" shall mean each Bank set forth on Annex
I identified as an Initial Lending Bank.
"Insurance Debt" shall mean Indebtedness of the Borrower, in
an aggregate amount not exceeding $14,000,000, in respect of deferred premium
payments under liability, casualty or other insurance policies of the Borrower.
"Intercompany Loan" shall have the meaning provided in Section
8.06(h).
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"Intercompany Notes" shall mean promissory notes, in the form
of Exhibit K, evidencing Intercompany Loans.
"Interest Coverage Ratio" shall mean, for any period, the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period;
provided that for purposes of calculating such ratio, Consolidated Interest
Expense shall not include interest expense incurred in respect of Insurance
Debt.
"Interest Period" with respect to any Eurodollar Loan, shall
mean the interest period applicable thereto, as determined pursuant to Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedging agreement or other similar agreement or
arrangement.
"L/C Supportable Indebtedness" shall mean (i) obligations of
the Borrower or its Subsidiaries incurred in the ordinary course of business
with respect to insurance obligations and workers' compensation, surety bonds
and other similar statutory obligations and (ii) such other obligations of the
Borrower or any of its Subsidiaries as are reasonably acceptable to the
Administrative Agent and the Letter of Credit Issuer and otherwise permitted to
exist pursuant to the terms of this Agreement.
"Lear Siegler" shall mean Lear Siegler Holdings Corp., a
Delaware corporation.
"Leasehold" of any Person shall mean all of the right, title
and interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lee" shall mean Thomas H. Lee Company, a sole proprietorship
located in Massachusetts.
"Lee Affiliates" shall mean any Affiliate of Lee, provided
that for purposes of the definition of "Change of Control Event", the term Lee
Affiliate shall not include any portfolio company of either Lee or any Affiliate
of Lee.
"Lee Investor" shall mean and include Thomas H. Lee Equity
Fund, III L.P., Thomas H. Lee Foreign Fund III, L.P. and THL-CCI Limited
Partnership, or any limited or general partner, stockholder, officer, employee
or consultant of such Lee Investor or any officer, employee or consultant of
Lee; provided that for the purposes of making calculations under the definition
of "Change of Control Event", the aggregate amount of equity of the Borrower
attributable to consultants of Lee and consultants of Lee Investors may not
exceed $3,000,000.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fees" shall have the meaning provided in
Section 3.01(b)(i).
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"Letter of Credit Issuer" shall mean (i) in respect of the
Existing Letters of Credit, PNC Bank (but not in respect of any renewal or
extension of any Existing Letter of Credit), The Chase Manhattan Bank or Chase
Manhattan Bank Delaware and (ii) in respect of other Letters of Credit, Chase
Manhattan Bank Delaware.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Debt at such time (excluding Insurance Debt) to (y) Consolidated
EBITDA for the Test Period then last ended (or, for the Test Period ending FQE3
1998, Consolidated EBITDA for such Test Period multiplied by 4/3).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each and every Loan made by any Bank
hereunder, including A Term Loans, B Term Loans, C Term Loans, Revolving Loans
or Swingline Loans.
"LSAC" shall mean L.S. Acquisition Corp., a Delaware
corporation.
"LS Companies" shall mean Lear Siegler and its subsidiaries.
"LSNWY" shall mean LSNWY Corp., a Delaware corporation.
"LS Tax Sharing Agreement" shall mean the Tax Sharing
Agreement between the Borrower and Lear Siegler in a form reasonably
satisfactory to the Administrative Agent.
"Majority Banks" of any Facility shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement if all outstanding Obligations of the other
Facilities under this Agreement were repaid in full and all Commitments with
respect thereto were terminated.
"Management Agreements" shall have the meaning provided in
Section 5.13.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(C).
"Margin Adjustment Period" shall mean each period which shall
commence on a date on which the financial statements are delivered pursuant to
Section 7.01(b)(i) or (c)(i), as the case may be, and which shall end on the
earlier of (i) the date of actual delivery of the next financial statements
pursuant to Section 7.01(b)(i) or (c)(i), as the case may be, and (ii) the
latest
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date on which the next financial statements are required to be delivered
pursuant to Section 7.01(b)(i) or (c)(i), as the case may be.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Material Adverse Effect" shall mean a material adverse effect
on the business, properties, assets, liabilities or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole.
"Maturity Date" with respect to any Facility shall mean either
the A Term Loan Maturity Date, the B Term Loan Maturity Date, the C Term Loan
Maturity Date or the Revolving Loan Maturity Date, as the case may be.
"Maximum Swingline Amount" shall mean $20,000,000.
"Merger" shall have the meaning specified in the recitals to
this Agreement.
"Merger Agreement" shall mean the Merger Agreement dated as of
October 10, 1997 as in effect in the Initial Borrowing Date between Vistar and
the Borrower.
"Merger Documents" shall mean the Merger Agreement and all
other agreements and documents relating to the Merger.
"Minimum Borrowing Amount" shall mean (i) for Term Loans,
$5,000,000; (ii) for Revolving Loans, $500,000; and (iii) for Swingline Loans,
$50,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each of the mortgages, deeds of trust,
deeds to secure debt or other substantially similar instrument granting a Lien
on any Mortgaged Property to secure the Obligations, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms of this Agreement.
"Mortgage Policies" shall have the meaning provided in Section
7.11(g).
"Mortgaged Properties" shall mean and include the Real
Properties owned by the Borrower and its Domestic Subsidiaries to the extent
designated as such on Schedule 6.21.
"Multiemployer Plan" shall mean any multiemployer plan (within
the meaning of section 4001(a)(3) of ERISA) to which the Company or any of its
Subsidiaries has any liability or contributes (or has at any time within the
past five years contributed to or had any liability to contribute).
"Net Cash Proceeds" shall mean, with respect to any Asset
Sale, the Cash Proceeds resulting therefrom net of (a) cash expenses of sale
(including brokerage fees, if any, transfer taxes and payment of principal,
premium and interest of Indebtedness other than the Loans required to be
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repaid as a result of such Asset Sale) and (b) incremental income taxes paid or
payable as a result thereof.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Note" shall mean each A Term Note, each B Term Note, each C
Term Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent located at 270 Park Avenue, New York, New York 10017 or such other office
as the Administrative Agent may designate to the Borrower and the Banks from
time to time.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to any Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Other Hedging Agreements" shall mean any foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against fluctuations in currency values.
"Participant" shall have the meaning provided in Section
2.04(a).
"Payment Office" shall mean the office of the Administrative
Agent located at 270 Park Avenue, New York, New York 10017 or such other office
as the Administrative Agent may designate to the Borrower and the Banks from
time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in
Section 8.02(m).
"Permitted Encumbrances" shall mean (i) those liens,
encumbrances and other matters affecting title to any Mortgaged Property listed
in the Mortgage Policies in respect thereof and found reasonably acceptable by
the Administrative Agent, (ii) as to any particular Mortgaged Property at any
time, such easements, encroachments, covenants, rights of way, minor defects,
irregularities or encumbrances on title which do not, in the reasonable opinion
of the Administrative Agent, materially impair such Mortgaged Property for the
purpose for which it is held by the mortgagor thereof, or the lien held by the
Collateral Agent, (iii) zoning and other municipal ordinances which are not
violated in any material respect by the existing improvements and the present
use made by the mortgagor thereof of the Premises (as defined in the respective
Mortgage), (iv) general real estate taxes and assessments not yet delinquent,
and (v) such other items as the Administrative Agent may consent to (such
consent not to be unreasonably withheld).
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"Permitted Holders" shall mean (a) Lee and the Lee Affiliates,
(b) the Lee Investors, (c) each other holder of common stock on the Initial
Borrowing Date (each Person which is a Permitted Holder solely by virtue of this
clause (c), "a Qualified Permitted Holder"), (d) from and after the Second
Borrowing Date, Belron and the Belron Affiliates and (e) senior management
employees and directors of the Borrower who acquire common stock of the Borrower
within 90 days after the Initial Borrowing Date for an aggregate purchase price
not in excess of $5,000,000; provided, however, that (x) to the extent that the
aggregate economic interest or voting interest in the Borrower's capital stock
legally or beneficially owned by the Qualified Permitted Holders exceeds 20% of
the economic or voting interest, as the case may be, in the Borrower's capital
stock, such excess shall be deemed not to be owned by the Qualified Permitted
Holders for purposes of determining a Change of Control (except for a Change of
Control under clause (ii)(b)(A) of the definition thereof).
"Permitted Liens" shall have the meaning provided in Section
8.03.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any employee pension benefit plan (within
the meaning of section 3(2) of ERISA) which is maintained or contributed to by
the Borrower or any of its Subsidiaries, or for which the Company or any of its
Subsidiaries has any liability or contingent liability, other than a
Multiemployer Plan.
"Pledge Agreement" shall have the meaning provided in Section
5.10(a).
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as
defined the Pledge Agreement.
"Pre-Merger Stock Payments" shall mean the (i) the declaration
and payment by the Borrower of a cash dividend of approximately $67,200,000 on
its Class A Common Stock, (ii) the declaration and payment by the Borrower of a
cash dividend of approximately $4,800,000 (which equals the accrued and unpaid
dividends on the Pre-Merger Borrower Preferred Stock) on the Borrower Pre-Merger
Preferred Stock and (iii) the redemption in full of the Borrower Pre-Merger
Preferred Stock for a redemption price of approximately $58,248,500, all prior
to the Second Borrowing Date.
"Pre-Merger Borrower Preferred Stock" shall mean the
Borrower's 8% Cumulative Preferred Stock which will be redeemed in full prior to
the Merger Closing Date.
"Preferred Stock" shall mean the Borrower Preferred Stock and
any Additional Permitted Preferred Stock.
"Pricing Grid" shall mean the pricing grid attached hereto as
Annex III.
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"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Chase as its prime rate in effect at its
principal office in New York City, the Prime Rate to change when and as such
publicly announced rate changes. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Chase may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.
"Projections" shall have the meaning provided in Section 5.16.
"Qualified Permitted Holders" shall have the meaning specified
in the definition of "Permitted Holders."
"Quarterly Payment Date" shall mean the last Business Day of
each March, June, September and December.
"Real Property" of any Person shall mean all of the right,
title and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Recapitalization" shall mean the recapitalization of the
Borrower pursuant to, and in accordance with the terms of, the Recapitalization
Documents.
"Recapitalization Agreement" shall mean the Recapitalization
Agreement and Plan of Merger and Stock Purchase Agreement dated as of November
8, 1996, as amended and as in effect on the Initial Borrowing Date by and among
Lear Siegler, the LS Selling Stockholders (as defined therein), the Borrower,
LSNWY and LSAC.
"Recapitalization Documents" shall mean the Recapitalization
Agreement and all other agreements and documents relating to the
Recapitalization.
"Recovery Event" shall mean the receipt by the Borrower or any
of its Subsidiaries of any insurance or condemnation proceeds payable (i) by
reason of theft, physical destruction or damage or any other similar event with
respect to any properties or assets of the Borrower or any of its Subsidiaries,
(ii) by reason of any condemnation, taking, seizing or similar event with
respect to any properties or assets of the Borrower or any of its Subsidiaries
and (iii) under any policy of insurance required to be maintained under Section
7.03.
"Register" shall have the meaning provided in subsection
12.04(c).
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or any portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from to time in effect and any
successor to all or any portion thereof.
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"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or any portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Required Banks" shall mean collectively (and not
individually) Non-Defaulting Banks the sum of whose outstanding Term Loans, Term
Loan Commitments, Revolving Credit Commitments (or, if after the Total Revolving
Credit Commitment has been terminated, outstanding Revolving Loans and Revolving
Percentages of outstanding Swingline Loans and Letter of Credit Outstandings)
constitute greater than 50% of the sum of (i) the total outstanding Term Loans
of Non-Defaulting Banks, or the Total Term Loan Commitment then in effect and
(ii) the Total Revolving Credit Commitment less the aggregate Revolving Credit
Commitments of Defaulting Banks (or, if after the Total Revolving Credit
Commitment has been terminated, the total outstanding Revolving Loans of
Non-Defaulting Banks and the aggregate Revolving Percentages of all
Non-Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Retiree Welfare Plan" shall mean any employee welfare benefit
plan (within the meaning of section 3(1) of ERISA) which provides benefits to
retired or other former employees of the Borrower or any of its Subsidiaries
(other than continuation of group health plan coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or pursuant to applicable
State law).
"Returns" shall have the meaning provided in Section 6.23.
"Revolving Bank" shall mean at any time each Bank with a
Revolving Credit Commitment or with outstanding Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "Revolving Credit Commitment," as the same may be reduced
from time to time pursuant to Section 3.02, Section 3.03 and/or Section 9.
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"Revolving Credit Facility" shall mean the Facility evidenced
by the Total Revolving Credit Commitment.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(d).
"Revolving Loan Maturity Date" shall mean the sixth
anniversary of the Initial Borrowing Date.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Revolving Percentage" shall mean at any time for each
Revolving Bank, with respect to Revolving Loans, Swingline Loans and Letters of
Credit, the percentage obtained by dividing such Revolving Bank's Revolving
Credit Commitment by the Total Revolving Credit Commitment, provided that if the
Total Revolving Credit Commitment has been terminated, the Revolving Percentage
of each Revolving Bank shall be determined by dividing such Revolving Bank's
Revolving Credit Commitment immediately prior to such termination by the Total
Revolving Credit Commitment immediately prior to such termination.
"Rollover Amount" shall have the meaning provided in Section
8.09(b).
"Safelite" shall mean the Borrower prior to the effectiveness
of the Merger.
"Scheduled A Repayment" shall have the meaning provided in
Section 4.02(A)(b)(i).
"Scheduled B Repayment" shall have the meaning provided in
Section 4.02(A)(b)(ii).
"Scheduled C Repayment" shall have the meaning provided in
Section 4.02(A)(b)(iii).
"Scheduled Repayment" shall mean any Scheduled A Repayment,
any Scheduled B Repayment or any Scheduled C Repayment.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Second Borrowing Date" shall mean the first Borrowing Date
after the Initial Borrowing Date, on which date the conditions set forth in part
(b) of Section 5 shall be satisfied.
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the
Security Documents.
"Security Agreement" shall have the meaning provided in
Section 5.10(b).
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean and include the Security
Agreement, the Pledge Agreement, each Mortgage, and each Additional Security
Document, if any.
"Senior Subordinated Note Documents" shall mean and include
each of the Senior Subordinated Note Indenture and the Senior Subordinated
Notes, as the same may be entered into, modified, supplemented or amended from
time to time pursuant to the terms hereof and thereof.
"Senior Subordinated Note Indenture" shall mean the Indenture
dated as of December 20, 1996 among the Borrower and the Subsidiary Guarantors
and Fleet National Bank, as trustee, as amended in connection with the Senior
Subordinated Notes Consent Solicitation, and any other Indentures that may be
entered into by and between the Borrower and the Subsidiary Guarantors and the
trustee for the holders of the Senior Subordinated Notes or the purchaser, of
the Senior Subordinated Notes, as applicable, in the form referred to in, or
having the terms permitted by, Section 8.04(c), as the same may be entered into,
modified, amended or supplemented from time to time in accordance with the terms
hereof and thereof.
"Senior Subordinated Notes" shall mean the 9-7/8% Senior
Subordinated Notes due 2006 of the Borrower and any other senior subordinated
notes of the Borrower that may be issued pursuant to a Senior Subordinated Note
Indenture and as the same may be modified, supplemented or amended from time to
time pursuant to the terms hereof and thereof.
"Senior Subordinated Notes Consent Solicitation" shall mean
the solicitation by the Borrower of consents from holders of the Subordinated
Notes to amend the Subordinated Indenture pursuant to the Consent Solicitation
Statement dated November 28, 1997.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by the Borrower or any of its Subsidiaries in the form
of Exhibit L.
"Shareholders' Agreements" shall have the meaning set forth in
Section 5.13.
"S&P" shall mean Standard & Poor's Corporation Ratings
Services, a division of McGraw-Hill.
"Stated Amount" of each Letter of Credit shall mean the
maximum amount available to be drawn thereunder (regardless of whether any
conditions for drawing could then be met).
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a
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corporation) in which such Person directly or indirectly through Subsidiaries,
has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the
Borrower (other than a Foreign Subsidiary except to the extent otherwise
provided in Section 7.13) that is or becomes a party to the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean each subsidiary guaranty, in
the form of Exhibit H (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof).
"Swingline Expiry Date" shall mean the date which is five
Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(B).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Syndication Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Syndication Date" shall mean that date upon which the Agents
determine (and notify the Borrower) that the primary syndication (and resultant
addition of Persons as Banks pursuant to Section 12.04(b)) has been completed.
"Tax Allocation Agreements" shall have the meaning provided in
Section 5.13.
"Taxes" shall have the meaning provided in Section 4.04.
"Term Loan" shall mean each A Term Loan, each B Term Loan and
each C Term Loan.
"Term Loan Commitment" shall mean, with respect to each Bank
at any time, the sum of the A Term Loan Commitment, the B Term Loan Commitment
and the C Term Loan Commitment of such Bank at such time.
"Term Loan Facilities" shall mean the A Term Loan Facility,
the B Term Loan Facility and the C Term Loan Facility.
"Test Period" shall mean for any determination made on a
specific date, the four consecutive fiscal quarters of the Borrower then last
ended (taken as one accounting period); provided that the Test Period for FQE3
1998 shall mean the period beginning on January 1, 1998 and ending on the last
day of FQE3 1998.
"Total A Term Loan Commitment" shall mean the sum of the A
Term Loan Commitments of each of the Banks.
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"Total B Term Loan Commitment" shall mean the sum of the B
Term Loan Commitments of each of the Banks.
"Total C Term Loan Commitment" shall mean the sum of the C
Term Loan Commitment of each of the Banks.
"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Credit Commitment.
"Total Revolving Credit Commitment" shall mean the sum of the
Revolving Credit Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Total A
Term Loan Commitment, the Total B Term Loan Commitment and the Total C Term Loan
Commitment.
"Total Unutilized Revolving Credit Commitment" shall mean, at
any time, (i) the Total Revolving Credit Commitment at such time less (ii) the
sum of the aggregate principal amount of all Revolving Loans and Swingline Loans
at such time plus the Letter of Credit Outstandings at such time.
"Transaction" shall mean, collectively, (i) the Merger, (ii)
the incurrence of Loans and the issuance of Letters of Credit on the Initial
Borrowing Date and the Second Borrowing Date, (iii) the Senior Subordinated
Notes Consent Solicitation and the amendment of the Senior Subordinated Note
Indenture in connection therewith, (iv) the refinancing on the Initial Borrowing
Date of substantially all Indebtedness of the Borrower and its Subsidiaries
(other than the Senior Subordinated Notes, the Insurance Debt and the Existing
Indebtedness), (v) the refinancing on the Second Borrowing Date of substantially
all Indebtedness of Vistar and its Subsidiaries, (vi) the payment of the
consideration for the Merger to the Vistar shareholders in accordance with the
Merger Agreement on the Second Borrowing Date, (vii) the making on the Initial
Borrowing Date of the Pre-Merger Stock Payments and (viii) the payment of fees
and expenses in connection with the foregoing.
"Transaction Bonuses" shall mean, collectively, (i) the cash
bonuses in an aggregate amount of up to $1,000,000 paid to members of management
of the Borrower in connection with the Transaction, (ii) the acceleration of the
vesting of stock options held by certain members of management of the Borrower
to purchase an aggregate 160,000 shares of the Company's pre-Merger Class A
Common Stock and (iii) in connection with the consummation of the Merger, the
forgiveness by the Borrower of up to $4,000,000 of payments owed to the Borrower
and Vistar by certain stockholders and members of management of the Borrower and
Vistar.
"Type" shall mean any type of Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar
Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the relevant jurisdiction.
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"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under the Plan as of the close of its most recent plan year exceeds the
fair market value of the assets allocable thereto, each determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section
2.03(a).
"U.S. Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States of America.
"Vistar" shall have the meaning specified in the recitals to
this Agreement.
"Vistar Subsidiaries" shall mean Subsidiaries of Vistar
immediately prior to the Second Borrowing Date.
"Waivable Mandatory Repayment" shall have the meaning provided
in Section 4.02(C).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any
Person, any Wholly-Owned Subsidiary of such Person which is a Domestic
Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any
Person, any Wholly-Owned Subsidiary of such Person which is a Foreign
Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock (other than director's qualifying
shares and/or other nominal amounts of shares required to be held other than by
such Person under applicable law) is at the time owned by such Person and/or one
or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"Working Capital" shall mean the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Written" (whether lower or upper case) or "in writing" shall
mean any form of written communication or a communication by means of telex,
facsimile device, telegraph or cable.
SECTION 11. The Agents.
11.01 Appointment. Each Bank hereby irrevocably designates and
appoints Chase as Administrative Agent of such Bank (such term to include for
purposes of this Section 11, Chase acting as Collateral Agent) to act as
specified herein and in the other Credit Documents, and each such Bank hereby
irrevocably authorizes Chase as the Administrative Agent to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are
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reasonably incidental thereto. The Administrative Agent agrees to act as such
upon the express conditions contained in this Section 11. Notwithstanding any
provision to the contrary elsewhere in this Agreement or in any other Credit
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Credit
Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this Section 11 are solely for the benefit of the
Administrative Agent and the Banks, and neither the Borrower nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as agent of the Banks and the
Administrative Agent does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower or any of
its Subsidiaries.
11.02 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Credit Document by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or the
other Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by the Borrower,
any of its Subsidiaries or any of their respective officers contained in this
Agreement or the other Credit Documents, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Document or for any failure of the Borrower or any of its
Subsidiaries or any of their respective officers to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or the other Documents, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries. The Administrative Agent shall not
be responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any other
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Banks or by or on behalf of the Borrower or any of its Subsidiaries
to the Administrative Agent or any Bank or be required to ascertain or inquire
as to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default.
11.04 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice,
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consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower or any of its
Subsidiaries), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.
11.05 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has actually received notice from a Bank
or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Banks. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Banks.
11.06 Nonreliance on Administrative Agent and other Banks.
Each Bank expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other condition, prospects and creditworthiness of the Borrower and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Borrower and its Subsidiaries. The Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Borrower or any of its
Subsidiaries which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
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11.07 Indemnification. The Banks agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective "percentages" as used in determining the Required Banks at such time
(with such "percentages" to be determined as if there are no Defaulting Banks),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against the Administrative Agent in its capacity as such
in any way relating to or arising out of this Agreement or any other Credit
Document, or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted to be taken by
the Administrative Agent under or in connection with any of the foregoing, but
only to the extent that any of the foregoing is not paid by the Borrower or any
of its Subsidiaries; provided that no Bank shall be liable to the Administrative
Agent for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of the
Administrative Agent. To the extent any Bank would be required to indemnify the
Administrative Agent pursuant to the immediately preceding sentence but for the
fact that it is a Defaulting Bank, such Defaulting Bank shall not be entitled to
receive any portion of any payment or other distribution hereunder until each
other Bank shall have been reimbursed for the excess, if any, of the aggregate
amount paid by such Bank under this Section 11.07 over the aggregate amount such
Bank would have been obligated to pay had such first Bank not been a Defaulting
Bank. If any indemnity furnished to the Administrative Agent for any purpose
shall, in the opinion of the Administrative Agent be insufficient or become
impaired, the Administrative Agent may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section 11.07 shall survive the
payment of all Obligations.
11.08 Administrative Agent in its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and its
Subsidiaries as though the Administrative Agent were not the Administrative
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Administrative Agent shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not the
Administrative Agent and the terms "Bank" and "Banks" shall include the
Administrative Agent in its individual capacity.
11.09 Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
11.10 Resignation of the Administrative Agent; Successor
Administrative Agent. The Administrative Agent may resign as the Administrative
Agent upon 20 days' notice to the Banks. Upon the resignation of the
Administrative Agent, the Required Banks shall appoint from among the Banks a
successor Administrative Agent which is a bank or a trust company for the Banks
subject to prior approval by the Borrower (such approval not to be unreasonably
withheld),
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whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as the Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the
resignation of the Administrative Agent hereunder, the provisions of this
Section 11 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
11.11 Documentation Agent, Syndication Agent and Co-Agents.
The Documentation Agent and the Syndication Agent shall have no duties or
liabilities under the Credit Documents in such capacity.
11.12 Letter of Credit Issuer. The provisions of this Section
11 shall apply to the Letter of Credit Issuer in its capacity as such, mutatis
mutandis.
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of each Agent (including, without
limitation, the reasonable fees and disbursements of Simpson Thacher & Bartlett
and local counsel) in connection with the negotiation, preparation, execution
and delivery of the Credit Documents and the documents and instruments referred
to therein and any amendment, waiver or consent relating thereto and requested
by the Borrower and in connection with the Agents' syndication efforts with
respect to this Agreement; (ii) pay all reasonable out-of-pocket costs and
expenses of each Agent and each of the Banks in connection with the enforcement
of the Credit Documents and the documents and instruments referred to therein
and, after an Event of Default shall have occurred and be continuing, the
protection of the rights of each of the Agents and each of the Banks thereunder
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agents and the Banks), provided that the Borrower shall be obligated to
pay the fees and disbursements of only one counsel to the Agents and the Banks
pursuant to this clause (ii) unless an Agent or Bank notifies the Borrower that
it reasonably believes that its legal position differs from the other Agents or
Banks or that it may be subject to different claims or defenses than the other
Agents and Banks, in which case the Borrower will also pay the reasonable fees
and disbursements of counsel (including in-house counsel) of such Agent or Bank;
(iii) pay and hold each of the Banks harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such taxes; and (iv) indemnify
each Agent and each Bank, their respective officers, directors, trustees,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or not
any Agent or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Document or the use of the proceeds
of any Loans hereunder or the Transaction or the consummation of any other
transactions contemplated in
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any Document (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified), or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property or any Environmental Claim, in
each case, including, without limitation, the reasonable fees and disbursements
of counsel and independent consultants incurred in connection with any such
investigation, litigation or other proceeding.
12.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Agent and each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Borrower
or any of its Subsidiaries or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Agent or such Bank (including, without limitation, by branches and agencies
of such Agent and such Bank wherever located) to or for the credit or the
account of the Borrower or any of its Subsidiaries against and on account of the
Obligations and liabilities of the Borrower or any of its Subsidiaries to such
Agent or such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of the
Borrower or any of its Subsidiaries purchased by such Bank pursuant to Section
12.06(b), and all other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document, irrespective of
whether or not such Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. Notwithstanding anything to the contrary contained in this Section
12.02, no Bank shall exercise any such right of set-off without the prior
consent of the Administrative Agent or the Required Banks so long as the
Obligations shall be secured by any Real Property located in the State of
California, it being understood and agreed, however, that this sentence is for
the sole benefit of the Banks and may be amended, modified or waived in any
respect by the Required Banks without the requirement of prior notice to or
consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
12.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Annex II; or, at such other address as shall be designated by
any party in a written notice to the other parties hereto. All such notices and
communications shall be mailed, telegraphed, telexed, telecopied or cabled or
sent by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, the Borrower
may not assign or transfer any of its rights, obligations or interest hereunder
or under any other Credit Document without the prior written consent of all of
the Banks and, provided further, that, although any Bank may transfer, assign or
grant participations in its rights hereunder, such Bank shall remain a "Bank"
for all purposes hereunder
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(and may not transfer or assign all or any portion of its Commitments hereunder
except as provided in Section 12.04(b)) and the transferee, assignee or
participant, as the case may be, shall not constitute a "Bank" hereunder and,
provided further, that no Bank shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of any Loan, Note or
Letter of Credit (unless such Letter of Credit is not extended beyond the
Revolving Loan Maturity Date) in which such participant is participating, or
reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory reduction in the Total Commitment shall not constitute a change
in the terms of such participation, and that an increase in any Commitment or
Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Revolving Credit Commitment (and related outstanding Obligations hereunder)
and/or its outstanding Term Loans to its parent company and/or any affiliate of
such Bank which is at least 50% owned by such Bank or its parent company or to
one or more other Banks or (y) assign all, or if less than all, a portion equal
to at least $5,000,000 (or at least $1,000,000 in the case of any assignment by
Chase within fourteen Business Days of the Initial Borrowing Date) in the
aggregate for the assigning Bank or assigning Banks, of such Revolving Credit
Commitments and/or outstanding principal amount of Term Loans hereunder to one
or more Eligible Transferees, each of which assignees shall become a party to
this Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that (i) at such time Annex I shall be deemed modified to reflect the
Commitments (and/or outstanding Term Loans, as the case may be) of such new Bank
and of the existing Banks, (ii) upon surrender of the old Notes, new Notes will
be issued, at the Borrower's expense, to such new Bank and to the assigning Bank
to the extent it is retaining any Commitments or Loans, such new Notes to be in
conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments (and/or
outstanding Term Loans, as the case may be), (iii) the consent of the
Administrative Agent shall be required in connection with any such assignment
pursuant to clause (y) of this Section 12.04(b) (which consent shall not be
unreasonably withheld) and (iv) the Administrative Agent shall receive at the
time of each such assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Register pursuant to Section 12.04(c). To the extent
of any assignment pursuant to this Section 12.04(b), the assigning Bank shall be
relieved of its
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obligations hereunder with respect to its assigned Commitments and/or Loans but
shall continue to be entitled to the benefit of all indemnities hereunder with
respect to matters arising out of the prior involvement of such assignor as a
Bank hereunder. At the time of each assignment pursuant to this Section 12.04(b)
to a Person which is not already a Bank hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Bank shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable a Section 4.04(b)(ii) Certificate) described in
Section 4.04(b). To the extent that an assignment of all or any portion of a
Bank's Commitments and related outstanding Obligations pursuant to Section 1.13
or this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.05 or 4.04 from those being charged
by the respective assigning Bank prior to such assignment, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) The Borrower hereby designates the Administrative Agent to
serve as the Borrower's agent, solely for purposes of this Section 12.04(c), to
maintain a register (the "Register") on which it will record the names and
addresses of the Banks and the Commitments from time to time of each of the
Banks, the Loans made by each of the Banks and each repayment in respect of the
principal amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation, shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Bank, the transfer of
the Commitments of such Bank and the rights to the principal of, and interest
on, any Loan made pursuant to such Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
12.04(c) except when caused by the gross negligence or willful misconduct of the
Administrative Agent.
(d) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Agent or any Bank shall
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operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which any
Agent or any Bank would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Agents or the Banks to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees
that promptly after its receipt of each payment from or on behalf of any Credit
Party in respect of any Obligations of such Credit Party, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
of such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided that if
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks); provided that except as otherwise specifically
provided herein, all computations determining compliance with Sections 4.02 and
8, including definitions used therein, shall utilize accounting principles and
policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the FYE 1997 financial statements delivered to the Banks
pursuant to Section 7.01(c) except that such computations shall not in any event
(i) give effect to purchase accounting adjustments required or permitted by APB
16 (including non-cash write-ups and non-cash charges relating to inventory and
fixed assets, in each case arising in connection with the Borrower) and APB 17
(including non-cash charges relating to intangibles and goodwill arising in
connection with the Borrower) or (ii) give effect to any charges in connection
with accounting for the Merger or the Recapitalization.
(b) All computations of interest and Fees hereunder shall be
made on the actual number of days elapsed over a year of 360 days, provided that
interest on Base Rate Loans based
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on the Prime Rate shall be computed on the actual number of days elapsed over a
year of 365 or 366 days, as the case may be.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a)
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any
other Credit Document brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Credit Party. Each Credit Party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Credit Party, at its address for notices pursuant to Section 12.03, such
service to become effective 30 days after such mailing. Each Credit Party hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any Agent, any Bank or the holder of any Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts executed by all the parties hereto shall be lodged
with the Borrower and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which the Borrower, the Administrative Agent,
the Documentation Agent and each of the Banks shall have signed a counterpart
hereof (whether the same or different counterparts) and shall have delivered the
same to the Administrative Agent at the Notice Office or, in the case of the
Banks, shall have given to the Administrative Agent telephonic (confirmed in
writing), written, telex or facsimile notice (actually received) at such office
that the same has been signed and mailed to it. The Administrative Agent will
give the Borrower and each Bank prompt written notice of the occurrence of the
Effective Date.
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12.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
12.12 Amendment or Waiver; etc. (a) Neither this Agreement nor
any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Banks, provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank (other than a Defaulting
Bank) (with Obligations being directly affected thereby in the case of the
following clause (i)), (i) extend the final scheduled maturity of any Loan or
Note or extend the stated maturity of any Letter of Credit beyond the Revolving
Loan Maturity Date, or reduce the rate or extend the time of payment of interest
or Fees thereon, or reduce the principal amount thereof, (ii) release all or
substantially all of the Collateral (except as expressly provided in the
Security Documents) under all the Security Documents, (iii) amend, modify or
waive any provision of this Section 12.12, (iv) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Term Loans and Revolving
Credit Commitments are included on the Effective Date) or (v) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver, discharge
or termination shall (u) increase the Commitments of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase in the Commitment of such Bank), (v) without the consent of Chase or
the Letter of Credit Issuer, as the case may be, amend, modify or waive any
provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit or Swingline Loans, (w) without the consent of any Agent,
amend, modify or waive any provision of Section 11 as same applies to such Agent
or any other provision as same relates to the rights or obligations of such
Agent, (x) without the consent of the Collateral Agent, amend, modify or waive
any provision relating to the rights or obligations of the Collateral Agent, (y)
without the consent of the Majority Banks of each Facility which is being
allocated a lesser prepayment or commitment reduction as a result of the actions
described below, alter the required application of any prepayments (or
commitment reduction), as between the various Facilities pursuant to Section
4.01(a) and 4.02(B)(b) (although the Required Banks may waive, in whole or in
part, any such prepayment, repayment or commitment reduction so long as the
application, as amongst the various Facilities, of any such prepayment,
repayment or commitment reduction which is still required to be made is not
altered), (z) without the consent of the Majority Banks of the respective
Facility, amend the definition of Majority Banks or amend, modify or waive the
order of the application of any payment or prepayment or (aa) without the
consent of the Majority Banks of each Facility, amend, modify or waive any
Scheduled Repayment of any Facility (without extending the final scheduled
maturity thereof); and provided further, that any amendment of this Agreement
entered into pursuant to Section 7.10 shall require the consent of only the
Borrower and the Administrative Agent. A waiver or amendment to cure any Default
or Event of Default shall not be effective for purposes of Section 5.33 unless
such waiver or amendment has been consented to by the Majority Banks under the
Revolving Credit Facility.
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(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clause (a)(i) through (v), inclusive, of the first proviso to
Section 12.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting banks
whose individual consent is required are treated as described in either clause
(A) or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bank consents to the proposed
change, waiver, discharge or termination or (B) terminate such non-consenting
Bank's Commitments and repay in full its outstanding Loans, in accordance with
Sections 3.02(b) and/or 4.01(b), provided that, unless the Commitments
terminated and Loans repaid pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Banks or the increase
of the Commitments and/or outstanding Loans of existing Banks (who in each case
must specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that the
Borrower shall not have the right to replace a Bank solely as a result of the
exercise of such Bank's rights (and the withholding of any required consent by
such Bank) pursuant to the second proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.07 or 12.01, shall
survive the execution and delivery of this Agreement and the making, repayment
and assignment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Bank; provided, that the Borrower shall not be responsible for costs
arising under Section 1.10, 1.11, 2.05 or 4.04 resulting from any such transfer
(other than a transfer pursuant to Section 1.12) to the extent such costs would
not otherwise be applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. (a) Each of the Banks agrees that it
will use its reasonable efforts not to disclose without the prior consent of the
Borrower (other than to its employees, auditors, counsel or other professional
advisors, to affiliates or to another Bank if the Bank or such Bank's holding or
parent company in its sole discretion determines that any such party should have
access to such information) any information with respect to the Borrower or any
of its Subsidiaries which is furnished pursuant to this Agreement; provided,
that any Bank may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors or
to the National Association of Insurance Commissioners (to the extent necessary
to receive the benefits of any law or regulation governing such Bank's
investments), (c) as may be required or appropriate in response to any summons
or subpoena or in connection with any litigation, (d) to comply with any law,
order, regulation or ruling applicable to such Bank, (e) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information abut
such Bank's investment portfolio in connection with ratings issued with respect
to such Bank, (f) to any prospective transferee or participant in connection
with any contemplated assignment,
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<PAGE> 118
grant of a participation or transfer of any of the Commitments and/or Loans or
any interest therein by such Bank and (g) any direct or indirect counterparty
with a Bank or its affiliate in a swap agreement with respect to such Bank's
Loans; provided, that, in the case of clauses (f) and (g), such prospective
transferee or contractual counterparty executes an agreement with such Bank, for
the benefit of such Bank and the Borrower, containing provisions substantially
identical to those contained in this Section.
(b) The Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to the Borrower or
any of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of the Borrower and its Subsidiaries,
provided that such Persons shall be subject to the provisions of this Section
12.15 to the same extent as such Bank).
12.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.17 Integration. This Agreement and the other Credit
Documents represent the entire agreement of the Credit Parties, the Agents and
the Banks with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by any Credit Party,
any Agent or any Bank relative to subject matter hereof or thereof not expressly
set forth or referred to herein or in the other Credit Documents.
12.18 Syndication. The parties acknowledge that the Initial
Borrowing Date and the Second Borrowing Date occurred on December 17, 1997 and
December 18, 1997, respectively. In order to consummate the syndication of the
Facilities, each Bank (other than the Initial Banks) which signs this Agreement
on or before December 23, 1997 will be deemed to become a party hereto as a Bank
hereunder on December 23, 1997 having the Commitment set forth on Annex I. On
December 23, 1997, the Borrower and the Banks shall make such payments as shall
be requested by the Administrative Agent with the result that, after giving
effect thereto, the Loans outstanding under each Facility are held by Banks
lending under such Facility in accordance with the respective commitment amounts
for such Facility set forth as Annex I.
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<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
SAFELITE GLASS CORP.
By: /s/ Douglas A. Herron
------------------------------------
Title: Vice President
Address for Notices:
Safelite Glass Corp.
1105 Schrock Road
Columbus, OH 43229
Facsimile No.: (614) 842-3323
Attn: Douglas A. Herron
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Bank
By: /s/ Bruce Borden
------------------------------------
Title: Vice President
BANKERS TRUST COMPANY, as Syndication
Agent and as a Bank
By: /s/ Anthony LoGrippo
------------------------------------
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS L.P., as
Documentation Agent and as a Bank
By: /s/ Ed Kearns
------------------------------------
Title: Vice President
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<PAGE> 120
THE BANK OF NOVA SCOTIA, as Co-Agent and
as a Bank
By: /s/ F.C.H. Ashby
--------------------------------------
Title: Senior Manager Loan Operation
BANK ONE, NA, as Co-Agent and as a Bank
By: /s/ Thomas D. Igoe
--------------------------------------
Title: Senior Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
as Co-Agent and as a Bank
By: /s/ Paul Maleck
--------------------------------------
Title: Vice President
CREDITANSTALT CORPORATE FINANCE, INC.,
as Co-Agent and as a Bank
By: /s/ Chirstina T. Shoen / David E. Yewer
---------------------------------------
Title: Senior Vice President / Vice
President
CREDIT LYONNAIS CHICAGO BRANCH, as
Co-Agent and as a Bank
By: /s/ Attila Koc
--------------------------------------
Title: First Vice President
FIRST UNION NATIONAL BANK, as Co-Agent
and as a Bank
By: /s/ George L. Woolsey
------------------------------------
Title: Vice President
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<PAGE> 121
FLEET NATIONAL BANK, as Co-Agent and as
a Bank
By: /s/ Eugenie Sullivan
------------------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch, as Co-Agent
and as a Bank
By: /s/ Shuicui Tajima
------------------------------------
Title:
ABN AMRO BANK, N.V.
By: /s/ Louis K. McLinden Jr.
------------------------------------
Title: Vice President
By: /s/ Curis Helmeci
------------------------------------
Title: Vice President
ALLSTATE INSURANCE COMPANY
By: /s/ Charlie Mires
------------------------------------
Title: Assistant Vice President
By: /s/ Ronald Mendel
------------------------------------
Title: Portfolio Manager
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<PAGE> 122
THE BANK OF NEW YORK
By: /s/ Douglas A. Ober
------------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By: /s/ Arnaud Collin du Bocage
------------------------------------
Title: Executive Vice President and
General Manager
BANQUE PARIBAS
By: /s/ Karen E. Coons
------------------------------------
Title: Vice President
By: /s/ Rowena P. Festin
------------------------------------
Title: Vice President
PRIME INCOME TRUST
By: /s/ Rafael Scolari
------------------------------------
Title: S.V.P. and Portfolio Manager
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
------------------------------------
Title: Joint General Manager
ING HIGH INCOME PRINCIPAL PRESERVATION
FUND HOLDINGS, LDC
By: /s/ Kathleen A. Lenacic
------------------------------------
Title: Vice President and Portfolio
Manager
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<PAGE> 123
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
------------------------------------
Title: Authorized Signatory
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James Dingler
------------------------------------
Title: Director
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Adam G. Clemens
------------------------------------
Title: Managing Director
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
By: NEW YORK LIFE INSURANCE COMPANY
By: /s/ Adam Clemens
------------------------------------
Title: Managing Director
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Howard Tiffen
------------------------------------
Title: Senior Vice President
PNC BANK, OHIO, NATIONAL ASSOCIATION
By: /s/ Toby B. Rau
------------------------------------
Title: Assistant Vice President
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<PAGE> 124
THE TRAVELERS INSURANCE COMPANY
By: /s/ Robert M. Mills
----------------------------------------
Title: Investment Officer
KZH-SOLEIL CORPORATION
By: /s/ Virginia Conway
----------------------------------------
Title: Authorized Agent
THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH
By: /s/ John H. Kenper
----------------------------------------
Title: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: /s/ Jeffrey W. Maillet
----------------------------------------
Title: Sr. Vice President and Director
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: /s/ Gilles Marchand, CFA
----------------------------------------
Title: Authorized Signatory
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<PAGE> 125
MERRILL LYNCH GLOBAL INVESTMENT SERIES:
INCOME STRATEGIES PORTFOLIO
By: MERRILL LYNCH ASSET MANAGEMENT,
L.P., as Investment Adviser
By: /s/ Gilles Marchand, CFA
------------------------------------
Title: Authorized Signatory
CYPRESS TREE BOSTON PARTNERS
By: /s/ Alexander Aikenes
------------------------------------
Title: Partner
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<PAGE> 1
EXHIBIT 10.7
SAFELITE GLASS CORP.
1998 STOCK OPTION PLAN
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of Safelite Glass Corp. (the "Company") by employees of the Company
and its subsidiaries, to induce qualified personnel to enter and remain in the
employ of the Company or its subsidiaries and otherwise to provide additional
incentive for optionees to promote the success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or
Treasury shares of the Class B Non-Voting Common Stock, $0.01 par value, of the
Company ("Common Stock") for which options may be granted under the Plan shall
not exceed three hundred fifty thousand (350,000) shares, subject to adjustment
as provided in Section 12 hereof.
(b) If an option granted hereunder shall expire or terminate for
any reason without having vested fully or having been exercised in full, the
unvested and/or unpurchased shares subject thereto shall again be available for
subsequent option grants under the Plan.
(c) Stock issuable upon exercise of an option granted under the
Plan may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
<PAGE> 2
3. Administration of the Plan.
At the discretion of the Company's Board of Directors, the Plan shall
be administered either (i) by the full Board of Directors of the Company or (ii)
by a committee (the "Committee") consisting of two or more members of the
Company's Board of Directors. In the event the full Board of Directors is the
administrator of the Plan, references herein to the Committee shall be deemed to
include the full Board of Directors. The Board of Directors may from time to
time appoint a member or members of the Committee in substitution for or in
addition to the member or members then in office and may fill vacancies on the
Committee however caused. The Committee shall choose one of its members as
Chairman and shall hold meetings at such times and places as it shall deem
advisable. A majority of the members of the Committee shall constitute a quorum
and any action may be taken by a majority of those present and voting at any
meeting.
Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee. The decision of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Committee shall have
the authority to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any option agreement or Award agreement granted hereunder in the
manner and to the extent it shall deem expedient to carry the Plan into effect
and shall be the sole and final judge of such expediency. No Committee member
shall be liable for any action or determination made in good faith.
- 2 -
<PAGE> 3
4. Type of Options.
Options granted pursuant to the Plan shall be authorized by action of
the Board of Directors and may be designated as either incentive stock options
meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified options which are not intended to meet
the requirements of such Section 422 of the Code, the designation to be in the
sole discretion of the Board of Directors. The Plan shall be administered by the
Board of Directors in such manner as to permit options to qualify as incentive
stock options under the Code.
5. Eligibility.
Options designated as incentive stock options shall be granted only to
key employees (including officers and directors who are also employees) of the
Company or any of its subsidiaries, including subsidiaries who become such after
adoption of the Plan. Options designated as non-qualified options may be granted
to officers, key employees and non-employee directors of the Company or of any
of its subsidiaries. "Subsidiary" or "subsidiaries" shall be as defined in
Section 424 of the Code and the Treasury Regulations promulgated thereunder (the
"Regulations").
The Committee shall, from time to time, at its sole discretion, select
from such eligible individuals those to whom options shall be granted and shall
determine the number of shares to be subject to each option. In determining the
eligibility of an individual to be granted an option, as well as in determining
the number of shares to be granted to any individual, the Board of Directors in
its sole discretion shall take into account the position and responsibilities of
the individual being considered, the nature and value to the Company or its
subsidiaries of
- 3 -
<PAGE> 4
his or her service and accomplishments, his or her present and potential
contribution to the success of the Company or its subsidiaries, and such other
factors as the Board of Directors may deem relevant.
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10% of the value of all classes of stock of the Company or a
parent or a subsidiary, unless the purchase price for the stock under such
option shall be at least 110% of its fair market value at the time such option
is granted and the option, by its terms, shall not be exercisable more than five
years from the date it is granted. In determining the stock ownership under this
paragraph, the provisions of Section 424(d) of the Code shall be controlling. In
determining the fair market value under this paragraph, the provisions of
Section 7 hereof shall apply.
The maximum number of shares of the Company's Common Stock with respect
to which an option or options may be granted to any employee in any calendar
year shall not exceed one hundred fifty thousand (150,000) shares, taking into
account shares subject to options granted and terminated, or repriced, during
such calendar year.
6. Option Agreement.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Board of Directors, provided that options
- 4 -
<PAGE> 5
designated as incentive stock options shall meet all of the conditions for
incentive stock options as defined in Section 422 of the Code. The date of grant
of an option shall be as determined by the Board of Directors. More than one
option may be granted to an individual.
7. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be as determined by the
Board of Directors, but in no event shall the option price of a non-qualified
stock option be less than 50% of the fair market value of such Common Stock at
the time the option is granted, as determined by the Board of Directors. The
option price or prices of shares of the Company's Common Stock for incentive
stock options shall be the fair market value of such Common Stock at the time
the option is granted as determined by the Board of Directors in accordance with
the Regulations promulgated under Section 422 of the Code. If such shares are
then listed on any national securities exchange, the fair market value shall be
the mean between the high and low sales prices, if any, on the largest such
exchange on the business day immediately preceding the date of the grant of the
option or, if none, shall be determined by taking a weighted average of the
means between the highest and lowest sales prices on the nearest date before and
the nearest date after the date of grant in accordance with Treasury Regulations
Section 25.2512-2. If the shares are not then listed on any such exchange, the
fair market value of such shares shall be the mean between the high and low
sales prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation National Market ("NASDAQ/NM") for the business day
immediately preceding the date of the grant of the option, or, if none, shall be
determined by taking a weighted average of the means between the
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<PAGE> 6
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NM, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the business day immediately preceding the date of
the grant of the option, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2. If the fair market value cannot be
determined under the preceding three sentences, it shall be determined in good
faith by the Board of Directors.
8. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of
the exercise price, as determined by the Board of Directors, by delivery of (i)
cash or a check payable to the order of the Company in an amount equal to the
exercise price of such options, (ii) shares of Common Stock of the Company owned
by the optionee having a fair market value equal in amount to the exercise price
of the options being exercised, (iii) any combination of (i) and (ii), provided,
however, that payment of the exercise price by delivery of shares of Common
Stock of the Company owned by such optionee may be made only if such payment
does not result in a charge to earnings for financial accounting purposes as
determined by the Board of Directors or (iv) payment may also be made by
delivery of a properly executed exercise notice to the Company, together with a
copy of irrevocable instruments to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the exercise price. The
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<PAGE> 7
fair market value of any shares of the Company's Common Stock which may be
delivered upon exercise of an option shall be determined by the Board of
Directors in accordance with Section 7 hereof.
(b) To the extent that the right to purchase shares under an
option has accrued and is in effect, options may be exercised in full at one
time or in part from time to time, by giving written notice, signed by the
person or persons exercising the option, to the Company, stating the number of
shares with respect to which the option is being exercised, accompanied by
payment in full for such shares as provided in subparagraph (a) above. Upon such
exercise, delivery of a certificate for paid-up non-assessable shares shall be
made at the principal office of the Company to the person or persons exercising
the option at such time, during ordinary business hours, after five (5) but not
more than ten (10) business days from the date of receipt of the notice by the
Company, as shall be designated in such notice, or at such time, place and
manner as may be agreed upon by the Company and the person or persons exercising
the option. Upon exercise of the option and payment as provided above, the
optionee shall become a shareholder of the Company as to the Shares acquired
upon such exercise.
9. Exercise of Options.
Except as otherwise determined from time to time by the Board of
Directors, options granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, not be exercisable during the first twelve (12) months after
the date of grant. Thereafter, options shall become exercisable as to
twenty-five percent (25%) of the shares covered thereby upon the expiration of
twelve (12) months after the date of grant and as to an additional 2.08333% upon
the expiration of each month during the next three (3) succeeding twelve (12)
month periods.
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<PAGE> 8
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less than
one hundred (100) full shares of Common Stock.
Notwithstanding the foregoing, the Board of Directors may in its
discretion (i) specifically provide for another time or times of exercise or
(ii) accelerate the exercisability of any option subject to such terms and
conditions as the Board of Directors deems necessary and appropriate.
10. Term of Options; Exercisability.
(a) Term.
(1) Each option shall expire not more than ten (10) years
from the date of the granting thereof, but shall be subject to earlier
termination as herein provided.
(2) Except as otherwise provided in this Section 10, an
option granted to any employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall terminate immediately on the date such
optionee ceases to be an employee of the Company or one of its subsidiaries, or
on the date on which the option expires by its terms, whichever occurs first.
(3) If such termination of employment is because the
optionee has become permanently disabled (within the meaning of Section 22(e)(3)
of the Code), such option shall terminate on the last day of the third month
from the date such optionee ceases to be an employee, or on the date on which
the option expires by its terms, whichever occurs first.
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<PAGE> 9
(4) In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day of the sixth month from
the date of death, or on the date on which the option expires by its terms,
whichever occurs first.
(5) If an optionee ceases to be an employee of the
Company or one of its subsidiaries due to a termination of such employment by
the Company without "Cause", as such term is defined in the particular
employment agreement with such optionee, any option granted to such optionee
shall terminate on the last day of the second month from the date of such
termination, or on the date on which the option expires by its terms, whichever
occurs first.
(6) Notwithstanding subparagraphs (2), (3), (4) and (5)
above, the Board of Directors shall have the authority to extend the expiration
date of any outstanding option in circumstances in which it deems such action to
be appropriate, provided that no such extension shall extend the term of an
option beyond the date on which the option would have expired if no termination
of the optionee's employment had occurred.
(b) Exercisability; Vesting. An option granted to an employee
optionee who ceases to be an employee of the Company or one of its subsidiaries
shall be exercisable only to the extent that the right to purchase shares under
such option has accrued, is vested and is in effect on the date such optionee
ceases to be an employee of the Company or one of its subsidiaries.
11. Options Not Transferable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only
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<PAGE> 10
by him. Any option granted under the Plan shall be null and void and without
effect upon the bankruptcy of the optionee to whom the option is granted, or
upon any attempted assignment or transfer, except as herein provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition, attachment, divorce, trustee
process or similar process, whether legal or equitable, upon such option.
12. Recapitalizations, Reorganizations and the Like.
(a) In the event that the outstanding shares of the Common Stock
of the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted under the Plan and as to which outstanding options
or portions thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of such
options and with a corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Board of
Directors in its sole discretion, in the case of any (i) sale or conveyance to
another entity of all or substantially all of the property and assets of the
Company, including, without limitation, by way of merger or consolidation, or
(ii) Change in Control (as hereinafter defined) of the Company, the
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<PAGE> 11
purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the shareholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board of Directors may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those shares
of stock or other securities the optionee would have received had the option
been exercised (to the extent then exercisable) and no disposition of the shares
acquired upon such exercise been made prior to such sale, conveyance or Change
in Control, less the option price therefor. Upon receipt of such consideration
by the optionee, his or her option shall immediately terminate and be of no
further force and effect. The value of the stock or other securities the
optionee would have received if the option had been exercised shall be
determined in good faith by the Board of Directors of the Company, and in the
case of shares of the Common Stock of the Company, in accordance with the
provisions of Section 7 hereof. The Board of Directors shall also have the power
and right to accelerate the exercisability of any options, notwithstanding any
limitations in this Plan or in the Agreement upon such a sale, conveyance or
Change in Control. Upon such acceleration, any options or portion thereof
originally designated as incentive stock options that no longer qualify as
incentive stock options under Section 422 of the Code as a result of such
acceleration shall be redesignated as non-qualified stock options. A "Change in
Control" shall be deemed to have occurred if any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, who
prior to such time owned less than ten percent (10%) of the then outstanding
Common Stock of the Company, shall acquire, whether by purchase, exchange,
tender offer, merger, consolidation or otherwise, such
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<PAGE> 12
additional shares of the Company's Common Stock in one or more transactions, or
series of transactions, such that following such transaction or transactions,
such person or group and affiliates beneficially own fifty percent (50%) or more
of the Company's Common Stock outstanding.
(c) Upon dissolution or liquidation of the Company, all options
granted under this Plan shall terminate, but each optionee (if at such time in
the employ of or otherwise associated with the Company or any of its
subsidiaries) shall have the right, immediately prior to such dissolution or
liquidation, to exercise his or her option to the extent then exercisable.
(d) No fraction of a share shall be purchasable or deliverable
upon the exercise of any option, but in the event any adjustment hereunder of
the number of shares covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the nearest smaller
whole number of shares.
13. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board of
Directors at the time.
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<PAGE> 13
14. Withholding.
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise,
employment and any other tax withholding requirements. On or after the date of
the first registration of an equity security of the Company under Section 12 of
the Securities Exchange Act of 1934 (the "1934 Act"), if an optionee is an
officer of the Company within the meaning of Section 16 of the 1934 Act, such
optionee may elect to pay such withholding tax obligations in accordance with
rules prescribed by the Board of Directors by having the Company withhold shares
of Common Stock having a value equal to the amount required to be withheld. The
value of the shares to be withheld shall equal the fair market value of the
shares on the day the option is exercised as determined by the Board of
Directors. The following provisions shall apply to such elections by persons who
are directors or officers of the Company within the meaning of Section 16(b) of
the 1934 Act: (i) if an optionee has received multiple options, a separate
election must be made for each option; (ii) the election may be a "standing
election," i.e., upon making an election, a fixed date need not be set for the
exercise of the option to which the election relates; (iii) the election will be
subject to the approval or disapproval of the Board of Directors, which approval
or disapproval may be given at any time after the election to which it relates;
(iv) the election may not be made within six months following the date of grant
of the option to which it relates; (v) the election must be made six months
prior to the date the option is exercised, or both the election and exercise
must be made in the ten-day "window period" beginning on the third day following
the release of the Company's quarterly or annual summary statement of sales and
earnings; and (vi) an
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<PAGE> 14
election may be revoked, or may be reinstituted after a revocation, only upon
six months' prior notice.
15. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 8, the Company may
delay the issuance of shares covered by the exercise of an option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
(i) The shares with respect to which such option
has been exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state securities acts now
in force or as hereafter amended; or
(ii) Counsel for the Company shall have given an
opinion, which opinion shall not be unreasonably conditioned or withheld, that
such shares are exempt from registration and qualification under applicable
Federal and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about compliance
with the above conditions within a reasonable time, except that the Company
shall be under no obligation to qualify shares or to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of shares in respect of which any
option may be exercised, except as otherwise agreed to by the Company in
writing.
16. Purchase for Investment; Rights of Holder on Subsequent
Registration.
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter
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<PAGE> 15
amended, the Company shall be under no obligation to issue any shares covered by
any option unless the person who exercises such option, in whole or in part,
shall give a written representation and undertaking to the Company which is
satisfactory in form and scope to counsel for the Company and upon which, in the
opinion of such counsel, the Company may reasonably rely, that he or she is
acquiring the shares issued pursuant to such exercise of the option for his or
her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares, and that he or she will
make no transfer of the same except in compliance with any rules and regulations
in force at the time of such transfer under the Securities Act of 1933, or any
other applicable law, and that if shares are issued without such registration, a
legend to this effect may be endorsed upon the securities so issued. In the
event that the Company shall, nevertheless, deem it necessary or desirable to
register under the Securities Act of 1933 or other applicable statutes any
shares with respect to which an option shall have been exercised, or to qualify
any such shares for exemption from the Securities Act of 1933 or other
applicable statutes, then the Company may take such action and may require from
each optionee such information in writing for use in any registration statement,
supplementary registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for such purpose and may require
reasonable indemnity to the Company and its officers and directors and
controlling persons from such holder against all losses, claims, damages and
liabilities arising from such use of the information so furnished and caused by
any untrue statement of any material fact therein or caused by the omission to
state a material fact required to be stated therein or necessary to
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<PAGE> 16
make the statements therein not misleading in the light of the circumstances
under which they were made.
17. Loans.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
18. Modification of Outstanding Options.
The Board of Directors may authorize the amendment of any outstanding
option with the consent of the optionee when and subject to such conditions as
are deemed to be in the best interests of the Company and in accordance with the
purposes of this Plan.
19. Approval of Stockholders.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or by
written consent of the stockholders as provided for under applicable state law,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Board of Directors may grant options under the
Plan prior to such approval, but any such option shall become effective as of
the date of grant only upon such approval and, accordingly, no such option may
be exercisable prior to such approval.
20. Termination and Amendment.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the
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<PAGE> 17
Company. The Board of Directors may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
except as provided in this Section 20, the Board of Directors may not, without
the approval of the stockholders of the Company obtained in the manner stated in
Section 19, increase the maximum number of shares for which options may be
granted or change the designation of the class of persons eligible to receive
options under the Plan, or make any other change in the Plan which requires
stockholder approval under applicable law or regulations, including any approval
requirement which is a prerequisite for exemptive relief under Section 16 of the
1934 Act. The Board of Directors may terminate, amend or modify any outstanding
option without the consent of the option holder, provided, however, that, except
as provided in Section 12, without the consent of the optionee, the Board of
Directors shall not change the number of shares subject to an option, nor the
exercise price thereof, nor extend the term of such option.
21. Compliance with Rule 16b-3.
It is intended that the provisions of the Plan and any option granted
thereunder to a person subject to the reporting requirements of Section 16(a) of
the 1934 Act shall comply in all respects with the terms and conditions of Rule
16b-3 under the 1934 Act, or any successor provisions. Any agreement granting
options shall contain such provisions as are necessary or appropriate to assure
such compliance. To the extent that any provision hereof is found not to be in
compliance with such Rule, such provision shall be deemed to be modified so as
to be in compliance with such Rule, or if such modification is not possible,
shall be deemed to be null and void, as it relates to a recipient subject to
Section 16(a) of the 1934 Act.
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<PAGE> 18
22. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
23. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
24. Notices.
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
APPROVED BY BOARD OF DIRECTORS: December 12, 1997
APPROVED BY SHAREHOLDERS: December 12, 1997
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<PAGE> 1
EXHIBIT 10.8
AMENDED AND RESTATED THL MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the
18th day of December, 1997 by and between Safelite Glass Corp., a Delaware
corporation (the "Company"), and Thomas H. Lee Company, a sole proprietorship
("THL"). All capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Merger Agreement (as defined below).
WHEREAS, this Agreement amends and restates that certain THL Management
Agreement by and between the Company and THL dated as of December 20, 1996 (the
"Prior Agreement"), subject to Section 4 herein;
WHEREAS, on the date hereof the Company has consummated certain
transactions (such transactions being referred to herein as the "Merger"),
pursuant to that certain Merger Agreement, dated as of October 10, 1997, by and
between Vistar, Inc., an Illinois corporation, and the Company (the "Merger
Agreement");
WHEREAS, THL is providing advisory and other services to the Company in
connection with the senior secured financing (the "Senior Financing") being
provided in connection with the Merger pursuant to a Credit Agreement dated on
the date hereof (the "Credit Agreement") among the Company, The Chase Manhattan
Bank and Bankers Trust Company, as agents, and the lending institutions from
time to time party thereto;
WHEREAS, THL has staff specifically skilled in corporate finance,
strategic corporate planning, and other management skills and services;
WHEREAS, the Company will require THL's special skills and management
advisory services in connection with its general business operations; and
WHEREAS, THL is willing to provide such skills and services to the
Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. SERVICES. THL hereby agrees that, during the term of this Agreement
(the "Term"), it will:
a. provide the Company with advice in connection with the
negotiation and consummation of agreements, contracts,
documents and instruments necessary to provide the Company
with financing from banks or other financial institutions or
other entities on terms and conditions satisfactory to the
Company; and
<PAGE> 2
b. provide the Company with financial, managerial and operational
advice in connection with its day-to-day operations,
including, without limitation:
i. advice with respect to the investment of funds; and
ii. advice with respect to the development and
implementation of strategies for improving the
operating, marketing and financial performance of the
Company.
2. PAYMENT OF FEES. The Company hereby agrees to: during the Term, pay to
THL (or its designee) a management fee in an amount equal to $1,000,000
per annum in exchange for the services provided to the Company by THL,
such fee being payable by the Company quarterly in advance, the first
such payment to be made at or after the closing of the Merger
(provided, however, that if during any fiscal quarter of the Company a
Default or Event of Default (as such terms are defined in the Credit
Agreement) exists, only one-half of such fee for such fiscal quarter
may be paid and the remaining one-half of such fee shall be paid at
such time as all Defaults and Events of Default (as defined in the
Credit Agreement) have been cured or waived).
Each payment made pursuant to this Section 2 shall be paid by wire
transfer of immediately available federal funds to the account(s)
specified by THL (or its designee).
3. TERM. This Agreement shall continue in full force and effect, unless
and until terminated by mutual consent of the parties, for so long as
THL (or any successor or permitted assign, as the case may be)
continues to carry on the business of providing services of the type
described in Section 1 above; provided, however, that (a) either party
may terminate this Agreement following a material breach of the terms
of this Agreement by the other party hereto and a failure to cure such
breach within 30 days following written notice thereof and (b) this
Agreement shall automatically terminate upon the sale in an initial
public offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), of shares of the Company's common stock; and
provided further that each of (i) the obligations of the Company under
Section 5 below, (ii) any and all accrued and unpaid obligations of the
Company owed under Section 2 above and (iii) the provisions of Section
8 shall survive any termination of this Agreement to the maximum extent
permitted under applicable law.
4. EFFECT OF AGREEMENT. This Agreement replaces the Prior Agreement, and
the Prior Agreement is no longer of any force or effect, by agreement
of the parties hereto and thereto, as evidenced by the signature of
such parties below; provided, however, that the parties agree and
acknowledge that pursuant to the Prior Agreement the Company shall pay
to THL (or to its designees) the amounts as set forth on Exhibit A
attached hereto for the purposes set forth on Exhibit A and in the
manner as set forth in Section 2 hereof and shall remain obligated, as
set forth in Section 5.b. hereof, to the
<PAGE> 3
Indemnities (as defined in Section 5.b. hereof) with respect to the
Prior Agreement and the transactions consummated (such transactions
being referred to herein as the "Recapitalization") pursuant to the
Recapitalization Agreement and Plan of Merger and Stock Purchase
Agreement, dated as of the 8th day of November, 1996, by and among Lear
Siegler Holdings Corp., a Delaware corporation, the LS Selling
Stockholders (as defined therein), the Company, LSNWY Corp., a Delaware
corporation, Lite Acquisition Corp., a Delaware corporation, and L.S.
Acquisition Corp., a Delaware corporation.
5. EXPENSES; INDEMNIFICATION.
a. Expenses. The Company agrees to pay on demand all expenses
incurred by THL and its affiliates (or any of them) in
connection with this Agreement, the Merger and such other
transactions and all operations hereunder or otherwise
incurred in connection therewith, including but not limited to
(i) the fees and disbursements of: (A) Hutchins, Wheeler &
Dittmar A Professional Corporation, counsel to THL, (B) KPMG
Peat Marwick, accountant to THL, and (C) any other consultants
or advisors retained by THL or either of the parties
identified in clauses (A) and (B) arising in connection
therewith (including but not limited to the preparation,
negotiation and execution of this Agreement and any other
agreement executed in connection herewith or in connection
with the Merger, the Senior Financing or the consummation of
the other transactions contemplated hereby (and any and all
amendments, modifications, restructurings and waivers, and
exercises and preservations of rights and remedies hereunder
or thereunder) and the operations of the Company and any of
its subsidiaries), and (ii) any out-of-pocket expenses
incurred by THL in connection with the provision of services
hereunder or the attendance at any meeting of the board of
directors (or any committee thereof) of the Company or any of
its affiliates.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by THL, the Company hereby agrees
to indemnify, exonerate and hold each of THL, and its
affiliates, and each of their respective partners,
shareholders, affiliates, directors, officers, fiduciaries,
employees and agents and each of the partners, shareholders,
affiliates, directors, officers, fiduciaries, employees and
agents of each of the foregoing (collectively, the
"Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and
damages, and expenses in connection therewith, including
without limitation reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnitees or any of them as a result of, or
arising out of, or relating to the Recapitalization, the
Merger, the execution, delivery, performance, enforcement or
existence of the Prior Agreement, this Agreement or the
transactions contemplated hereby or thereby, except for any
such Indemnified Liabilities arising on account of such
Indemnitee's gross negligence or willful misconduct, and if
and to the extent
<PAGE> 4
that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable
law. None of the Indemnitees shall be liable to the Company or
any of its affiliates for any act or omission suffered or
taken by such Indemnitee that does not constitute gross
negligence or willful gross negligence or misconduct.
6. ASSIGNMENT, ETC. Except as provided below, neither party shall have the
right to assign this Agreement. THL acknowledges that its services
under this Agreement are unique. Accordingly, any purported assignment
by THL shall be void. Notwithstanding the foregoing, THL may assign all
or part of its rights and obligations hereunder to any affiliate of THL
which provides services similar to those called for by this Agreement,
in which event THL shall be released of all of its rights and
obligations hereunder.
7. AMENDMENTS AND WAIVERS. No amendment or waiver of any term, provision
or condition of this Agreement shall be effective, unless in writing
and executed by each of THL and the Company. No waiver on any one
occasion shall extend to or effect or be construed as a waiver of any
right or remedy on any future occasion. No course of dealing of any
person nor any delay or omission in exercising any right or remedy
shall constitute an amendment of this Agreement or a waiver of any
right or remedy of any party hereto.
8. MISCELLANEOUS.
a. Choice of Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of
The Commonwealth of Massachusetts without giving effect to any
choice or conflict of law provision or rule that would cause
the application of the domestic substantive laws of any other
jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon
this Agreement or the subject matter hereof shall be brought
and maintained exclusively in the federal and state courts of
The Commonwealth of Massachusetts. Each of the parties hereto
by execution hereof (i) hereby irrevocably submits to the
jurisdiction of the federal and state courts in The
Commonwealth of Massachusetts for the purpose of any action,
suit or proceeding arising out of or based upon this Agreement
or the subject matter hereof and (ii) hereby waives to the
extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named
courts, that it is immune from extraterritorial injunctive
relief or other injunctive relief, that its property is exempt
or immune from attachment or execution that any such action,
suit or proceeding may not be brought or maintained in one of
the above-named courts,
<PAGE> 5
that any such action, suit or proceeding brought or maintained
in one of the above-named courts should be dismissed on
grounds of forum non conveniens, should be transferred to any
court other than one of the above-named courts, should be
stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named
courts, or that this Agreement or the subject matter hereof
may not be enforced in or by any of the above-named courts.
Each of the parties hereto hereby consents to service of
process in any such suit, action or proceeding in any manner
permitted by the laws of The Commonwealth of Massachusetts,
agrees that service of process by registered or certified
mail, return receipt requested, at the address specified in or
pursuant to Section 10 is reasonably calculated to give actual
notice and waives and agrees not to assert by way of motion,
as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in
accordance with Section 10 does not constitute good and
sufficient service of process. The provisions of this Section
8.b. shall not restrict the ability of any party to enforce in
any court any judgment obtained in a federal or state court of
The Commonwealth of Massachusetts.
c. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES
HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM,
DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT HEREOF, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties
hereto acknowledges that it has been informed by each other
party that the provisions of this Section 8.c. constitute a
material inducement upon which such party is relying and will
rely in entering into this Agreement and the transactions
contemplated hereby. Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any
court as written evidence of the consent of each of the
parties hereto to the waiver of its right to trial by jury.
9. MERGER/ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof
and supersedes any prior communication or agreement with respect
thereto.
10. NOTICES. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party
and such other party's copied persons as specified below by personal
delivery to the address set forth for it below or to such other address
as such party shall have specified by notice to each other party or by
<PAGE> 6
mailing a copy thereof by certified or registered mail, or by Federal
Express or any other reputable overnight courier service, postage
prepaid, with return receipt requested, addressed to such party and
copied persons at such addresses. In the case of service by personal
delivery, it shall be deemed complete on the first business day after
the date of actual delivery to such address. In case of service by mail
or by overnight courier, it shall be deemed complete, whether or not
received, on the third day after the date of mailing as shown by the
registered or certified mail receipt or courier service receipt.
Notwithstanding the foregoing, notice to any party or copied person of
change of address shall be deemed complete only upon actual receipt by
an officer or agent of such party or copied person.
If to the Company, to it at:
Safelite Glass Corp.
1105 Schrock Road, 7th Floor
Columbus, OH 43229
Attention: Secretary
If to THL, to it at:
Thomas H. Lee Company
75 State Street
Boston, MA 02109
Attention: Mr. Scott M. Sperling
Mr. Anthony J. DiNovi
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Charles W. Robins, Esq.
11. SEVERABILILY. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of such proceedings to the extent necessary
to permit the remaining provisions to be enforced. To the full extent,
however, that the provisions of any applicable law may be waived, they
are hereby waived to the end that this Agreement be, deemed to be valid
and binding agreement enforceable in accordance with its terms, and in
the event that any provision hereof shall be found to be invalid or
unenforceable, such provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent consistent with and
possible under applicable law.
<PAGE> 7
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
agreement.
<PAGE> 8
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
THE COMPANY: SAFELITE GLASS CORP.
By: /s/ John F. Barlow
------------------------------
Name: John F. Barlow
Title: President
THL: THOMAS H. LEE COMPANY
By: /s/ Scott M. Sperling
------------------------------
Name: Scott M. Sperling
Title: Vice President
<PAGE> 1
EXHIBIT 10.9
AMENDED AND RESTATED BELRON MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the
18th day of December, 1997 by and between Safelite Glass Corp., a Delaware
corporation (the "Company"), and Belron International BV, a company organized
under the laws of the Netherlands ("Belron") All capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement (as defined below).
WHEREAS, on the date hereof the Company has consummated certain
transactions (such transactions being referred to herein as the "Merger"),
pursuant to that certain Merger Agreement, dated as of October 10, 1997, by and
between Vistar, Inc. an Illinois corporation ("Vistar") and the Company (the
"Merger Agreement") and, as a result of the Merger, Vistar will be merged into
Safelite and Safelite will be the surviving entity and successor to Vistar;
WHEREAS, this Agreement amends and restates that certain Management
Agreement by and between Belron and Vistar, Inc., an Illinois corporation
("Vistar") dated March 1, 1996 (the "Prior Agreement") subject to Section 4
herein;
WHEREAS, Belron has itself or has access to considerable experience and
expertise in the fields of international finance, purchasing, management, and
manufacturing and trading in automotive glass and products ancillary thereto,
and other management skills and services;
WHEREAS, the Company will require Belron's special skills and
management advisory services in connection -with its general business
operations; and
WHEREAS, Belron is willing to provide such skills and services to the
Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. SERVICES. Belron hereby agrees that, during the term of this
Agreement (the "Term"), it will:
a. provide the Company with advice and assistance in
obtaining the full benefits of Belron's international associations and
expertise including, without limitation (to the extent not
contractually prohibited), making available to the Company:
(i) its relationships in the international financial
community;
(ii) its worldwide purchasing influence and relationships; and
<PAGE> 2
(iii) its marketing, legal, taxation, accounting and credit
control expertise;
b. provide the Company with advice and assistance with
respect to marketing and communications; and
c. provide the Company with such other services as may
reasonably be agreed between the parties from time to time.
Nothing in this Agreement requires or shall be construed to require Belron to
provide the Company with or procure the use of any of its or its affiliates'
intellectual property, including but not limited to, its inventions, processes,
patents, trademarks, trade names, service marks, or copyrights, and any
applications and registrations pertaining thereto, other than on an arms' length
basis.
2. PAYMENT OF FEES. The Company hereby agrees during the Term, pay to
Belron (or its designee) a management fee in an amount equal to $1,000,000 per
annum. in exchange for the services provided to the Company by Belron, such fee
being payable by the Company quarterly in advance, the first such payment to be
made at or after the closing of the Merger (provided, however, that if during
any fiscal quarter of the Company a Default or Event of Default (as such terms
are defined in the Credit Agreement) exists, only one-half of such fee for such
fiscal quarter may be paid and the remaining one-half of such fee shall be paid
at such time as all Defaults and Events of Default (as defined in the Credit
Agreement) have been cured or waived). Each payment made pursuant to this
Section 2 shall be paid by wire transfer of immediately available federal funds
to the account(s) specified by Belron (or its designee).
3. TERM. This Agreement shall continue in full force and effect,
unless and until terminated by mutual consent of the parties, for so long as
Belron (or any successor or permitted assign, as the case may be) continues to
carry on the business of providing services of the type described in Section 1
above; provided, however, that (a) either party may terminate this Agreement
following a material breach of the terms of this Agreement by the other party
hereto and a failure to cure such breach within 30 days following written notice
thereof and (b) this Agreement shall automatically terminate upon the sale in an
initial public offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), of shares of the Company's common stock\; and provided
further that each of (i) the obligations of the Company under Section 5 below,
(ii) any and all accrued and unpaid obligations of the Company owed under
Section 2 above and (iii) the provisions of Section 8 shall survive any
termination of this Agreement to the maximum extent permitted under applicable
law.
4. EFFECT OF AGREEMENT. This Agreement replaces the Prior Agreement,
and the Prior Agreement is no longer of any force or effect, by agreement of the
parties hereto and thereto, as evidenced by the signature of such parties below;
provided, however, that the parties agree and acknowledge that pursuant to the
Prior Agreement the Company shall pay
- 2 -
<PAGE> 3
to Belron (or to its designees) the amounts as set forth on Exhibit A attached
hereto for the purposes set forth on Exhibit A and in the manner as set forth in
Section 2 hereof.
5. EXPENSES; INDEMNIFICATION.
a. Expenses. The Company agrees to pay on demand all expenses incurred
by Belron and its affiliates (or any of them) in connection with this
Agreement, the Merger and such other transactions and all operations
hereunder or otherwise incurred in connection therewith, including but
not limited to (i) the fees and disbursements of: (A) Katten Muchin &
Zavis, counsel to Belron, (B) Arthur Andersen, accountant to Belron,
and (C) any other consultants or advisors retained by Belron or either
of the parties identified in clauses (A) and (B) arising in connection
therewith (including but not limited to the preparation, negotiation
and execution of this Agreement and any other agreement executed in
connection herewith or in connection with the Merger or the
consummation of the other transactions contemplated hereby (and any and
all amendments, modifications, restructurings and waivers, and
exercises and preservations of rights and remedies hereunder or
thereunder) and the operations of the Company and any of its
subsidiaries), and (ii) any out-of-pocket expenses incurred by Belron
in connection with the provision of services hereunder or the
attendance at any meeting of the board of directors (or any committee
thereof) of the Company or any of its affiliates.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by Belron, the Company hereby agrees to
indemnify, exonerate and hold each of Belron, and its affiliates, and
each of their respective partners, shareholders, affiliates, directors,
officers, fiduciaries, employees and agents and each of the partners,
shareholders, affiliates, directors, officers, fiduciaries, employees
and agents of each of the foregoing (collectively, the "Indemnitees")
free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in
connection therewith, including without limitation reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnitees or any of them as a result
of, or arising out of, or relating to the Merger, the execution,
delivery, performance, enforcement or existence of the Prior Agreement,
this Agreement or the transactions contemplated hereby or thereby,
except for any such Indemnified Liabilities arising on account of such
Indemnitee's gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. None of the Indemnitees
shall be liable to the Company or any of its affiliates for any act or
omission suffered or taken by such Indemnitee that does not constitute
gross negligence or willful gross negligence or misconduct.
- 3 -
<PAGE> 4
6. ASSIGNMENT, ETC. Except as provided below, neither party shall have
the right to assign this Agreement. Belron acknowledges that its services under
this Agreement are unique. Accordingly, any purported assignment by Belron shall
be void. Notwithstanding the foregoing, Belron may assign all or part of its
rights and obligations hereunder to any affiliate of Belron which provides
services similar to those called for by this Agreement, in which event Belron
shall be released of all of its rights and obligations hereunder.
7. AMENDMENTS AND WAIVERS. No amendment or waiver of any term,
provision or condition of this Agreement shall be effective, unless in writing
and executed by each of Belron and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or remedy on
any future occasion. No course of dealing of any person nor any delay or
omission in exercising any right or remedy shall constitute an amendment of this
Agreement or a waiver of any right or remedy of any party hereto.
8. MISCELLANEOUS.
a. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of New York
without giving effect to any choice or conflict of law provision or
rule that would cause the application of the domestic substantive laws
of any other jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this
Agreement or the subject matter hereof shall be brought and maintained
exclusively in the federal and state courts of the State of New York.
Each of the parties hereto by execution hereof (i) hereby irrevocably
submits to the jurisdiction of the federal and state courts in the
State of New York for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of the
above-named courts, that it is immune from extraterritorial injunctive
relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named
courts, that any such action, suit or proceeding brought or maintained
in one of the above-named courts should be dismissed on grounds of
forum non conveniens, should be transferred to any court other than one
of the above-named courts, should be stayed by virtu of the pendency of
any other action, suit or proceeding in any court other than one of the
above-named courts, or that this Agreement or the subject matter hereof
may not be enforced in or by any of the above-named courts. Each of the
parties hereto hereby consents to service of process in any such suit,
action or proceeding in any manner permitted by the laws of the State
of New York, agrees that service of process by registered or certified
mail, return receipt requested, at the address specified in or
- 4 -
<PAGE> 5
pursuant to Section 10 is reasonably calculated to give actual notice
and waives and agrees not to assert by way of motion, as a defense or
otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 10 does not
constitute good and sufficient service of process. The provisions of
this Section 8.b. shall not restrict the ability of any party to
enforce in any court any judgment obtained in a federal or state court
of The Commonwealth of Massachusetts.
c. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES,
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT,
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT HEREOF, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN
CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto acknowledges
that it has been informed by each other party that the provisions of
this Section 8.c. constitute a material inducement upon which such
party is relying and will rely in entering into this Agreement and the
transactions contemplated hereby. Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any court as
written evidence of the consent of each of the parties hereto to the
waiver of its right to trial by jury.
9. MERGER/ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any prior communication or agreement with respect thereto.
10. NOTICES. All notices, demands, and communications of any kind which
any party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and such
other party's copied persons as specified below by personal delivery to the
address set forth for it below or to such other address as such party shall have
specified by notice to each other party or by mailing a copy thereof by
certified or registered mail, or by Federal Express or any other reputable
overnight courier service, postage prepaid, with return receipt requested,
addressed to such party and copied persons at such addresses. In the case of
service by personal delivery, it shall be deemed complete on the first business
day after the date of actual delivery to such address. In case of service by
mail or by overnight courier, it shall be deemed complete, whether or not
received, on the third day after the date of mailing as shown by the registered
or certified mail receipt or courier service receipt. Notwithstanding the
foregoing, notice to any party or copied person of change of address shall be
deemed complete only upon actual receipt by an officer or agent of such party or
copied person.
If to the Company, to it at:
- 5 -
<PAGE> 6
Safelite Glass Corp.
1105 Schrock Road, 7th Floor
Columbus, OH 43229
Attention: Secretary
If to Belron, to it at:
Belron International NV
Kaya Krisolito
P.O. Box 342
Kralendijk
Bonaire
Netherlands Antilles
Telecopy: 59-9-75-449
and
Director: Group Legal Services
Attention: Louis Shakinovsky
Belron International
c/o Kings Observatory
Old Deer Park Richmond
Surrey TW9 2AZ
ENGLAND
Telecopy: 44-181-948-7340
with a copy to:
Katten Muchin & Zavis
525 West Monroe
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz
Telecopy: (312) 902-1061
11. SEVERABILITY. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then such
unenforceable provision shall be deemed eliminated from this Agreement for the
purpose of such proceedings to the extent necessary to permit the remaining
provisions to be enforced. To the full extent, however, that the provisions of
any applicable law may be waived, they are hereby waived to the end that this
Agreement be, deemed to be valid and binding agreement enforceable in accordance
with its terms, and in the event that any provision hereof shall be found to be
- 6 -
<PAGE> 7
invalid or unenforceable, such provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent consistent with and possible
under applicable law.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
THE COMPANY: SAFELITE GLASS CORP.
By: /s/ John F. Barlow
---------------------------
Name: John F. Barlow
Title: President
BELRON: BELRON INTERNATIONAL BV
By:
---------------------------
Name:
Title:
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
THE COMPANY: SAFELITE GLASS CORP.
By:
--------------------------------
Name:
Title:
BELRON: BELRON INTERNATIONAL BV
By: /s/ ML Shakinovsky
--------------------------------
Name: ML Shakinovsky
Title: Director
8
<PAGE> 1
EXHIBIT 10.10
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (the "Agreement"),
entered into this 18th day of December, 1997 is made by and among (i) Safelite
Glass Corp., a Delaware corporation (the "Company"), (ii) Belron (USA) BV, a
company organized under the laws of the Netherlands ("Belron" and, together with
any Permitted Transferees thereof, the "Belron Shareholders"), (iii) those
Shareholders listed on Exhibit A attached hereto (together with any Permitted
Transferees thereof, the "Kellman Shareholders"), (iv) those Shareholders of the
Company listed on Exhibit B attached hereto (including THOMAS H. LEE EQUITY
FUND, III, L.P., a Delaware limited partnership ("TH Lee")) (together with any
Permitted Transferees thereof, the "TH Lee Shareholders"), and (v) those
Shareholders of the Company listed on Exhibit C attached hereto (together with
any Permitted Transferees thereof, the "Management Shareholders"). The Belron
Shareholders, the Kellman Shareholders, the TH Lee Shareholders and the
Management Shareholders are hereinafter collectively referred to as the
"Shareholders" and each individually referred to as a "Shareholder".
WHEREAS, the Company, the TH Lee Shareholders and the Management
Shareholders are parties to that certain Stockholders' Agreement, dated as of
December 20, 1996 (the "Old Agreement");
WHEREAS, the TH Lee Shareholders and the Management Shareholders own,
respectively, that number of shares of Voting Common Stock and Non-Voting Common
Stock set forth in Exhibits B and C attached hereto;
WHEREAS, pursuant to the Merger Agreement, dated October 10, 1997 (the
"Merger Agreement"), by and between Vistar, Inc. and the Company, the Company
shall issue on the date hereof to Belron that number of shares of Voting Common
Stock and Non-Voting Common Stock set forth in Exhibit A attached hereto;
WHEREAS, pursuant to the Merger Agreement, the Company shall issue on
the date hereof to the Kellman Shareholders that number of shares of Non-Voting
Common Stock set forth in Exhibit A attached hereto;
WHEREAS, the Company, the TH Lee Shareholders, the Management
Shareholders, Belron and the Kellman Shareholders desire to amend and restate
the Old Agreement and set forth more fully their agreements regarding certain
rights and restrictions with respect to the management of the Company and the
voting, transfer and sale of the shares of capital stock held by the
Shareholders;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
of the parties hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 2
1. DEFINITIONS. The following terms will have the meaning for purposes of this
Agreement set forth below for such term.
"AAA RULES" has the meaning set forth in SECTION 21.
"ADDITIONAL SHARES" means (i) any shares of Common Stock, whether now
authorized or not, (ii) any rights, options or warrants to purchase any shares
of Common Stock, or to purchase securities that may become convertible into,
exercisable for or exchangeable for shares of Common Stock, and (iii) any
securities convertible into, exercisable for or exchangeable for shares of
Common Stock; provided, however, that Additional Shares shall not include (a)
securities offered by the Company pursuant to an underwritten public offering
registered pursuant to the Securities Act, (b) any shares of Common Stock or any
rights, options or warrants to purchase any shares of Common Stock, or to
purchase securities that may become convertible into, exercisable for or
exchangeable for shares of Common Stock, issued to officers or employees of the
Company after the date hereof pursuant to an employee incentive plan approved by
the Board, (c) securities issued as a dividend on, subdivision of or other
distribution in respect of all shares of Common Stock, (d) securities issued
upon conversion, exercise or exchange of any previously issued Additional
Shares, or (e) securities issued pursuant to the acquisition of another
corporation, limited liability company or partnership by the Company by merger,
purchase of substantially all of the assets of such other entity, or by other
reorganization whereby the Company ends up owning, directly or indirectly,
greater than fifty percent (50%) of the voting power of such entity or otherwise
controls such entity, provided such acquisition or reorganization has been
approved by the Board.
"AFFILIATE" of any Person means a Person controlling, under common
control with or controlled by such Person.
"ARBITRATORS" has the meaning set forth in SECTION 21.
"BELRON DIRECTORS" has the meaning set forth in SECTION 2(a)(ii)(A)(1).
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day on which business is ordinarily conducted
in the State of New York and in the United Kingdom, excluding Saturday, Sunday
or any day on which the banks located in New York City or London, England are
required by law (other than a general banking moratorium or holiday for a period
exceeding more than four (4) consecutive days) to be closed. If any notice or
event is required to be delivered or occur, pursuant to the terms of this
Agreement, on a day which is not a Business Day, such notice or event shall be
delivered or occur on the next Business Day after the original required delivery
or occurrence date.
"CHAIRMAN" has the meaning set forth in SECTION 5.
- 2 -
<PAGE> 3
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Voting Common Stock and the Non-Voting Common
Stock.
"COMPETITOR" has the meaning set forth in SECTION 8(d).
"ELECTION PERIOD" has the meaning set forth in SECTION 8(c)(i)(B).
"EXECUTIVE OPERATING COMMITTEE CHAIRMAN" has the meaning set forth
SECTION 6.
"EXECUTIVE OPERATING COMMITTEE" has the meaning set forth in SECTION 6.
"FAMILY MEMBER" has the meaning set forth in SECTION 8(g)(ii)
"GAAP" means, with respect to Persons organized under the laws of the
United States, 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 any successor authority) as they
exist from time to time, consistently applied.
"INDEPENDENT THIRD PARTY" means any Person who does not own in excess
of 1% of the Company's capital stock on a fully-diluted basis (a "1% Owner"),
who is not controlling, controlled by or under common control with any such 1%
Owner and who is not the spouse or descendent (by birth or adoption) of any such
1% Owner or a trust for the benefit of such 1% Owner and/or such other Persons.
"IPO" means an initial public offering of the Company's capital stock
pursuant to the Securities Act.
"ISSUANCE DATE" has the meaning set forth in SECTION 9(b).
"ISSUANCE NOTICE" has the meaning set forth in SECTION 9(b).
"NON-VOTING COMMON STOCK" means the Class B Non-Voting Common Stock of
the Company, par value $0.01 per share.
"OFFER" has the meaning set forth in SECTION 9(a).
"OTHER SHAREHOLDERS" has the meaning set forth in SECTION 8(f)(ii).
"PERMITTED TRANSFER" has the meaning set forth in SECTION 8(g).
"PERMITTED TRANSFEREE" means any person or entity who shall have
acquired and who shall hold Shareholder Shares pursuant to a Permitted Transfer.
-3-
<PAGE> 4
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity, or any department, agency or political
subdivision thereof.
"PRE-TRANSFER OFFER NOTICE" has the meaning set forth in SECTION
8(c)(i)(A).
"PRE-TRANSFER RE-OFFER NOTICE" has the meaning set forth in SECTION
8(c)(ii).
"PUBLIC SALE" means any sale of Shareholder Shares to the public
pursuant to an underwritten offering registered under the Securities Act or to
the public through a broker, dealer or market maker pursuant to a registration
statement effective under the Securities Act pursuant to Rule 415 or the
provisions of Rule 144 adopted under the Securities Act.
"RE-OFFER ELECTION PERIOD" has the meaning set forth in SECTION
8(c)(ii).
"RFR ELECTION PERIOD" has the meaning set forth in SECTION 8(d).
"RFR NOTICE" has the meaning set forth in SECTION 8(d).
"SALE NOTICE" has the meaning set forth in SECTION 8(e)(ii).
"SALE OF THE COMPANY NOTICE" has the meaning set forth in SECTION
8(f)(ii).
"SALE OF THE COMPANY" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company Board (whether by
merger, consolidation or sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER SHARES" means (i) any Common Stock purchased or otherwise
acquired by any Shareholder, (ii) any capital stock or other equity securities
issued or issuable directly or indirectly with respect to the Common Stock
referred to in clause (i) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization, and (iii) any other shares of any class or series of
capital stock of the Company held by a Shareholder. As to any particular shares
constituting Shareholder Shares, such shares shall cease to be Shareholder
Shares when they have been (x) effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering them or
(y) sold to the public through a broker, dealer or market maker pursuant to Rule
144 (or any similar provision then in force) under the Securities Act.
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<PAGE> 5
"SUBSIDIARY" means any entity controlled by the Company, directly or
through one or more Subsidiaries.
"SUPPLIER" has the meaning set forth in SECTION 8(d).
"TAG-ALONG RIGHT" has the meaning set forth in SECTION 8(e)(i).
"TH LEE DIRECTORS" has the meaning set forth in SECTION 2(a)(ii)(A)(2).
"TRANSFER" has the meaning set forth in SECTION 8(a).
"TRANSFERRING SHAREHOLDER" has the meaning set forth in SECTION
8(c)(i)(A).
"TRIGGERING DAY" means the first day upon which the following three
conditions have been satisfied: (i) the consummation of an IPO; (ii) the
expiration of a three (3)-year period after the date of this Agreement; and
(iii) the Belron Shareholders beneficially own, in the aggregate, more shares of
Voting Common Stock than that beneficially owned, in the aggregate, by the TH
Lee Shareholders and the Management Shareholders.
"VOTING COMMON STOCK" means the Class A Voting Common Stock of the
Company, par value $0.01 per share.
2. BOARD OF DIRECTORS.
(a) From and after the date hereof and until the provisions of this
Section 2 cease to be effective, each Shareholder shall vote all of its Voting
Common Stock and any other voting securities of the Company over which such
Shareholder has voting control and shall take all other reasonably necessary or
desirable actions within its control (whether in its capacity as a Shareholder,
director, member of a Board committee or officer of the Company or otherwise,
and including, without limitation, attendance at meetings in person or by proxy
for purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all reasonably necessary or desirable
actions within its control (including, without limitation, calling special Board
and Shareholder meetings), so that:
(i) until the Triggering Day, the authorized number of
directors on the Board shall be established at ten (10) directors;
(ii) the following individuals shall be elected to the Board:
(A) from and after the date hereof and until the
Triggering Day:
(1) five (5) representatives designated by
Belron (which designees initially shall be Ronnie
Lubner, M. Louis Shakinovsky, John E. Mason, Adrian
F. Jones and Selwyn Herson), determined by a vote of
the
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<PAGE> 6
Belron Shareholders owning a majority of the
Shareholder Shares held by all Belron Shareholders
(the "Belron Directors"); and
(2) five (5) representatives designated by
TH Lee (which designees initially shall be Garen K.
Staglin, John F. Barlow, Anthony J. DiNovi, Scott M.
Sperling and Seth W. Lawry), determined by a vote of
the TH Lee Shareholders and Management Shareholders
owning a majority of the Shareholder Shares held by
all TH Lee Shareholders and Management Shareholders
(the "TH Lee Directors").
(B) from and after the Triggering Day and until the
provisions of this Section 2 cease to be effective, Belron and
TH Lee agree to vote all of their shares of Voting Common
Stock such that, to the extent possible, each of Belron and TH
Lee shall be entitled to designate a minimum number of
directors corresponding to the respective percentage ownership
of the Belron Shareholders' or TH Lee Shareholders' (but
excluding their Permitted Transferees who are not Affiliates
or Family Members) Voting Common Stock as related to their
respective percentage ownership of the Voting Common Stock on
the date hereof, as set forth below:
<TABLE>
<CAPTION>
PERCENTAGE NUMBER OF
OWNERSHIP DIRECTORS
--------- ---------
<S> <C>
50% or more 3
25% - 49.99% 2
5% - 24.99% 1
</TABLE>
Notwithstanding the foregoing, (i) any Shareholder shall be
entitled to vote its shares of Voting Common Stock in the
election of directors as such Shareholder deems appropriate so
long as the requirements of this SECTION 2(a)(ii)(B) to elect
the minimum directors are satisfied; and (ii) Belron shall not
be required to vote its shares of Voting Common Stock in the
election of directors to nominate or elect TH Lee Directors to
the extent that such action could reasonably be expected to
prevent Belron from electing a majority of the Board of
Directors unless such failure to elect a majority of the Board
of Directors is caused by a voting agreement entered into by
Belron or a reduction in the number of directors below seven
(7) caused by Belron.
(iii) so long as John F. Barlow is Chief Executive Officer, he
shall be a director of the Company; and
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<PAGE> 7
(iv) upon the vacancy from the Board of any representative
designated hereunder by Belron or TH Lee, as the case may be, such
vacancy shall be filled by a representative designated by Belron or TH
Lee, as appropriate.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the Board
and any committee thereof. In addition, the Company shall maintain directors and
officers indemnity insurance coverage satisfactory to a majority of the
directors, and the Company's certificate of incorporation and bylaws shall
provide for indemnification and exculpation of directors to the fullest extent
permitted under applicable law.
(c) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this SECTION 2, the individual previously
holding such directorship shall be elected to such position, or if such
individual fails or declines to serve, the election of an individual to such
directorship shall be accomplished in accordance with the Company's bylaws and
applicable law; provided that the Shareholders shall vote to remove such
individual if the party which failed to designate such directorship so directs.
(d) The provisions of this SECTION 2 shall terminate automatically and
be of no further force and effect upon the tenth anniversary of the date hereof.
After the Triggering Day, if either the Belron Shareholders or the TH Lee
Shareholders (but excluding their Permitted Transferees who are not Affiliates
or Family Members), cease to hold 5% of the Voting Common Stock that such group
holds on the date hereof, such group's right to designate members of the Board
shall terminate.
3. REPRESENTATIONS AND WARRANTIES. Each Shareholder represents and warrants that
(i) such Shareholder is the record owner of the number of Shareholder Shares set
forth opposite its name on Exhibit A, Exhibit B or Exhibit C attached hereto,
(ii) this Agreement has been duly authorized, executed and delivered by such
Shareholder and constitutes the valid and binding obligation of such
Shareholder, enforceable in accordance with its terms, and (iii) such
Shareholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Shareholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
4. CHIEF EXECUTIVE OFFICER.
(a) The Company's initial Chief Executive Officer shall be John F.
Barlow.
(b) In the event of any resignation, termination of, or inability to
serve as Chief Executive Officer by such person, until the Triggering Day,
Belron and TH Lee shall each have the right to nominate the Chief Executive
Officer or Chief Executive Officers of the Company.
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<PAGE> 8
(c) The Chief Executive Officer or Chief Executive Officers shall
perform such duties as may be assigned to such Chief Executive Officer or Chief
Executive Officers by the Board and such Chief Executive Officer or Chief
Executive Officers shall report to the Executive Operating Committee.
5. CHAIRMAN OF THE BOARD OF DIRECTORS. Until the date which is the earlier of
(i) eighteen (18) months after consummation of an IPO or (ii) the third
anniversary of the date hereof, the Shareholders agree that the Chairman of the
Board (the "Chairman") shall be Garen K. Staglin. The Chairman shall perform
such duties as may be assigned to such Chairman by the Board, including, but not
limited to, presiding at all meetings of the Board.
6. EXECUTIVE OPERATING COMMITTEE. The Company shall have an Executive Operating
Committee (the "Executive Operating Committee") which shall be responsible for
monitoring and facilitating the implementation of the Company's budget,
post-Merger integration plan, purchasing policy and other matters delegated by
the Board. The Executive Operating Committee shall have a chairman (the
"Executive Operating Committee Chairman") who shall preside over all meetings of
the committee and have such other powers as delegated by the Board. Until the
third anniversary of the date hereof, the Shareholders agree that:
(a) the Executive Operating Committee shall consist of four (4)
directors designated as follows:
(i) two (2) members designated by the Belron Directors (one of
whom shall initially be John E. Mason and the other of whom shall be
designated at a later date); in the event of any resignation, removal
of, or inability to serve on such committee, by any such designee, or
other vacancy in the position of committee member so designated by the
Belron Directors, such vacancy shall be filled by a successor designee
designated by the Belron Directors; and
(ii) two (2) members designated by the TH Lee Directors (one
of whom shall initially John F. Barlow and the other of whom shall be
designated at a later date); in the event of any resignation, removal
of, or inability to serve on such committee, by any such designee, or
other vacancy in the position of committee member so designated by the
TH Lee Directors, such vacancy shall be filled by a successor designee
designated by the TH Lee Directors;
(b) the Chairman of the Executive Operating Committee shall initially
be John E. Mason; in the event of any resignation, removal of, or inability to
serve as such Chairman by Mr. Mason, or other vacancy in the position of the
Executive Operating Committee Chairman, such vacancy shall be filled by a
successor designee designated by the Belron Directors, subject to the right of
TH Lee to disapprove such Belron designee for good cause; and
(c) the Shareholders acknowledge the potential benefits for the Company
of Belron's worldwide purchasing influence and relationships and the Executive
Committee will recognize
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<PAGE> 9
such influence and relationships in formulating and implementing the Company's
purchasing policy.
7. RESTRICTIONS ON PURCHASES. Notwithstanding anything in this Agreement to the
contrary, no Shareholder shall purchase shares of Voting Common Stock for a
period of three (3) years after the date hereof; provided that Transfers to
Permitted Transferees and exercise of vested options and of pre-emptive rights
under Section 9 hereof shall be permitted. After the expiration of the three
(3)-year period, each TH Lee Shareholder shall give Belron ten (10) days' prior
written notice of its intention to purchase shares of Voting Common Stock and
the number of shares it intends to purchase.
8. RESTRICTIONS ON TRANSFER.
(a) RETENTION OF VOTING COMMON STOCK. Subject to the provisions of
SECTION 8(g), until the third anniversary of the date hereof, no Shareholder
shall sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) any interest in such Person's Voting Common Stock (a "Transfer").
(b) RETENTION OF NON-VOTING COMMON STOCK. No Shareholder shall Transfer
any interest in the Non-Voting Common Stock or any Voting Common Stock for which
the restrictions in (a) above have expired, held by such Person on the date
hereof or hereafter unless such Transfer complies with the provisions of this
SECTION 8.
(c) FIRST OFFER RIGHT. In addition to compliance with the other
requirements of this SECTION 8 and subject to the provisions of SECTION 8(g),
Belron shall have the following rights of first offer with respect to transfers
by any of the TH Lee Shareholders and any of the Management Shareholders of any
of the Shareholder Shares held by such Persons.
(i) INITIAL OFFER.
(A) Prior to making any Transfer of Shareholder
Shares, the transferring TH Lee Shareholder or transferring Management
Shareholder, as applicable (in each case, the "Transferring Shareholder"), shall
deliver written notice by a method permitted by SECTION 12(c) (a "Pre-Transfer
Offer Notice") to each of the parties listed as to receive notice for Belron.
The Pre-Transfer Offer Notice shall disclose in reasonable detail the proposed
number of Shareholders Shares to be transferred, the proposed sales price and
other terms and conditions of the Transfer; provided that the Pre-Transfer Offer
Notice shall not be required to include the identity of the proposed
transferee(s).
(B) Belron may elect to purchase all (but not less
than all) of the Shareholder Shares specified in the Pre-Transfer Offer Notice
at the price and on the terms specified therein by delivering written notice to
the Transferring Shareholder by a method permitted by SECTION 12(d) of such
election to the Transferring Shareholder within twenty-four
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<PAGE> 10
(24) hours (which must include one (1) full Business Day) after the delivery of
the Pre-Transfer Offer Notice (the "Election Period"). If Belron elects to
purchase all (but not less than all) of such Shareholder Shares within the
Election Period, the closing of any such transaction between Belron and the
Transferring Shareholder shall be within fourteen (14) calendar days after
expiration of the Election Period. If Belron has not elected to purchase all of
the Shareholder Shares within the Election Period, the Transferring Shareholder
may, within one hundred eighty (180)-days after the expiration of the Election
Period and subject to the provisions of Section 8(d), if applicable, transfer
such Shareholder Shares to one or more third parties at a price no less than
100% of the price per share specified in the Pre-Transfer Offer Notice and on
other terms no more favorable to the transferees thereof than offered to Belron
in the Pre-Transfer Offer Notice.
(ii) RE-OFFER. At any time within such one hundred eighty
(180)-day period provided in Section 8(c)(i)(B), above, the Transferring
Shareholder may re-offer the Shareholder Shares to be transferred to Belron at a
lower sales price than that specified in the Pre-Transfer Offer Notice by
delivering written notice by a method permitted by SECTION 12(c) (the
"Pre-Transfer Re-Offer Notice") by 9:00 a.m., London, England time, to each of
the parties listed as to receive written notice for Belron; provided, however,
that in the case of any proposed sale pursuant to an underwritten public
offering registered pursuant to the Securities Act, the Pre-Transfer Re-Offer
Notice shall be delivered by 9:00 a.m. Boston, Massachusetts time. The
Pre-Transfer Re-Offer Notice shall disclose in reasonable detail the proposed
number of Shareholder Shares to be transferred, the proposed sales price and
other terms and conditions of the Transfer; provided that the Pre-Transfer
Re-Offer Notice shall not be required to include the identity of the proposed
transferee(s). Belron may elect to purchase all (but not less than all) of the
Shareholder Shares to be transferred at the sales price specified in the
Pre-Transfer Re-Offer Notice by delivering written notice to the Transferring
Shareholder by a method permitted by SECTION 12(d) of such election to the
Transferring Shareholder by 5:00 p.m., London, England time, on the day such
Pre-Transfer Re-Offer Notice is received; provided, however, that in the case of
any sale pursuant to an underwritten public offering registered under the
Securities Act, such election period shall terminate at 4:00 p.m., Boston,
Massachusetts time on the day such Pre-Transfer Re-Offer Notice is received (in
either case, the "Re-Offer Election Period"). If Belron elects to purchase all
(but not less than all) of such Shareholder Shares within the Re-Offer Election
Period, the closing of any such transaction between Belron and the Transferring
Shareholder shall be within fourteen (14) calendar days after expiration of the
Re-Offer Election Period. If Belron has not elected to purchase all of the
Shareholder Shares within the Re-Offer Election Period, the Transferring
Shareholder may, within one hundred eighty (180) days after the expiration of
the Re-Offer Election Period and subject to the provisions of Section 8(d),
transfer such Shareholder Shares to one or more third parties at a price no less
than 100% of the price per share specified in the Pre-Transfer Re-Offer Notice.
(iii) Any Shareholder Shares subject to a Pre-Transfer Offer
Notice or a Pre-Transfer Re-Offer Notice not transferred within the applicable
one hundred eighty (180) day period shall be subject to SECTIONS 8(c)(i) AND
(ii) prior to any subsequent Transfer. The purchase price specified in any
Pre-Transfer Offer Notice or Pre-Transfer Re-Offer Notice shall be payable
solely in cash at the closing of the transaction. The closing of the transaction
between the
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<PAGE> 11
Transferring Shareholder and one or more third parties with respect to any
Shareholder Shares covered by a Pre-Transfer Offer Notice or a Pre-Transfer
Re-Offer Notice shall be within fourteen (14) calendar days of the expiration of
the applicable one hundred eighty (180)-day period.
(iv) In the case of any proposed sale pursuant to an
underwritten public offering, the Transferring Shareholder shall deliver written
notice to Belron not less than forty-eight (48) hours (which must include one
(1) full Business Day) before entering into a an underwriting or purchase
agreement with respect to such underwritten public offering.
(d) RIGHT OF FIRST REFUSAL. In addition to compliance with the other
requirements of this SECTION 8 and subject to the provisions of SECTION 8(g), in
the event that any of the TH Lee Shareholders or any of the Management
Shareholders have a bona fide offer from a third party to sell any Shareholder
Shares to any Person with respect to which such TH Lee Shareholder(s) and/or
Management Shareholder(s), as the case may be, have actual knowledge, after
reasonable inquiry of such Person, that such Person is a Supplier or Competitor,
prior to making any such Transfer, such TH Lee Shareholder(s) and/or Management
Shareholder(s), as the case may be, shall deliver written notice (the "RFR
Notice") to Belron. The RFR Notice shall disclose in reasonable detail the
identity of the prospective transferee(s), the number of shares to be
transferred and the terms and conditions of the transfer. Belron may elect to
purchase all (but not less than all) of such Shareholder Shares to be
transferred upon the same terms and conditions as those set forth in the RFR
Notice by delivering a written notice of such election to the transferring
Shareholder within ten (10) days after the RFR Notice has been delivered to
Belron ("RFR Election Period"). If Belron has not elected to purchase all of the
Shareholder Shares to be transferred within such RFR Election Period, the
transferring Shareholder may transfer the Shareholder Shares specified in the
RFR Notice at a price and on terms no more favorable to the transferee(s)
thereof than specified in the RFR Notice during the ninety (90)-day period
immediately following expiration of the RFR Election Period. Any Shareholder
Shares not transferred within such ninety (90)-day period shall be subject to
the provisions of this SECTION 8(d) upon subsequent transfer. If Belron has
elected to purchase Shareholder Shares hereunder, the transfer of such shares
shall be consummated as soon as practicable but in any event, within thirty (30)
calendar days, after the delivery of the election notice(s) to the transferring
Shareholder, on the terms and conditions set forth in the RFR Notice.
For purposes of this SECTION 8(d): "Supplier" shall mean (i) any Person
who manufactures automotive glass (including, but not limited to, those
manufacturers of automotive glass listed on Exhibit D attached hereto), (ii) any
Person who acts as a wholesaler of automotive glass, (iii) any Person who acts
as a distributor of automotive glass or (iv) any Affiliate of any Person set
forth in clause (i), (ii) or (iii); and "Competitor" shall mean any Person who
installs or repairs automotive glass or any Affiliate of any such Person.
The provisions of this SECTION 8(d) shall not apply to any Public Sale.
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<PAGE> 12
(e) TAG ALONG RIGHTS.
(i) APPLICABILITY OF PROVISIONS. Notwithstanding anything in
this Agreement to the contrary, (A) the Kellman Shareholders and the
Belron Shareholders shall have no Tag-Along Right with respect to any
Transfer by any Shareholder, (B) the Management Shareholders shall have
Tag-Along Rights with respect to all Transfers by any Shareholder and
(C) the TH Lee Shareholders shall have Tag-Along Rights only with
respect to Transfers by the Belron Shareholders.
(ii) TAG ALONG NOTICE. In addition to compliance with the
other requirements of this SECTION 8 and subject to the provisions of
SECTION 8(g), if any Shareholder shall propose to Transfer any
Shareholder Shares in a single transaction or series of related
transactions, such Shareholder shall have the obligation, and subject
to SECTION 8(e)(iv) hereof, each other Shareholder or other
Shareholders, as the case may be, shall have the right (the "Tag-Along
Right"), to require the proposed transferee of such Shareholder Shares
to purchase from such other Shareholder, at the same price per share
and upon the same terms and conditions as to be paid and given to the
transferring Shareholder, the number of Shareholder Shares equal to the
product obtained by multiplying (A) the number of Shareholder Shares
held by each such other Shareholder times, (B) the quotient derived by
dividing (1) the number of Shareholder Shares which otherwise would
have been sold by the transferring Shareholder by (2) the sum of the
total number of Shareholder Shares held by the transferring Shareholder
plus the total number of Shareholder Shares held by the other
Shareholders electing to participate in the sale; provided that in
order to be entitled to exercise its right to Transfer securities to
the proposed transferee pursuant to this SECTION 8(e), each other
Shareholder seeking to Transfer its Shareholder Shares must agree to
make substantially the same representations, warranties, covenants and
indemnities relating to title to such securities, and power and
authority to transfer such Shareholder Shares as the transferring
Shareholder agrees to make in connection with its proposed Transfer of
Shareholder Shares.
(iii) ELECTION. Upon receipt by a transferring Shareholder of a
bona fide offer to purchase its Shareholder Shares pursuant to SECTION
8(e)(i), the transferring Shareholder shall notify each other
Shareholder, in writing, of such offer and its terms and conditions,
which written notice shall include the number of Shareholder Shares the
transferring Shareholder desires to sell, the name of the purchasers
and the consideration offered in connection therewith (the "Sale
Notice"). Each other Shareholder may exercise its right to sell under
this SECTION 8(e) by giving written notice to the transferring
Shareholder within five (5) Business Days after the date on which such
other Shareholder received the Sale Notice from the transferring
Shareholder pursuant to this SECTION 8(e)(ii).
(iv) BEST EFFORTS. The transferring Shareholder shall use its
best efforts to obtain the agreement of the prospective transferee(s)
to the participation of other Shareholders in the contemplated transfer
and shall not transfer any Shareholder Shares
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<PAGE> 13
to the prospective transferee(s) if such transferee(s) refuses to allow
the participation of the other Shareholders.
(v) TERMINATION. The provisions of this SECTION 8(e) shall
terminate upon the consummation of an IPO.
(f) DRAG ALONG RIGHTS.
(i) THIRD PARTY TRANSACTION. Belron, TH Lee and the Board
shall collectively have the right to approve a Sale of the Company at
any time after the date hereof. In the event of such approval by each
of Belron, TH Lee and the Board, each Shareholder shall vote for,
consent to and raise no objections to such Sale of the Company. If the
Sale of the Company is structured as a (i) merger or consolidation,
each holder of Shareholder Shares shall waive any dissenters rights,
appraisal rights or similar rights in connection with such merger or
consolidation or (ii) sale of stock, each Shareholder shall agree to
sell all of its Shareholder Shares and rights to acquire Shareholder
Shares on the terms and conditions approved by Belron, TH Lee and the
Board. Each Shareholder shall take all necessary or desirable actions
in connection with the consummation of the Sale of the Company as
requested by Belron, TH Lee and the Board.
(ii) ELECTION. Belron and TH Lee shall deliver written notice
to the Company and the other Shareholders (the "Other Shareholders")
setting forth in reasonable detail the terms of the proposed Sale of
the Company at least ten (10) days prior to the consummation of the
Sale of the Company (the "Sale of the Company Notice"). Belron and TH
Lee shall have one hundred eighty (180) days after the delivery of the
Sale of the Company Notice to consummate the Sale of the Company on the
terms specified in the Sale of the Company Notice. If the Sale of the
Company is not consummated within such one hundred eighty (180)-day
period, Belron and TH Lee shall again comply with the provisions of
this SECTION 8(f).
(iii) CONDITIONS TO OBLIGATION. The obligations of the Other
Shareholders to participate in the Sale of the Company are subject to
the satisfaction of the conditions that, upon consummation of the Sale
of the Company, all holders of Common Stock shall receive the same form
and amount of consideration per share of Common Stock (including for
this purpose amounts allocated to noncompetition, consulting and other
arrangements), or if the holders of Common Stock are given an option as
to the form and consideration to be received, all holders shall be
given the same option.
(iv) TERMINATION. The provisions of this SECTION 8(f) shall
terminate upon the consummation of an IPO.
(g) PERMITTED TRANSFERS. The restrictions on Transfer set forth in this
SECTION 8 shall not apply with respect to any of the following (each, a
"Permitted Transfer"):
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<PAGE> 14
(i) a Transfer of Shareholder Shares from the Kellman
Shareholders to Belron, another Kellman Shareholder, Joseph Kellman or
a trust for the benefit of Joseph Kellman;
(ii) a Transfer of Shareholder Shares by any Shareholder who
is a natural person, the Family Revocable Trust listed on Exhibit A or
Joseph Kellman to such Shareholder's or Joseph Kellman's spouse,
children, grandchildren, parents or siblings, one or more trusts for
the benefit of any of such persons or a family limited partnership of
which such persons are the only partners (each, a "Family Member");
(iii) a bona fide pledge of Shareholder Shares by a
Shareholder to a bank or financial institution;
(iv) a Transfer of Shareholder Shares between any Shareholder
who is a natural person and such Shareholder's guardian or conservator;
(v) a bona fide gift of Shareholder Shares by a Shareholder to
a charitable institution as defined in Section 501(c) of the Internal
Revenue Code of 1986, as amended;
(vi) a Transfer of Shareholder Shares from any Shareholder
which is a partnership to its partners;
(vii) a Transfer of Shareholder Shares from any Shareholder
which is a corporation or partnership to any Affiliate of such
Shareholder or to any officer or director of such Shareholder; or
(viii) a Transfer of Shareholder Shares by a Belron
Shareholder or TH Lee Shareholder to (A) any Affiliate of such
Shareholder, (B) another Belron Shareholder or TH Lee Shareholder, as
appropriate, or (C) an employee of Belron or Thomas H. Lee Company, as
appropriate.
The restrictions contained in this SECTION 8 shall continue to be applicable to
the Shareholder Shares after any such Transfer and; provided, further, no
Permitted Transfer shall be effective unless and until the transferee of such
Shareholder Shares shall have executed and delivered to the Company an executed
counterpart of this Agreement in accordance with Section 28 hereof and;
provided, further that any Permitted Transfer shall require the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed.
Notwithstanding the foregoing, no Shareholder shall avoid the
provisions of this Agreement by making one or more Permitted Transfers and then
disposing of all or any portion of such Shareholder's interest in the Permitted
Transferee.
(h) RESTRICTIVE LEGEND. Any certificate representing Shareholder Shares
will bear the following Legend:
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<PAGE> 15
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THEY MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT AS TO SAID SECURITIES OR AN
OPINION, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
AND GIVEN BY COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A Shareholders AGREEMENT BETWEEN
THE COMPANY AND THE ORIGINAL HOLDER DATED AS OF __________, 1997. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(i) OPINION OF COUNSEL. No Shareholder may Transfer any Shareholder
Shares (except Transfers pursuant to an effective registration statement under
the Securities Act or pursuant to the laws of descent and distribution) without
first delivering to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company and given by counsel reasonably
satisfactory to the Company that (i) neither registration nor qualification
under the Securities Act and applicable state securities laws is required in
connection with such Transfer and (ii) subject to reasonable factual
qualifications and assumptions, such Transfer does not and will not contravene
or violate the terms of this Agreement.
(j) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Shareholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Shareholder Shares as the owner
of such Shareholder Shares for any purpose.
9. PRE-EMPTIVE RIGHTS.
(a) If the Company authorizes the issuance and sale of Additional
Shares, then, subject to SECTION 9(f) herein, the Company will offer to sell
(the "Offer") to each Shareholder, and each such Shareholder may elect to
purchase, up to that number of Additional Shares, such that following such
purchase, each such Shareholder is able to maintain the same percentage
ownership (on a fully-diluted basis) of Shareholder Shares which each such
Shareholder owned immediately prior to the offer of Additional Shares.
(b) The Company shall give written notice of the issuance of Additional
Shares (the "Issuance Notice"), which notice shall set forth the price and other
terms of such issuance, to each of the Shareholders at any time prior to the
issuance of such Additional Shares (the "Issuance Date"), or within ten (10)
days following the Issuance Date. Upon receipt of the Issuance Notice, any
Shareholder may accept the Offer by giving written notice to the Company within
ten (10)
-15-
<PAGE> 16
days following receipt of the Issuance Notice, which written notice shall
specify the number of Additional Shares which such Shareholder wishes to
purchase. Payment in the full amount of the price for the Additional Shares
shall be made by wire transfer of immediately available funds, to the account
designated by the Company in the Issuance Notice, on the day that is the later
to occur of (i) the closing date of the transaction pursuant to which such
Additional Shares are being issued and (ii) three (3) Business days after such
Shareholder gives the Company written notice of acceptance of the Offer.
(c) Each Shareholder will be entitled to purchase Additional Shares at
the same price and upon the same terms as Additional Shares being offered to the
other purchaser thereof; provided that, if such other persons is to pay for such
Additional Shares in whole or in part with consideration other than cash, then
the Board, in its good faith judgment, shall make a determination of the fair
market value of such consideration, and each Shareholder will be entitled to
purchase the Additional Shares for cash equal to the fair market value of the
aggregate cash and non-cash consideration each of them would otherwise pay
hereunder. Notwithstanding the foregoing, no Shareholder will be permitted to
exercise its rights under this SECTION 9 unless it agrees to purchase all shares
of Common Stock offered as a package or unit in the issuance of the Additional
Shares.
(d) The Company shall promptly deliver to each Shareholder purchasing
Additional Shares hereunder certificates evidencing such Additional Shares
purchased by such Shareholder, upon receipt of payment therefor, and upon
execution of such documents and instruments as shall govern the issuance of such
Additional Shares.
(e) The provisions of this Section 9 shall terminate upon consummation
of an IPO.
(f) Notwithstanding anything in this Agreement to the contrary, the
Kellman Shareholders shall not be entitled to any pre-emptive rights with
respect to the issuance of any securities of and by the Company.
10. RESTRICTIVE COVENANTS.
(a) BELRON AND TH LEE APPROVAL. Until the Triggering Day, neither the
Board nor any committee thereof will take or ratify, on behalf of the Company or
any Subsidiary, any of the following actions, without the prior written consent
of Belron and TH Lee:
(i) MERGERS. Merger or consolidation of the Company or any of
its Subsidiaries with any Person, other than mergers with a
wholly-owned Subsidiary.
(ii) ASSET DISPOSITIONS. Sell, assign, transfer, lease or
otherwise dispose of all or substantially all of the consolidated
assets of the Company and its wholly-owned Subsidiaries (computed on
the basis of book value, determined in accordance with GAAP, or fair
market value as determined by the Board in its reasonable good faith
judgment) in
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<PAGE> 17
any transaction or series of related transactions, other than the sale
or disposition of inventory in the ordinary course of business.
(iii) RELATED PARTY ARRANGEMENTS. Enter into, amend, modify or
supplement, or permit any Subsidiary to enter into amend, modify or
supplement, any agreement or other transaction with any of the
Company's or any of its Subsidiary's officers, directors, employees or
Affiliates of any of the foregoing on terms that are less favorable to
the Company or any of its Subsidiaries than could be obtained in an
arms length transaction.
(iv) ACQUISITIONS; JOINT VENTURES. Acquire, or permit any
Subsidiary to acquire, any interest in any Person, or enter into, or
permit any Subsidiary to enter into, any joint venture involving an
investment by the Company or any of its Subsidiaries in excess of $10
million.
(v) PERSONNEL. Hire or fire any Chief Executive Officer or
other executive officer of the Company listed on attached hereto.
(vi) BUDGET. Approval of annual operating plan, including
capital expenditure budget and annual operating budget, and any
substantial change to a previously approved operating plan or budget.
(vii) AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS.
Amend, modify, supplement or restate the Amended and Restated
Certificate of Incorporation of the Company or the Amended and Restated
Bylaws of the Company.
(b) DEADLOCK RELATED TO BUDGET. Until the Triggering Day, in the event
that Belron and TH Lee shall fail to agree upon the annual budget for the next
year, the budget approved for the immediately preceding year shall remain in
effect until such time as Belron and TH Lee shall agree upon the annual budget
for the next year; provided, that the Company may spend in that next year up to
110% of the prior year's aggregate budget, subject to a greater increase, in
each case, upon approval of the next annual budget by Belron and TH Lee.
(c) FINANCINGS. Until the Triggering Day, neither the Board nor any
committee thereof will approve, recommend or ratify, on behalf of the Company or
any Subsidiary, any debt or equity financing transactions in which the Company
or any of its Subsidiaries is expected to receive net proceeds in excess of $25
million without the prior written approval of TH Lee.
11. AGREEMENTS WITH RESPECT TO AN IPO; RIGHT TO CALL FOR AN IPO.
(a) RIGHT TO CALL FOR AN IPO.
(i) TH Lee shall have the right to require the Company to
undertake an IPO at any time after the date of this Agreement, which
right shall be exclusive for thirty-six (36) months after the date
hereof.
-17-
<PAGE> 18
(ii) At any time after the first thirty-six (36) months after
the date hereof, Belron shall have the non-exclusive right to require
the Company to undertake an IPO.
(b) FURTHER ASSURANCES. In the event that an initial public offering of
the equity securities of the Company is approved pursuant to an effective
registration statement under the Securities Act, the Shareholders shall take all
necessary or desirable actions in connection with the consummation of the IPO.
In the event that such IPO is an underwritten offering and the managing
underwriters advise the Company in writing that, in their opinion, the equity
securities structure would adversely affect the marketability of the offering,
each holder shall consent to and vote for a recapitalization, reorganization
and/or exchange; provided that the resulting securities reflect and are
consistent with the rights and preferences set forth in the Company's
Certificate of Incorporation as in effect immediately prior to such IPO.
Notwithstanding the foregoing, in the case of an IPO called by TH Lee pursuant
to Section 11(a)(i), the Shareholders shall not be required to take any action
which could reasonably be expected to have a material adverse tax or accounting
effect on the Company based on the reasonable determination of TH Lee.
12. NOTICES. Any notices, consents or other communication required to be sent or
given hereunder by any of the parties shall in every case be in writing and
shall be deemed properly served if (a) delivered personally, (b) sent by
registered or certified mail, in all such cases with first class postage
prepaid, return receipt requested, (c) delivered by a recognized overnight
courier service, or (d) sent by telecopy transmission to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing.
(a) If to the Company:
Safelite Glass Corp.
1105 Schrock Road
Columbus, Ohio 43229
Attention: President
Telecopy: (614) 842-3323
with copies to:
Belron International NV
Kaya Krisolito
P.O. Box 342
Kralendijk
Bonaire
Netherlands Antilles
Telecopy: 59-9-75-449
and
Director: Group Legal Services
-18-
<PAGE> 19
Attention: Louis Shakinovsky
Belron International
c/o The Kings Observatory
Old Deer Park Richmond
Surrey TW9 2AZ
ENGLAND
Telecopy: 44-181-948-7340
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz, Esq.
Telecopy: (312) 902-1061
and
The Thomas H. Lee Company
75 State Street
Boston, Massachusetts 02109
Attention: Anthony J. DiNovi
Scott M. Sperling
Telecopy: (617) 227-3514
and
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Charles W. Robins, Esq.
Telecopy: (617) 951-1295
(b) If to the Kellman Shareholders to:
Joseph Kellman
1000 North Lake Shore Drive
Apt. 47-B
Chicago, IL 60610
Telecopy: (312) 280-8070
-19-
<PAGE> 20
and
Allan B. Muchin, Trustee
c/o Katten Muchin & Zavis
525 West Monroe
Suite 1600
Chicago, Illinois 60661
Telecopy: (312) 902-1061
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz, Esq.
Telecopy: (312) 902-1061
(c) If to the Belron Shareholders:
Belron International NV
Kaya Krisolito
P.O. Box 342
Kralendijk
Bonaire
Netherlands Antilles
Telecopy: 59-9-75-449
and
Director: Group Legal Services
Attention: Louis Shakinovsky
Belron International
c/o The Kings Observatory
Old Deer Park Richmond
Surrey TW9 2AZ
ENGLAND
Telecopy: 44-181-948-7340
-20-
<PAGE> 21
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz, Esq.
Telecopy: (312) 902-1061
(d) If to the TH Lee Shareholders or the Management
Shareholders:
The Thomas H. Lee Company
75 State Street
Boston, Massachusetts 02109
Attention: Anthony J. DiNovi
Scott M. Sperling
Telecopy: (617) 227-3514
and:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Charles W. Robins, Esq.
Telecopy: (617) 951-1295
Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after date of delivery to the overnight courier if
sent by overnight courier or (z) if transmitted by telecopy, upon receipt of
confirmation of delivery; provided, that, within three (3) days of such
transmission, service is also made by personal delivery, mail or overnight
courier as permitted herein.
13. SEVERABILITY. If any provision of this Agreement is, for any reason, invalid
or unenforceable, the remaining provisions of this Agreement will nevertheless
be valid and enforceable and will remain in full force and effect. Any provision
of this Agreement that is held invalid or unenforceable by a court of competent
jurisdiction will be deemed modified to the extent necessary to make it valid
and enforceable and as so modified will remain in full force and effect.
14. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Agreement may be modified, amended or waived by the written agreement of
Belron (acting on behalf of the Belron Shareholders and on behalf of the Kellman
Shareholders), and TH Lee (acting
-21-
<PAGE> 22
on behalf of the TH Lee Shareholders and on behalf of the Management
Shareholders); provided, however, that no amendment may adversely affect the
Kellman Shareholders at any time, unless consented to in writing by a majority
in interest of such Kellman Shareholders; provided further that no amendment may
adversely affect the Management Shareholders at any time, unless consented to in
writing by a majority in interest of such Management Shareholders. The failure
of any party to enforce any of the provisions of this Agreement shall in no way
be construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
15. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the other.
16. GOVERNING LAW. This Agreement will be governed and construed in accordance
with the laws of the State of New York, without giving effect to its principles
of conflicts of laws.
17. INTERPRETATIVE MATTERS. Unless the context otherwise requires, (i) all
references to Articles, Sections, Schedules or Exhibits are to Articles,
Sections, Schedules or Exhibits in this Agreement; (ii) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP; (iii) words in the singular or plural include the singular and plural
and pronouns stated in either the masculine, the feminine or neuter gender shall
include the masculine, feminine and neuter; (iv) the headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement; and (v) whenever the words
"include", "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "but not limited to."
18. SUCCESSORS. Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by the parties and their
successors and assigns.
19. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction will be applied against any party hereto.
20. DOCUMENTS. Each party will execute all documents and take such other actions
as any other party may reasonably request in order to consummate the
transactions provided for herein and to accomplish the purposes of this
Agreement.
21. ARBITRATION. If any controversy or claim from the application and
interpretation of the terms of this Agreement cannot be settled by the parties
hereto within a reasonable period of time, then the controversy or claim shall
be settled by arbitration, unless the controversy or claim is prohibited by the
law from being arbitrated. Arbitration shall be the sole remedy for disputes
hereunder, unless the controversy or claim is prohibited by the law from being
arbitrated. The arbitration shall be conducted in accordance with the Rules of
the American Arbitration
-22-
<PAGE> 23
Association (the "AAA Rules") and held in New York, New York. Any party
hereunder seeking arbitration shall file a written notice of demand for
arbitration with the other parties hereunder and with the American Arbitration
Association. Three Arbitrators shall be appointed in accordance with the AAA
Rules ("Arbitrators"). The decision and award of the Arbitrators shall be
binding among the parties and judgment on the award may be entered in any court
having jurisdiction as provided in SECTION 22 hereof. The Arbitrators shall have
no previous employment by, consulting with, or business relationship with any
party or its Affiliates. Questions regarding discovery or evidentiary issues
shall be referred to the Arbitrators and the Arbitrators' decisions shall be
final and binding on such issues. The Arbitrators may consider any material
relevant to the subject matter of the dispute even if such material may also
relate to issues not subject to arbitration. An audio recording of any
arbitration hearing shall be made. The Arbitrators may award any appropriate
relief including without limitation, an award for damages, specific performance
or other equitable relief. The award shall be in writing, accompanied by a
written opinion detailing the reasons for the award, and signed by the
Arbitrators. Each party to such arbitration shall pay its own expenses and fees,
except that administrative expenses (including the Arbitrators' fee) shall be
divided equally between the parties to the arbitration.
22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES HERETO
HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE STATE OF NEW YORK AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OR FORUM
NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. THE BELRON SHAREHOLDERS HEREBY
DESIGNATE AND APPOINT CT CORPORATION SYSTEM AT 208 S. LASALLE STREET, CHICAGO,
ILLINOIS 60604 AND SUCH OTHER PERSONS AS MAY HEREINAFTER BE SELECTED BY THE
BELRON SHAREHOLDERS, WHICH PERSONS SHALL IRREVOCABLY AGREE IN WRITING TO SO
SERVE AS AGENT TO RECEIVE ON THE BELRON SHAREHOLDERS' BEHALF SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE BELRON SHAREHOLDERS TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO THE BELRON SHAREHOLDERS AS PROVIDED HEREIN, EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY THE
BELRON SHAREHOLDERS REFUSES TO ACCEPT SERVICE, THEN THE BELRON SHAREHOLDERS
HEREBY AGREE THAT SERVICE UPON THEM BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY OTHER PARTY HERETO TO SERVE
-23-
<PAGE> 24
PROCESS ON THE BELRON SHAREHOLDERS IN ANY OTHER MANNER PERMITTED BY LAW.
23. WAIVER OF JURY TRIAL. THE PARTIES HEREBY, BY EXECUTION HEREOF, WAIVE ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM RELATING TO THE SUBJECT MATTER
OF THE PROPOSED TRANSACTIONS AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE PARTIES HEREBY FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
24. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Notwithstanding the foregoing, the Company and the Shareholders agree that this
Agreement supersedes and replaces the Old Agreement and that the Old Agreement
is no longer binding on any party thereto.
25. REMEDIES. The parties acknowledge and agree that money damages may not be an
adequate remedy for any breach or threatened breach by a party of its
obligations under this Agreement, and for that reason, among others, the
non-breaching party or parties will be irreparably damaged and may not have an
adequate remedy at law. Therefore, notwithstanding the provisions of SECTION 21,
the parties agree that the other party may pursue injunctive relief and/or
specific performance in any court of competent jurisdiction to enforce any of
the provisions of this Agreement. If any of the parties institutes any such
action or proceeding solely for injunctive relief and/or specific performance,
then the other parties hereby waive arbitration thereof under SECTION 21 for
such action solely as it relates to injunctive relief and/or specific
-24-
<PAGE> 25
performance and shall not assert in any such action or proceeding the claim or
defense that any matter of injunctive relief an/or specific performance is to be
submitted to arbitration under SECTION 21. The foregoing remedy is in addition
to any and all other remedies which a party may have.
26. NO INCONSISTENT AGREEMENTS. None of the parties hereto will hereafter enter
into any agreement which is inconsistent with the rights granted to the parties
in this Agreement.
27. THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
to this Agreement and their respective permitted successors and assigns, any
rights or remedies under or by reason of this Agreement.
28. ADDITIONAL SHAREHOLDERS. Any person or entity who is not at the time a
Shareholder acquiring Shareholder Shares (except for transferees acquiring
Shareholder Shares in a Public Sale), shall, on or before the Transfer or
issuance of it of Shareholder Shares, sign a counterpart signature page hereto
in form reasonably satisfactory to the Company and shall thereby become a party
to this Agreement to be bound hereunder as (i) a Management Shareholder if a
Permitted Transferee thereof or an employee of the Company or any of its
Subsidiaries, (ii) a TH Lee Shareholder if a Permitted Transferee thereof or an
employee or Affiliate of Thomas H. Lee Company, (iii) a Belron Shareholder if a
Permitted Transferee thereof or (iv) a Kellman Shareholder if a Permitted
Transferee thereof; provided, that a transferee which is a Permitted Transferee
under clause (iii) of the definition of Permitted Transfer shall not be
obligated to so agree until foreclosure on its pledge.
29. ROLE OF TRUSTEE. Each of Allan B. Muchin, Maurice Raizes and Marvin
Zimmerman is executing this Agreement as a trustee of the Kellman Trusts listed
on Exhibit A attached hereto and shall be conclusively deemed to be executing
such documents only in such capacity. Each of Allan B. Muchin, Maurice Raizes
and Marvin Zimmerman shall not be liable personally to any other party hereto in
the event of any actual or alleged breach of any provision contained herein by
any of the Kellman Trusts, except in the event of any willful breach of this
Agreement established by clear and convincing evidence. Each party agrees to
look solely to the estate of the Kellman Trusts and not to any trustee thereof
in such trustee's individual capacity for any damages or other remedy for a
breach by a Kellman Trust of any provision contained herein except in the event
of any willful breach of this Agreement established by clear and convincing
evidence.
- 25 -
<PAGE> 26
IN WITNESS WHEREOF, parties hereto have caused this Shareholders
Agreement to be signed as of the date first written above.
SAFELITE GLASS CORP.:
By: /s/ Douglas A. Herron
-----------------------------------
Name: Douglas A. Herron
Title: Treasurer
BELRON (USA) BV:
By:
-----------------------------------
Name:
Title:
KELLMAN SHAREHOLDERS:
FAMILY REVOCABLE TRUST
By:
-----------------------------------
Joseph Kellman, not individually
but solely as trustee
J-K GIFT TRUST U/A/D 12/16/91
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF RICHARD U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF CELIA U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF RICHARD U/A/D 11/8/95
<PAGE> 27
IN WITNESS WHEREOF, parties hereto have caused this Shareholders
Agreement to be signed as of the date first written above.
SAFELITE GLASS CORP.:
By:
-----------------------------------
Name: Douglas A. Herron
Title: Treasurer
BELRON (USA) BV:
By: /s/ M.L. Shakinovsky
-----------------------------------
Name: M.L. Shakinovsky
Title: Director
KELLMAN SHAREHOLDERS:
FAMILY REVOCABLE TRUST
By:
-----------------------------------
Joseph Kellman, not individually
but solely as trustee
J-K GIFT TRUST U/A/D 12/16/91
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF RICHARD U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF CELIA U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF RICHARD U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF CELIA U/A/D 11/8/95
By:
-----------------------------------
<PAGE> 28
IN WITNESS WHEREOF, parties hereto have caused this Shareholders
Agreement to be signed as of the date first written above.
SAFELITE GLASS CORP.:
By:
-----------------------------------
Name: Douglas A. Herron
Title: Treasurer
BELRON (USA) BV:
By:
-----------------------------------
Name:
Title:
KELLMAN SHAREHOLDERS:
FAMILY REVOCABLE TRUST
By: /s/ Joseph Kellman
-----------------------------------
Joseph Kellman, not individually
but solely as trustee
J-K GIFT TRUST U/A/D 12/16/91
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF RICHARD U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF CELIA U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF RICHARD U/A/D 11/8/95
<PAGE> 29
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF CELIA U/A/D 11/8/95
By: /s/ Allan B. Muchin
-----------------------------------
Allan B. Muchin, not individually
but solely as trustee of each of
the above seven trusts
By: /s/ Maurice Raizes
-----------------------------------
Maurice Raizes, not individually
but solely as trustee of each of
the above seven trusts
By: /s/ Marvin Zimmerman
-----------------------------------
Marvin Zimmerman, not individually
but solely as trustee of each of
the above seven trusts
TH LEE SHAREHOLDERS:
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By:
-----------------------------------
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By:
-----------------------------------
<PAGE> 30
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF CELIA U/A/D 11/8/95
By:
-----------------------------------
Allan B. Muchin, not individually
but solely as trustee of each of
the above seven trusts
By:
-----------------------------------
Maurice Raizes, not individually
but solely as trustee of each of
the above seven trusts
By:
-----------------------------------
Marvin Zimmerman, not individually
but solely as trustee of each of
the above seven trusts
TH LEE SHAREHOLDERS:
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
<PAGE> 31
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 32
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By: /s/ Morton H. Meyerson
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 33
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
/s/ Garen K. Staglin
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 34
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
/s/ John F. Barlow
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 35
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
/s/ Douglas A. Herron
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 36
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
/s/ Elizabeth A. Wolszon
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 37
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
/s/ Douglas R. Maehl
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 38
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
/s/ James K. West
----------------------------------------
James K. West
----------------------------------------
Poe A. Timmons
<PAGE> 39
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By:
-----------------------------------
BIG BEND INVESTMENTS, L.P.
By:
-----------------------------------
Name: Morton H. Meyerson
Title: General Partner
MAJORITY IN INTEREST OF THE MANAGEMENT
SHAREHOLDERS:
----------------------------------------
Garen K. Staglin
----------------------------------------
John F. Barlow
----------------------------------------
Douglas A. Herron
----------------------------------------
Elizabeth A. Wolszon
----------------------------------------
Douglas R. Maehl
----------------------------------------
James K. West
/s/ Poe A. Timmons
----------------------------------------
Poe A. Timmons
<PAGE> 40
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Brian D. O'Mara
----------------------------------------
Print Name: Brian D. O'Mara
----------------------------
Address: 1105 Lincoln Road
----------------------------
Grandview Heights, OH 43212
----------------------------
<PAGE> 41
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ David P. Stagner
---------------------------------------
Print Name: David Stagner
----------------------------
Address: 7742 Bale Kenyon Road
----------------------------
Lewis Center, OH 43035
----------------------------
<PAGE> 42
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Frederick R. Barnard
---------------------------------------
Print Name: Frederick R. Barnard
----------------------------
Address: 2414 Waterside Dr.
----------------------------
Aurora, IL 60504
----------------------------
<PAGE> 43
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Garth R. Beck
---------------------------------------
Print Name: Garth R. Beck
----------------------------
Address: 2232 Ave. 13070 So.
----------------------------
Riverton, UT 84065
----------------------------
<PAGE> 44
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Ronald H. Duncan
---------------------------------------
Print Name: Ronald H. Duncan
----------------------------
Address: 147 Meadow Ridge Ct.
----------------------------
Powell, OH 43065
----------------------------
<PAGE> 45
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ August N. Gassiot
---------------------------------------
Print Name: August N. Gassiot
----------------------------
Address: 2312 N. Cumberland
----------------------------
Metairie, LA 70003
----------------------------
<PAGE> 46
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Gary J. Strain
---------------------------------------
Print Name: Gary J. Strain
----------------------------
Address: 24 Chadwick Dr.
----------------------------
Voorhees, NJ 08043
----------------------------
<PAGE> 47
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Robert A. Carlson
---------------------------------------
Print Name: Robert A. Carlson
----------------------------
Address: 21 Edwards Road
----------------------------
Natick, MA 01760
----------------------------
<PAGE> 48
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Steven B. Micheli
---------------------------------------
Print Name: Steven B. Micheli
----------------------------
Address: 4033 Gloucester Rd.
----------------------------
Rocky Mount, NC 27803
----------------------------
<PAGE> 49
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Craig D. Douglas
---------------------------------------
Print Name: Craig D. Douglas
----------------------------
Address: 6345 Lido Ct.
----------------------------
Dublin, OH 43016
----------------------------
<PAGE> 50
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Michael Von Fenstermalher
---------------------------------------
Print Name: Michael Von Fenstermalher
----------------------------
Address: 6911 Lauren Place
----------------------------
Columbus, Ohio 43235
----------------------------
<PAGE> 51
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Michael G. Ridgway
---------------------------------------
Print Name: Michael G. Ridgway
----------------------------
Address: 6452 Worthington Rd.
----------------------------
Westerville, OH 43082
----------------------------
<PAGE> 52
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Thomas M. Feeney
---------------------------------------
Print Name: Thomas M. Feeney
----------------------------
Address: 7681 Seminary Ridge
----------------------------
Columbus, Ohio 43235
----------------------------
<PAGE> 53
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ James W. Crystal
---------------------------------------
Print Name: James W. Crystal
----------------------------
Address: 40 Broad Street
----------------------------
New York, NY 10004
----------------------------
<PAGE> 54
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Alleri B. OBlow
---------------------------------------
Print Name: Alleri B. OBlow
----------------------------
Address: 166 N. Myrtle Ave.
----------------------------
Monrovia, CA 91016
----------------------------
<PAGE> 55
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Donald A. Poirier
---------------------------------------
Print Name: Donald A. Poirier
----------------------------
Address: 6335 Deeside Dr.
----------------------------
Dublin, Ohio 43017
----------------------------
<PAGE> 56
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Peter Pearson
---------------------------------------
Print Name: Peter Pearson
----------------------------
Address: 49 North Fairway Dr.
----------------------------
NSL, Utah 04054
----------------------------
<PAGE> 57
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ John Ritucci
---------------------------------------
Print Name: John Ritucci
----------------------------
Address: 59 Windsor Lane
----------------------------
Marshfield, MA 02050
----------------------------
<PAGE> 58
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Carl W. Blackburn
---------------------------------------
Print Name: Carl W. Blackburn
----------------------------
Address: 109 Buhlmont Dr.
----------------------------
Sewickley, PA 15143
----------------------------
<PAGE> 59
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
12/31/97
/s/ M. Keith Jones
---------------------------------------
Print Name: M. Keith Jones
----------------------------
Address: 8125 Crossgate Ct. N.
----------------------------
Dublin, OH 43017
----------------------------
<PAGE> 60
SAFELITE GLASS CORP.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT SHAREHOLDERS:
/s/ Gary Mazeffa
---------------------------------------
Print Name: Gary Mazeffa
----------------------------
Address: 234 Deer Meadow Dr.
----------------------------
Gahanna, OH 43230
----------------------------
12.31.97
<PAGE> 61
EXHIBIT A
KELLMAN SHAREHOLDERS
<TABLE>
<CAPTION>
NON-VOTING
TRUST TRUSTEE(S) COMMON STOCK
----- ---------- ------------
<S> <C> <C>
Family Revocable Trust Joseph Kellman 2,225,096
J-K Gift Trust Allan B. Muchin
U/A/D 12/16/91 Maurice Raizes
Marvin Zimmerman 137,881
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Jack Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 13,716
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Richard Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 13,716
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Celia Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 13,716
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Jack Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 22,841
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Richard Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 22,841
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Celia Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman 22,841
Total 2,472,648
</TABLE>
BELRON OWNERSHIP
<TABLE>
<CAPTION>
VOTING
COMMON NON-VOTING
NAME STOCK COMMON STOCK TOTAL
---- ----- ------------ -----
<S> <C> <C> <C>
Belron 1,690,101 4,487,123 6,177,224
</TABLE>
<PAGE> 62
EXHIBIT B
TH LEE SHAREHOLDERS
<TABLE>
<CAPTION>
VOTING
COMMON NON-VOTING
NAME STOCK COMMON STOCK TOTAL
---- ----- ------------ -----
<S> <C> <C> <C>
Thomas H. Lee Equity Fund III, L.P. 1,241,479.33 2,482,958.67 3,724,438
Thomas H. Lee Foreign Fund III, L.P. 76,819.00 153,638.00 230,457
THL-CCI Investors Limited Partnership 128,781.67 257,563.33 386,345
Big Bend Investments, L.P. 12,483.00 24,966.00 37,449
</TABLE>
<PAGE> 63
EXHIBIT C
MANAGEMENT SHAREHOLDERS
<TABLE>
<CAPTION>
VOTING NON-VOTING
NAME COMMON COMMON
STOCK STOCK TOTAL
- ---- ----- ----- -----
<S> <C> <C> <C>
Garen K. Staglin 18,025.33 36,050.67 54,076.00
John F. Barlow 61,014.67 122,029.33 183,044.00
Douglas A. Herron 21,648.67 43,297.33 64,946.00
Elizabeth A. Wolszon 11,992.67 23,985.33 35,978.00
Douglas R. Maehl 11,992.67 23,985.33 35,978.00
Poe A. Timmons 6,505.33 13,010.67 19,516.00
James A. West 11,992.67 23,985.33 35,978.00
Thomas Feeney 11,992.67 23,985.33 35,978.00
James W. Crystal 3,650.00 7,300.00 10,950.00
Frederick R. Barnard 730.00 1,460.00 2,190.00
Garth R. Beck 730.00 1,460.00 2,190.00
Ronald H. Duncan 730.00 1,460.00 2,190.00
August N. Gassiot 730.00 1,460.00 2,190.00
Allen B. Oblow 730.00 1,460.00 2,190.00
Gary J. Strain 1,095.00 2,190.00 3,285.00
David P. Stagner 183.33 366.67 550.00
Robert A. Carlson 100.00 200.00 300.00
Craig D. Douglas 365.00 730.00 1,095.00
Michael V. Fenstermacher 250.00 500.00 750.00
Michael G. Ridgway 250.00 500.00 750.00
Brian D. O'Mara 250.00 500.00 750.00
Steven B. Micheli 365.00 730.00 1,095.00
Clark B. Wilson 200.00 400.00 600.00
Robert L. Avers 2,919.33 5,838.67 8,758.00
Carl W. Blackburn 730.00 1,460.00 2,190.00
James P. Catalino 1,460.00 2,920.00 4,380.00
William Dane 1,460.00 2,920.00 4,380.00
Donald P. Giles 2,919.33 5,838.67 8,758.00
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
VOTING NON-VOTING
NAME COMMON COMMON
STOCK STOCK TOTAL
- ---- ----- ----- -----
<S> <C> <C> <C>
Nicholas A. Greville 1,460.00 2,920.00 4,380.00
Stanley J. Hoffman 730.00 1,460.00 2,190.00
M. Keith Jones 1,460.00 2,920.00 4,380.00
Paul J. Krakenberg 1,460.00 2,920.00 4,380.00
Gary Mazeffa 1,460.00 2,920.00 4,380.00
Morton H. Meyerson 7,300.67 14,601.33 21,902.00
Peter T. Pearson 730.00 1,460.00 2,190.00
James R. Randolph 1,460.00 2,920.00 4,380.00
William J. Rapp 730.00 1,460.00 2,190.00
John Ritucci 730.00 1,460.00 2,190.00
Richard J. Scheer 730.00 1,460.00 2,190.00
Jack L. Warren 2,919.33 5,838.67 8,758.00
James E. Whittlesey 1,460.00 2,920.00 4,380.00
David W. Wood 730.00 1,460.00 2,190.00
Larry J. Binham, Trustee for the Shannon 5,543.33 11,086.67 16,630.00
Carole Barlow Irrevocable Trust
Larry J. Binham, Trustee for the Diane 5,543.33 11,086.67 16,630.00
Michelle Barlow Irrevocable Trust
Donald A. Poirier 292.00 584.00 876.00
Garen and Sharalyn Staglin 1997 54,076.00 108,152.00 162,228.00
Charitable Remainder Unitrust
Michael F. Hallenberger 730.00 1,460.00 2,190.00
</TABLE>
<PAGE> 65
EXHIBIT D
MANUFACTURERS
1. Apogee Enterprises
2. PPG Industries
3. Saint Gobain
4. Asahi Glass
5. Guardian Glass
6. Pilkington Glass
7. Amilite
8. Carlite
<PAGE> 66
EXHIBIT E
EXECUTIVE OFFICERS
1. Senior Vice President - Marketing and Strategic Planning
2. Senior Vice President - Information Services
3. Senior Vice President - Manufacturing Distribution and Purchasing
4. Senior Vice President - Wholesale Sales
5. Senior Vice President - Client Sales and Support
6. Senior Vice President - Chief Financial Officer and Treasurer
7. Vice President - Finance and Corporate Controller
8. Vice President - Network Operations
9. Vice-President Retail Store Operations, East
10. Vice President Retail Store Operations, West
11. Vice President Store Development and Real Estate
12. Vice-President Human Resources
13. Vice President, Secretary and General Counsel
<PAGE> 1
EXHIBIT 10.11
EXHIBIT F
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of December 20, 1996 (the "Existing
Pledge Agreement"), as amended and restated through December 17, 1997 (as
further amended, modified or supplemented from time to time, this "Agreement"),
made by each of the undersigned (each a "Pledgor" and, together with any other
entity that becomes a party hereto pursuant to Section 23 hereof, the
"Pledgors"), in favor of THE CHASE MANHATTAN BANK, as Collateral Agent (the
"Pledgee"), for the benefit of the Secured Creditors (as defined below). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Safelite Glass Corp. (the "Borrower"), the lenders
from time to time party thereto (the "Banks"), Bankers Trust Company, as
Syndication Agent, Goldman Sachs Credit Partners L.P., as Documentation Agent,
and The Chase Manhattan Bank, as Administrative Agent (together with any
successor agent, the "Administrative Agent", and together with the Pledgee, the
Banks, the Syndication Agent and the Documentation Agent, the "Bank Creditors"),
have entered into a Credit Agreement, dated as of December 20, 1996, as amended
and restated through December 17, 1997 (as further amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, all as contemplated therein;
WHEREAS, the parties hereto have elected to amend and restate
the Existing Pledge Agreement pursuant to this Agreement rather than enter into
a new pledge agreement for their convenience and intend that all indebtedness,
obligations and liens created under the Existing Pledge Agreement and the other
Credit Documents be continued hereunder and thereunder and remain in full force
and effect and not be discharged, paid, satisfied or cancelled;
WHEREAS, the Borrower may from time to time be party to one or
more (i) interest rate agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements, (ii) foreign
exchange contracts, currency swap agreements or similar agreements or
arrangements designed to protect against the fluctuations in currency values
and\or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
"Interest Rate Protection Agreement or Other Hedging Agreement"), with a Bank or
an affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a
<PAGE> 2
Page 2
Bank under the Credit Agreement for any reason, together with such Bank's or
affiliate's successors and assigns, collectively, the "Other Creditors", and
together with Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiary Guaranty, each Pledgor
(other than the Borrower) has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements and Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to
the Borrower under the Credit Agreement that each Pledgor shall have executed
and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) and liabilities of
such Pledgor, now existing or hereafter incurred under, arising out of
or in connection with any Credit Document to which such Pledgor is a
party and the due performance and compliance by such Pledgor with the
terms of each such Credit Document (all such obligations and
liabilities under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Protection
Agreements or Other Hedging Agreements, being herein collectively
called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) and liabilities of
such Pledgor, now existing or hereafter incurred under, arising out
<PAGE> 3
Page 3
of or in connection with any Interest Rate Protection Agreement or
Other Hedging Agreement including, in the case of Pledgors other than
the Borrower, all obligations of such Pledgor under its Guaranty in
respect of Interest Rate Protection Agreements or Other Hedging
Agreements (all such obligations and liabilities under this clause (ii)
being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred
to in clauses (i), (ii) and (iii) above, after an Event of Default
(such term, as used in this Agreement, shall mean any Event of Default
under, and as defined in, the Credit Agreement, or any payment default
by the Borrower under any Interest Rate Protection Agreement or Other
Hedging Agreement and shall in any event include, without limitation,
any payment default (after the expiration of any applicable grace
period) on any of the Obligations (as hereinafter defined)) shall have
occurred and be continuing, the reasonable expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing or
realizing on the Collateral, or of any exercise by the Pledgee of its
rights hereunder, together with reasonable attorneys' fees and court
costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein: (i) the term "Stock" shall mean (x) with respect to corporations
incorporated under the laws of the United States or any State or territory
thereof (each a "Domestic Corporation"), all of the issued and outstanding
shares of capital stock of any Domestic Corporation at any time owned by each
Pledgor and (y) with respect to corporations which are not Domestic Corporations
(each a "Foreign Corporation"), all of the issued and outstanding shares of
capital stock at any time owned by any Pledgor of any Foreign Corporation,
provided that except as provided in the last sentence of this Section 2, such
Pledgor shall not be required to pledge hereunder more than 65% of the total
combined voting power of all classes of capital stock of any Foreign Corporation
entitled to vote; (ii) the term "Notes" shall mean (x) all Intercompany Notes at
any time issued to each Pledgor and (y) all other promissory notes with a face
amount of $500,000 or more from time to time issued to, or held by, each
Pledgor, provided that except as provided in the last sentence of
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this Section 2, no Pledgor shall be required to pledge hereunder any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation; and (iii) the term "Securities" shall mean all of the Stock
and Notes. Each Pledgor represents and warrants that on the date hereof (i) each
Subsidiary of such Pledgor, and the direct ownership thereof, is listed in Annex
A hereto; (ii) the Stock held by such Pledgor consists of the number and type of
shares of the stock of the corporations as described in Annex B hereto; (iii)
such Stock constitutes that percentage of the issued and outstanding capital
stock of the issuing corporation as is set forth in Annex B hereto; (iv) the
Notes held by such Pledgor consist of the promissory notes described in Annex C
hereto where such Pledgor is listed as the Bank; and (v) on the date hereof,
such Pledgor owns no other Securities. In the circumstances and to the extent
provided in Section 7.14 of the Credit Agreement, the 65% limitation set forth
in clause (i)(y) and the limitation in the proviso of clause (ii) in each case
of this Section 2 and in Section 3.2 hereof shall no longer be applicable and
such Pledgor shall duly pledge and deliver to the Pledgee such of the Securities
not theretofore required to be pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes
set forth in Section 1 hereof, each Pledgor hereby: (i) grants to the Pledgee a
security interest in all of the Collateral owned by such Pledgor; (ii) pledges
and deposits as security with the Pledgee the Securities owned by such Pledgor
on the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by
undated stock powers duly executed in blank by such Pledgor in the case of
Stock, or such other instruments of transfer as are acceptable to the Pledgee;
and (iii) assigns, transfers, hypothecates, mortgages, charges and sets over to
the Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement; provided, however, that no Pledgor shall be required to grant
a security interest in any Pledged Securities to the extent that granting such
security interest in such Pledged Securities would violate any contractual
obligation to which such Pledgor is subject.
3.2. Subsequently Acquired Securities. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time to time after the date hereof, such Pledgor will forthwith
pledge and deposit such Securities (or certificates or instruments representing
such Securities) as security with the Pledgee and deliver to the Pledgee
certificates therefor or instruments thereof, duly endorsed in blank in the case
of Notes and accompanied by undated stock powers duly executed in blank in the
case of Stock, or such other instruments of transfer as are acceptable to the
Pledgee, and will
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promptly thereafter deliver to the Pledgee a certificate executed by any
Authorized Officer of such Pledgor describing such Securities and certifying
that the same have been duly pledged with the Pledgee hereunder. Subject to the
last sentence of Section 2 hereof, no Pledgor shall be required at any time to
pledge hereunder any Stock which is more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled to
vote.
3.3. Uncertificated Securities. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2 hereof, if any Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall promptly
take all actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York UCC, if applicable). Each Pledgor further agrees to take such actions
as the Pledgee deems reasonably necessary or desirable to effect the foregoing
and to permit the Pledgee to exercise any of its rights and remedies hereunder,
and agrees to provide an opinion of counsel reasonably satisfactory to the
Pledgee with respect to the creation and perfection of any such pledge of
uncertificated Securities promptly upon request of the Pledgee.
3.4. Definition of Pledged Stock, Pledged Notes, Pledged
Securities and Collateral. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock," all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes," and all of the Pledged Stock and Pledged Notes together are
hereinafter called the "Pledged Securities," which together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, is hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of such Pledgor, endorsed or assigned
in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or
a sub-agent appointed by the Pledgee. The Pledgee agrees to promptly notify the
relevant Pledgor after the appointment of any sub-agent; provided, however, that
the failure to give such notice shall not affect the validity of such
appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
(i) an Event of Default shall have occurred and be continuing and (ii) the
relevant Pledgor has knowledge of or written notice thereof shall have been
given by the Pledgee to the relevant Pledgor (provided that if an Event of
Default specified in Section 9.05 of the Credit
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Agreement shall occur, no such notice shall be required), each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities and to give all consents, waivers or ratifications in
respect thereof; provided that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate any of the terms of
this Agreement, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the position or
interests of the Pledgee or any other Secured Creditor. All such rights of such
Pledgor to vote and to give consents, waivers and ratifications shall cease in
case an Event of Default shall occur and be continuing, and Section 7 hereof
shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless (i) an Event of
Default shall have occurred and be continuing and (ii) the relevant Pledgor has
knowledge of or written notice thereof shall have been given by the Pledgee to
the relevant Pledgor (provided that if an Event of Default specified in Section
9.05 of the Credit Agreement shall occur, no such notice shall be required), all
cash dividends payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor; provided
that all cash dividends payable in respect of the Pledged Stock which are
determined by the Pledgee to represent in whole or in part an extraordinary,
liquidating or other distribution in return of capital shall be paid, to the
extent so determined to represent an extraordinary, liquidating or other
distribution in return of capital, to the Pledgee and retained by it as part of
the Cash Collateral Account (as defined in the Security Agreement). The Pledgee
shall also be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged
Stock by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization;
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other
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Secured Debt Agreement or by law) for the protection and enforcement of its
rights in respect of the Collateral, and the Pledgee shall be entitled, without
limitation, to exercise the following rights, which each Pledgor hereby agrees
to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities
into the Pledgee's name or the name of its nominee or nominees (the
Pledgee agrees to promptly notify the relevant Pledgor after such
transfer; provided, however, that the failure to give such notice shall
not affect the validity of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated
in accordance with its terms, and take any other action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(iv) subject to the giving of written notice to the relevant
Pledgor in accordance with clause (ii) of Section 5 hereof (to the
extent required by such Section 5), to vote all or any part of the
Pledged Stock (whether or not transferred into the name of the Pledgee)
and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto as though it were the
outright owner thereof (each Pledgor hereby irrevocably constituting
and appointing the Pledgee the proxy and attorney-in-fact of such
Pledgor, with full power of substitution to do so); and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine; provided that at least 10 days' written notice of the time
and place of any such sale shall be given to such Pledgor. Each Pledgor
hereby waives and releases to the fullest extent permitted by law any
right or equity of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling
the Collateral and any other security for the Obligations or otherwise.
At any such sale, unless prohibited by applicable law, the Pledgee on
behalf of the Secured Creditors may bid for and purchase all or any
part of the Collateral so sold free from any such right or equity of
redemption. Neither
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the Pledgee nor any Secured Creditor shall be liable for failure to
collect or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or now or hereafter existing at law
or in equity or by statute shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by the Pledgee or any other Secured Creditor of any one or more
of the rights, powers or remedies provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any other Secured Creditor to exercise any such
right, power or remedy shall operate as a waiver thereof. The Secured Creditors
agree that this Agreement may be enforced only by the action of the
Administrative Agent or the Pledgee, in each case acting upon the instructions
of the Required Banks (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least the majority of the
outstanding Other Obligations) and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the Pledgee,
as the case may be, for the benefit of the Secured Creditors upon the terms of
this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency remaining in the
Obligations after receipt of the proceeds of Collateral.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
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11. INDEMNITY. Each Pledgor jointly and severally agrees to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor from and against any and all claims, demands, losses, judgments and
liabilities of whatsoever kind or nature, including all costs and expenses,
including reasonable attorneys' fees, growing out of or resulting from this
Agreement or the exercise by the Pledgee of any right or remedy granted to it
hereunder or under any other Secured Debt Agreement (the "Indemnified
Liabilities") except for those Indemnified Liabilities arising from the
Pledgee's or such other Secured Creditor's gross negligence or willful
misconduct. In no event shall the Pledgee be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent that
the obligations of the Pledgors under this Section 11 are unenforceable for any
reason, each Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join
with the Pledgee in executing and, at such Pledgor's own expense, file and
refile under the applicable UCC or appropriate local equivalent, such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral without the
signature of such Pledgor where permitted by law, and agrees to do such further
acts and things and to execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
13. THE PLEDGEE AS AGENT. (a) The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Pledgee as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Pledgee shall act hereunder on
the terms and conditions set forth herein and in Section 11 of the Credit
Agreement;
(b) The Pledgee's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the
same manner as the Pledgee deals with similar securities and property for its
own account, except that the Pledgee shall have no
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obligation to invest funds held in any Cash Collateral Account and may hold the
same as demand deposits. Neither the Pledgee, any Bank nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
14. TRANSFER BY PLEDGORS. Except for sales or dispositions of
Collateral permitted pursuant to the Credit Agreement, no Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except for the
Liens and security interests created by this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement and liens permitted under
clauses (a) and (e) of Section 8.03 of the Credit Agreement; (ii) it has full
power, authority and legal right to pledge all the Securities pledged by it
pursuant to this Agreement; (iii) this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance with its terms,
except to the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) no consent of any other
party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor in connection with the execution, delivery or performance of this
Agreement, or in connection with the exercise of its rights and remedies
pursuant to this Agreement, except as may be required in connection with the
disposition of the Securities by laws affecting the offering and sale of
securities generally; (v) the execution, delivery and performance of this
Agreement by such Pledgor do not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the certificate
of incorporation or by-laws of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed
of trust, agreement, instrument or undertaking to which such Pledgor or any of
its Subsidiaries is a party or which purports to be binding upon such Pledgor or
any of its Subsidiaries or upon
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any of their respective assets and will not result in the creation or imposition
of any lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock of Subsidiaries of the Borrower have been duly and validly issued, are
fully paid and nonassessable; (vii) each of the Pledged Notes constituting
Intercompany Notes, when executed by the obligor thereof, will be the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (viii)
the pledge and assignment of the Securities pursuant to this Agreement, together
with the delivery of the Securities pursuant to this Agreement (which delivery
has been made), creates a valid and perfected first security interest in such
Securities and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Securities. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and such Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any other instrument or agreement referred to therein, or any assignment or
transfer of any thereof; (ii) any waiver, consent, extension, indulgence or
other action or inaction under or in respect of any such agreement or instrument
or this Agreement; (iii) any furnishing of any additional security to the
Pledgee or its assignee or any acceptance thereof or any release of any security
by the Pledgee or its assignee; (iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to such Pledgor or any Subsidiary of such Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not such Pledgor shall have notice or knowledge
of any of the foregoing.
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17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Pledged Stock, such Pledgor
as soon as practicable and at its expense will use its reasonable efforts, to
the extent it has the right and authority to do so, to cause the issuer of such
Pledged Stock to effect (and to keep effective) a registration and will use its
reasonable efforts to cause such qualification and compliance to be effected
(and be kept effective) as may be so requested and as would permit or facilitate
the sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933 as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with any other government
requirements; provided that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will cause to be furnished to the
Pledgee by the issuer such number of prospectuses, offering circulars or other
documents incident thereto as the Pledgee from time to time may reasonably
request, and will indemnify the Pledgee, each other Secured Creditor and all
others participating in the distribution of the Pledged Stock against all
claims, losses, damages and liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished (or failed to be furnished) in writing to such Pledgor or
issuer by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine
to exercise its right to sell all or any part of the Pledged Securities pursuant
to Section 7 hereof, such Pledged Securities or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Pledged Securities or part thereof by private
sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration; provided that at least 10 days' notice of the time and place
of any such sale shall be given to such Pledgor. Without limiting the generality
of the foregoing, in any such event the Pledgee, in its sole and absolute
discretion: (i) may proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Securities or
part thereof
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shall have been filed under such Securities Act; (ii) may approach and negotiate
with a single possible purchaser to effect such sale; and (iii) may restrict
such sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the
distribution or sale of such Pledged Securities or part thereof. In the event of
any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price which the Pledgee,
in its sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration as
aforesaid.
18. TERMINATION; RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will promptly execute and deliver to such Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly release from the security interest created hereby and
assign, transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitment and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, no Note
(as defined in the Credit Agreement) or Letter of Credit is outstanding (other
than Letters of Credit, together with all Fees that have accrued and will accrue
thereon through the stated termination date of such Letters of Credit, which
have been supported in a manner satisfactory to the Letter of Credit Issuer as
provided in the Credit Agreement) and all other Obligations (other than
indemnities described in Section 11 hereof and in Section 12.13 of the Credit
Agreement which are not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed in connection with a sale or other disposition permitted by
Section 8.02 of the Credit Agreement or is otherwise released at the direction
of the Required Banks (or all the Banks if required by Section 12.12 of the
Credit Agreement), the Pledgee, at the request and expense of such Pledgor will
duly release from the security interest created hereby and assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in possession of the Pledgee and has not theretofore been
released pursuant to this Agreement and will execute all instruments as may be
reasonably necessary to accomplish the same.
<PAGE> 14
Page 14
(c) At any time that a Pledgor desires that Collateral be
released as provided in the foregoing Section 18(a) or (b), it shall deliver to
the Pledgee a certificate signed by an Authorized Officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
Section 18(a) or (b).
19. PLEDGOR'S RETAINED RIGHTS. In order to permit Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to Section 5 hereof and/or to receive the dividends and distributions that it is
authorized to receive and retain pursuant to Section 6 hereof, the Pledgee
shall, if necessary, upon the written request of Pledgor, from time to time
execute and deliver to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may reasonably request.
20. NOTICES, ETC. All notices and other communications
hereunder shall be in writing and shall be delivered or mailed by first class
mail, postage prepaid, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: William Caggiano Telephone No.: (212) 270-1338
Telecopier No.: (212) 972-0009
(c) if to any Bank (other than the Pledgee), at such address
as such Bank shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Pledgor and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly affected
thereby and the Pledgee (with the written consent of either (x) the Required
Banks (or all the Banks if required by Section 12.12 of the Credit Agreement) at
all times prior to the time on which all Credit Document
<PAGE> 15
Page 15
Obligations have been paid in full or (y) the holders of at least a majority of
the outstanding Other Obligations at all times after the time on which all
Credit Document Obligations have been paid in full); provided that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors (as defined below) of such Class. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, i.e., whether (i)
the Bank Creditors as holders of the Credit Document Obligations or (ii) the
Other Creditors as holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (i)
with respect to the Credit Document Obligations, the Required Banks and (ii)
with respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
22. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings in this Agreement are for purposes of reference
only and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument.
23. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.13 and/or 8.15 of the
Credit Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
* * *
<PAGE> 16
Page 16
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address: SAFELITE GLASS CORP.,
Safelite Glass Corp. as a Pledgor
1105 Schrock Road
Columbus, OH 43227
By: /s/ Douglas A. Herron
------------------------------
Attention: Douglas A. Herron Title: Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Collateral Agent
By: /s/ Bruce Borden
---------------------------
Title: Vice President
<PAGE> 1
Exhibit 10.12
AMENDMENT NO. 1 TO SHAREHOLDERS AGREEMENT
AMENDMENT NO. 1, DATED AS OF MARCH 26, 1998 (THE "AMENDMENT") TO
SHAREHOLDERS AGREEMENT, dated as of December 18, 1997 (the "Agreement") by and
among Safelite Glass Corp. ("Safelite"), Belron (USA) BV ("Belron"), the Kellman
Shareholders (as defined therein), TH Lee (as defined therein) and the
Management Shareholders (as defined therein).
WHEREAS, pursuant to Section 14 of the Agreement, the parties hereto
desire to modify certain terms and conditions of the Agreement as specifically
set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. AMENDMENT TO THE AGREEMENT.
1. Section 2(a)(i) of the Agreement is hereby amended by deleting
the following:
"until the Triggering Day, the authorized number of directors
on the Board shall be established at ten (10) directors;" and
inserting in lieu thereof the following:
"until the Triggering Day, the authorized number of directors
on the Board shall be established at an even number between
eight (8) and sixteen (16);"
2. Section 2(a)(ii) of the Agreement is hereby amended by
deleting the following:
"the following individuals shall be elected to the Board:"
and inserting in lieu thereof the following:
"individuals shall be elected to the Board as follows:"
3. Section 2(a)(ii)(A)(1) of the Agreement is hereby amended by
deleting the following:
"five (5) representatives designated by Belron (which
designees initially shall be Ronnie Lubner, M. Louis
Shakinovsky, John E. Mason, Adrian F. Jones and Selwyn
Herson), determined by a vote of the Belron Shareholders
owning a majority of the Shareholder Shares held by all Belron
Shareholders (the "Belron Directors"); and"
<PAGE> 2
and inserting in lieu thereof the following:
"one-half of the Board members shall be designated by Belron,
determined by a vote of the Belron Shareholders owning a
majority of the Shareholder Shares held by all Belron
Shareholders (the "Belron Directors"); and"
4. Section 2(a)(ii)(A)(2) of the Agreement is hereby amended by
deleting the following:
"five (5) representatives designated by TH Lee (which
designees initially shall be Garen K. Staglin, John F. Barlow,
Anthony J. DiNovi, Scott M. Sperling and Seth W. Lawry),
determined by a vote of the TH Lee Shareholders and Management
Shareholders owning a majority of the Shareholder Shares held
by all TH Lee Shareholders and Management Shareholders (the
"TH Lee Directors").
and inserting in lieu thereof the following:
"one-half of the Board shall be designated by TH Lee,
determined by a vote of the TH Lee Shareholders and Management
Shareholders owning a majority of the Shareholder Shares held
by all TH Lee Shareholders and Management Shareholders (the
"TH Lee Directors").
B. RATIFICATION, ETC. Except as otherwise expressly set forth
herein, all terms and conditions of the Agreement are hereby ratified and
confirmed and shall remain in full force and effect. Except as expressly set
forth herein, nothing herein shall be construed to be an amendment or a waiver
of any requirements of the Agreement. All references in the Agreement to the
Agreement shall, from and after the date hereof, be deemed to be references to
the Agreement as amended by this Amendment.
C. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
D. GOVERNING LAW. This Amendment shall be governed by the laws of
the State of New York as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies, without giving effect
to provisions thereof regarding conflict of laws.
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal to be effective as of the date first above written.
BELRON (USA) BV
By: /s/ Louis Shakinovsky
-------------------------------
Name: Louis Shakinovsky
Title: Director
THOMAS H. LEE EQUITY FUND III, L.P.
By: /s/ Anthony J. Dinovi
-------------------------------
Name: Anthony J. DiNovi
Title: Vice President
- 3 -
<PAGE> 1
EXHIBIT 10.13
AMENDMENT OF THE 1998 STOCK OPTION PLAN
WHEREAS, this Board of Directors deems it to be in the best interest of
the Corporation to increase the number of shares of Class B Common Stock for
which options may be granted under the 1998 Stock Option Plan from 350,000 to
410,000;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
recommends that the Stockholders of the Corporation approve the following
amendments to the 1998 Stock Option Plan:
Section 2(a) of the 1998 Stock Option Plan to read in full as
follows:
The total number of shares of the authorized but unissued or
Treasury shares of the Class B Non-Voting Common Stock, $0.01 par
value, of the Company ("Common Stock") for which options may be granted
under the Plan shall not exceed 410,000 shares, subject to adjustment
as provided in Section 12 hereof.
The last paragraph in Section 5 of the 1998 Stock Option Plan to read
in full as follows:
The maximum number of shares of the Company's Common Stock
with respect to which an option or options may be granted to any
employee in any calendar year shall not exceed 410,000 shares, taking
into account shares subject to options granted and terminated, or
repriced, during such calendar year.
FURTHER RESOLVED, that, subject to the approval of the foregoing
amendments by the Stockholders, the Corporation reserve, from its authorized and
unissued shares of Class B Common Stock 410,000 shares of the Corporation's
Class B Common Stock for issuance upon the exercise of options granted pursuant
to the Corporation's 1998 Stock Option Plan; and,
FURTHER RESOLVED, that each of the officers of the Corporation be, and
each of them is hereby, authorized and directed to execute on behalf of the
Corporation such instruments, and to perform such further acts, as he or she, in
his or her sole discretion, deems necessary or desirable to effectuate the
intent of the foregoing resolutions.
<PAGE> 1
EXHIBIT 10.14
REGISTRATION AGREEMENT
This REGISTRATION AGREEMENT (this "Agreement"), dated as of December
18, 1997, is by and among SAFELITE GLASS CORP., a Delaware corporation (the
"Company"), BELRON (USA) BV, a company organized under the laws of the
Netherlands ("Belron"), those shareholders of the Company listed on Exhibit A
attached hereto (the "Kellman Shareholders"), those shareholders of the Company
listed on Exhibit B attached hereto, including THOMAS H. LEE EQUITY FUND III,
L.P., a Delaware limited partnership ("TH Lee")(collectively, the "TH Lee
Shareholders"), and those shareholders of the Company listed on Exhibit C
attached hereto (collectively, the "Management Shareholders"). Belron, each of
the Kellman Shareholders, each of the TH Lee Shareholders and each of the
Management Shareholders are referred to herein individually as a "Shareholder"
and collectively as the "Shareholders".
WITNESSETH:
WHEREAS, the Company and the Shareholders deem it desirable to enter
into this Agreement to establish certain rights and restrictions with respect to
the registration of the shares of capital stock held by the Shareholders.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
of the parties hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following terms will have the meaning for purposes
of this Agreement set forth below for such term.
"AFFILIATE" of any Person means a Person controlling, under common
control with or controlled by such Person.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day on which business is ordinarily conducted
in the State of New York, excluding Saturday, Sunday or any day on which the
national banks located in the City of New York are required by law (other than a
general banking moratorium or holiday for a period exceeding more than four (4)
consecutive days) to be closed. If any notice or event is required to be
delivered or occur, pursuant to the terms of this Agreement, on a day which is
not a Business Day, such notice or event shall be delivered or occur on the next
Business Day after the original required delivery or occurrence date.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the shares of Voting Common Stock and Non-Voting
Common Stock.
<PAGE> 2
"IPO" means an initial public offering of the Company's capital stock
pursuant to the Securities Act.
"NON-VOTING COMMON STOCK" means the Class B Non-Voting Common Stock of
the Company, par value $0.01 per share.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity, or any department, agency or political
subdivision thereof.
"PUBLIC SALE" means any sale of any Registrable Securities to the
public pursuant to an offering registered under the Securities Act or to the
public through a broker, dealer or market maker pursuant to the provisions of
Rule 144 adopted under the Securities Act.
"REGISTRABLE SECURITIES" means any shares of Common Stock held by the
Shareholders; provided, however, that Registrable Securities shall not include
any shares of Common Stock that have been registered pursuant to the Securities
Act or that have been sold to the public pursuant to Rule 144 of the Commission
promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"VOTING COMMON STOCK" means the Class A Voting Common Stock of the
Company, par value $0.01 per share.
2. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. Subject to the terms and conditions set
forth below, at any time after the Company has completed an IPO, Shareholders
may request registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations"), and registration under the Securities Act of all or
any portion of their Registrable Securities on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations"), if available, as follows:
(i) TH Lee shall have the right to request up to two (2)
Demand Registrations.
(ii) From and after the earlier of (i) (x) four (4) years
from the date hereof and (y) such time as TH Lee has
exercised its right to request one (1) Demand
Registration as provided herein, or (ii) such time as
TH Lee has exercised its right to request two (2)
Demand Registrations as provided herein, Belron shall
have the right to request up to two (2) Demand
Registrations.
(iii) After Belron has exercised its right to request two
Demand Registrations, TH Lee shall have the right to
request a third Demand Registration if, at
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<PAGE> 3
the time of such request, the TH Lee Shareholders, in
the aggregate, hold more than ten percent (10%) of
the outstanding Common Stock.
(iv) Notwithstanding anything in this Agreement to the
contrary, no Shareholder shall be entitled to request
a Demand Registration with respect to, and the
Company shall not be obligated to take any action to
effect the registration of, any shares of Voting
Common Stock held by the Shareholders for the first
three (3) years after the date of this Agreement.
All registrations requested pursuant to this SECTION 2(a) are referred
to herein as "Demand Registrations". Each request for a Demand Registration
shall specify the approximate number of Registrable Securities requested to be
registered. Within ten (10) days after receipt of any such request, the Company
shall give written notice of such requested registration to all other holders of
Registrable Securities and shall, subject to Sections 2(c) and 2(d) hereof,
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within fifteen
(15) days after the receipt of the Company's notice; provided that Belron shall
not have the right to be included in any Demand Registrations requested by TH
Lee; provided further that the Kellman Shareholders shall not have the right to
be included in any Demand Registrations requested by any person until: (i) the
third year anniversary of the date of this Agreement and (ii) such time as the
Kellman Shareholders own at least one more share of Common Stock than the TH Lee
Shareholders.
(b) REGISTRATION EXPENSES; DEMAND REGISTRATIONS. The Company shall pay
all Registration Expenses (as defined in SECTION 6(a) hereof) for Demand
Registrations requested by the holders of Registrable Securities provided in
(a), above, whether or not any such Demand Registration becomes effective. A
registration shall not count as one of the permitted Demand Registrations until
it has become effective (unless such Demand Registration has not become
effective due to the fault of, or at the request of, the holders requesting such
registration).
(c) PRIORITY ON DEMAND REGISTRATIONS. The Company shall not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of at least 65% of the
Registrable Securities initially requesting such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering, exceeds the number of Registrable Securities and
other securities, if any, which can be sold therein without adversely affecting
the marketability of the offering, the Company shall include in such
registration (i) first, the Registrable Securities of the Shareholder(s)
requesting such Demand Registration (TH Lee or Belron, as the case may be), (ii)
second, the Registrable Securities of the other Shareholders entitled to be
included in such Demand Registration pro rata among such Shareholders on the
basis of the number of shares of Registrable Securities owned by each such
Shareholder and (iii) third, other securities requested to be included in such
Demand Registration.
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<PAGE> 4
(d) RESTRICTIONS ON LONG-FORM REGISTRATIONS. The Company shall not be
obligated to effect any Demand Registration within ninety (90) days after the
effective date of a previous Demand Registration or a previous registration in
which the holders of Registrable Securities were given piggyback rights pursuant
to SECTION 3 hereof and in which there was no reduction in the number of
Registrable Securities requested to be included. The Company may postpone for up
to ninety (90) days the filing or the effectiveness of a registration statement
for a Demand Registration if the Company reasonably determines in good faith
that such Demand Registration could reasonably be expected to have a material
adverse effect on any proposal or plan by the Company to engage in any material
transaction including any acquisition of assets, any merger, consolidation,
tender offer, reorganization or similar transaction; provided that, in such
event, the holders of Registrable Securities initially requesting such Demand
Registration shall be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration shall not count as one of the permitted
Demand Registrations hereunder and the Company shall pay all Registration
Expenses in connection with such registration.
(e) SELECTION OF UNDERWRITERS. The Shareholder requesting a Demand
Registration (Belron or TH Lee, as the case may be) shall have the right to
select the investment banker(s) and manager(s) to administer the offering,
subject to the approval of the Company, which shall not be unreasonably
withheld.
3. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any
of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and shall, subject to Sections 3(c) and
3(d) hereof, include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within twenty (20) days after the receipt of the Company's notice; provided that
the Kellman Shareholders shall not have the right to be included in any
Piggyback Registrations until: (i) the third year anniversary of the date of
this Agreement and (ii) such time as the Kellman Shareholders own at least one
more share of Common Stock than the TH Lee Shareholders.
(b) PIGGYBACK EXPENSES. The Company shall pay all Registration Expenses
(as defined in SECTION 6(A) hereof) incurred by the holders of Registrable
Securities for Piggyback Registrations, whether or not any such Piggyback
Registration becomes effective.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company shall include in such registration (i) first, the
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<PAGE> 5
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration by the TH Lee Shareholders, the
Management Shareholders and/or the Kellman Shareholders, pro rata among such
Shareholders on the basis of the number of shares of Registrable Securities
owned by each such Shareholder, (iii) third, the Registrable Securities
requested to be included in such registration by Belron and (iv) fourth, other
securities requested to be included in such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company shall include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the Registrable
Securities requested to be included in such registration by the TH Lee
Shareholders, the Management Shareholders and/or the Kellman Shareholders, pro
rata among such Shareholders on the basis of the number of shares of Registrable
Securities owned by each such Shareholder, (iii) third, the Registrable
Securities requested to be included in such registration by Belron and (iv)
fourth, other securities requested to be included in such registration.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities included in such Piggyback Registration, which approval shall not be
unreasonably withheld.
4. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities shall not effect any Public
Sale of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the one hundred and eighty (180)-day period beginning on the effective
date of the registration statement filed by the Company under the Securities Act
for its underwritten IPO (except as part of such underwritten registration),
unless the underwriters managing the registered public offering otherwise agree.
(b) Each holder of Registrable Securities shall not effect any Public
Sale of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the ninety (90)-day period beginning on the effective date of any
underwritten offering pursuant to a registration statement filed by the Company
under the Securities Act (except as part of such underwritten registration)
subsequent to consummation of the Company's IPO, unless the underwriters
managing the registered public offering otherwise agree.
-5-
<PAGE> 6
(c) The Company (i) shall not effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to and during
the ninety (90)-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-8 or
any successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) shall cause each holder of at least five
percent (5%) (on a fully-diluted basis) of its Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
5. REGISTRATION PROCEDURES. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its reasonable best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof by a holder of Registrable Securities
requesting registration, and pursuant thereto the Company shall as expeditiously
as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such registration statement to become effective (provided that, before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the holders of a
majority of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed, which documents shall be
subject to the review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than ninety (90) days
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
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<PAGE> 7
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the National Association of
Securities Dealers, Inc. ("NASD") automated quotation system and, if listed on
the NASD automated quotation system, use its reasonable best efforts to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11 Aa2-1 of the Commission or, failing that, to secure NASDAQ authorization
for such Registrable Securities and, without limiting the generality of the
foregoing, use its reasonable best efforts to arrange for at least two market
makers to register as such with respect to such Registrable Securities with the
NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including effecting a stock split or a combination of
shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, its counsel and the independent accountants who have certified the
financial
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<PAGE> 8
statements to supply information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement, as shall be reasonably necessary in order to conduct a reasonable and
diligent investigation within the meaning of the Securities Act;
(j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months beginning with the first day
of the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which, in its sole and
exclusive judgment, might be deemed to be an underwriter or a controlling person
of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(m) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of such Registrable
Securities; and
(n) use its reasonable best efforts to furnish to each seller of
Registrable Securities, addressed to such seller, a "cold comfort" letter signed
by the independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein), and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities and
such other matters as the holders of a majority of the Registrable Securities
being sold reasonably request (provided that such Registrable Securities
constitute at least 25% of the securities covered by such registration
statement);
6. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of
-8-
<PAGE> 9
compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, fees and disbursements of custodians, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne as provided in this Agreement, except
that the Company shall, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on the NASD
automated quotation system.
(b) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
-9-
<PAGE> 10
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be limited
to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate in any
registration hereunder which is underwritten unless such Person (i) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
9. NOTICES. Any notices, consents or other communication required to be sent or
given hereunder by any of the parties shall in every case be in writing and
shall be deemed properly served if (a) delivered personally, (b) sent by
registered or certified mail, in all such cases with first class postage
prepaid, return receipt requested, (c) delivered by a recognized overnight
courier service, or (d) sent by telecopy transmission to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing.
-10-
<PAGE> 11
(a) If to the Company:
Safelite Glass Corp.
1105 Schrock Road
Columbus, Ohio 43229
Attention: President
Telecopy: (614) 842-3323
with copies to:
Belron International NV
Kaya Krisolito
P.O. Box 342
Kralendijk
Bonaire
Netherlands Antilles
Telecopy: 59-9-75-449
and
Director: Group Legal Services
Attention: Louis Shakinovsky
Belron International
c/o The Kings Observatory
Old Deer Park Richmond
Surrey TW9 2AZ
ENGLAND
Telecopy: 44-181-948-7340
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz, Esq.
Telecopy: (312) 902-1061
-11-
<PAGE> 12
and
The Thomas H. Lee Company
75 State Street
Boston, Massachusetts, 02109
Attention: Anthony J. DiNovi
Scott M. Sperling
Telecopy: (617) 227-3514
and
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Charles W. Robins, Esq.
Telecopy: (617) 951-1295
(b) If to Belron:
Belron International NV
Kaya Krisolito
P.O. Box 342
Kralendijk
Bonaire
Netherlands Antilles
Telecopy: 59-9-75-449
with a copies to:
Director: Group Legal Services
Attention: Louis Shakinovsky
Belron International
c/o The Kings Observatory
Old Deer Park Richmond
Surrey TW9 2AZ
ENGLAND
Telecopy: 44-181-948-7340
-12-
<PAGE> 13
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David R. Shevitz, Esq.
Telecopy: (312) 902-1061
(c) If to the TH Lee Shareholders or the Management
Shareholders:
The Thomas H. Lee Company
75 State Street
Boston, Massachusetts, 02109
Attention: Anthony J. DiNovi
Scott M. Sperling
Telecopy: (617) 227-3514
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Charles W. Robins, Esq.
Telecopy: (617) 951-1295
Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after date of delivery to the overnight courier if
sent by overnight courier or (z) if transmitted by telecopy, upon receipt of
confirmation of delivery, provided that, within three (3) days after such
transmission, service is also made by personal delivery.
10. SEVERABILITY. If any provision of this Agreement is, for any reason, invalid
or unenforceable, the remaining provisions of this Agreement will nevertheless
be valid and enforceable and will remain in full force and effect. Any provision
of this Agreement that is held invalid or unenforceable by a court of competent
jurisdiction will be deemed modified to the extent necessary to make it valid
and enforceable and as so modified will remain in full force and effect.
11. AMENDMENT AND WAIVER. This Agreement may be amended, or any provision of
this Agreement may be waived, provided that any such amendment or waiver will be
binding on a party hereto only if such amendment or waiver is set forth in a
writing executed by the parties
-13-
<PAGE> 14
hereto; provided, however, that the consent of a Shareholder shall not be
required with respect to an amendment to or waiver of this Agreement if (i) such
Shareholder owns less than five percent (5%) of the fully-diluted Common Stock
then outstanding and (ii) such amendment or waiver could not reasonably be
expected to adversely affect such Shareholder in any material respect. The
waiver by any such party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other breach.
12. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the others.
13. GOVERNING LAW. This Agreement will be governed and construed in accordance
with the laws of the State of New York, without giving effect to its principles
of conflicts of laws.
14. HEADINGS. The headings of this Agreement are included for purposes of
convenience only and will not affect the construction or the interpretation of
any of its provisions of this Agreement.
15. SUCCESSORS. Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
16. ASSIGNMENT. This Agreement shall not be directly or indirectly assignable or
delegable by any party without the prior written consent of the other parties.
17. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties hereto to express their mutual intent
and no rule of strict construction will be applied against any party hereto.
18. DOCUMENTS. Each party will execute all documents and take such other actions
as the other parties may reasonably request in order to consummate the
transactions provided for herein and to accomplish the purposes of this
Agreement.
19. ARBITRATION. If any controversy or claim from the application and
interpretation of the terms of this Agreement cannot be settled by the parties
hereto within a reasonable period of time, then the controversy or claim shall
be settled by arbitration, unless the controversy or claim is prohibited by the
law from being arbitrated. Arbitration shall be the sole remedy for disputes
hereunder, unless the controversy or claim is prohibited by the law from being
arbitrated. The arbitration shall be conducted in accordance with the Rules of
the American Arbitration Association (the "AAA Rules") and held in New York, New
York. Any party hereunder seeking arbitration shall file a written notice of
demand for arbitration with the other parties hereunder and with the American
Arbitration Association. Three arbitrators shall be appointed in accordance with
the AAA Rules ("Arbitrators"). The decision and award of the Arbitrators shall
be binding among the parties and judgment on the award may be entered in any
court having jurisdiction as
-14-
<PAGE> 15
provided in SECTION 21 hereof. The Arbitrators shall have no previous employment
by, consulting with, or business relationship with any party or its Affiliates.
Questions regarding discovery or evidentiary issues shall be referred to the
Arbitrators and the Arbitrators' decisions shall be final and binding on such
issues. The Arbitrators may consider any material relevant to the subject matter
of the dispute even if such material may also relate to issues not subject to
arbitration. An audio recording of any arbitration hearing shall be made. The
Arbitrators may award any appropriate relief including without limitation, an
award for damages, specific performance or other equitable relief. The award
shall be in writing, accompanied by a written opinion detailing the reasons for
the award, and signed by the Arbitrators. Each party to such arbitration shall
each pay its own expenses and fees, except that administrative expenses
(including the Arbitrators' fee) shall be divided equally between the parties to
the arbitration.
20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES HERETO
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OR FORUM
NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. BELRON HEREBY DESIGNATES AND APPOINTS
CT CORPORATION SYSTEM AT 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604 AND SUCH
OTHER PERSONS AS MAY HEREINAFTER BE SELECTED BY BELRON, WHICH PERSONS SHALL
IRREVOCABLY AGREE IN WRITING TO SO SERVE AS AGENT TO RECEIVE ON BELRON'S BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BELRON TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL
TO BELRON AS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BELRON REFUSES TO ACCEPT SERVICE,
THEN BELRON HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY OTHER PARTY
HERETO TO SERVE PROCESS ON BELRON IN ANY OTHER MANNER PERMITTED BY LAW.
21. WAIVER OF JURY TRIAL. THE PARTIES HEREBY, BY EXECUTION HEREOF, WAIVE ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY
-15-
<PAGE> 16
DEALINGS AMONG THEM RELATING TO THE SUBJECT MATTER OF THE PROPOSED TRANSACTIONS
AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HEREBY
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
22. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
23. REMEDIES. The parties acknowledge and agree that money damages may not be an
adequate remedy for any breach or threatened breach by a party of its
obligations under this Agreement, and for that reason, among others, the
non-breaching party or parties will be irreparably damaged and may not have an
adequate remedy at law. Therefore, notwithstanding the provisions of SECTION 19,
the parties agree that the other party may pursue injunctive relief and/or
specific performance in any court of competent jurisdiction to enforce any of
the provisions of this Agreement. If any of the parties institutes any such
action or proceeding solely for injunctive relief any/or specific performance,
then the other parties hereby waive arbitration thereof under SECTION 19 for
such action solely as it relates to injunctive relief and/or specific
performance and shall not assert in any such action or proceeding the claim or
defense that any matter of injunctive relief and/or specific performance is to
be submitted to arbitration under SECTION 19. The foregoing remedy is in
addition to any and all other remedies which a party may have.
24. NO INCONSISTENT AGREEMENTS. None of the parties hereto will hereafter enter
into any agreement which is inconsistent with the rights granted to the parties
in this Agreement.
-16-
<PAGE> 17
25. THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
to this Agreement and their respective permitted successors and assigns, any
rights or remedies under or by reason of this Agreement.
26. ROLE OF TRUSTEE. Each of Allan B. Muchin, Maurice Raizes and Marvin
Zimmerman is executing this Agreement as a trustee of the Kellman Trusts listed
on Exhibit A attached hereto and shall be conclusively deemed to be executing
such documents only in such capacity. Each of Allan B. Muchin, Maurice Raizes
and Marvin Zimmerman shall not be liable personally to any other party hereto in
the event of any actual or alleged breach of any provision contained herein by
any of the Kellman Trusts. Each party agrees to look solely to the estate of the
Kellman Trusts and not to any trustee thereof in such trustee's individual
capacity for any damages or other remedy for a breach by a Kellman Trust of any
provision contained herein, except in the event of any willful breach of this
Agreement established by clear and convincing evidence.
* * * *
-17-
<PAGE> 18
IN WITNESS WHEREOF, parties hereto have caused this Registration
Agreement to be signed as of the date first written above.
SAFELITE GLASS CORP.:
By: /s/ D. A. Herron
-----------------------------------
Name: Douglas A. Herron
Title: Treasurer
BELRON (USA) BV:
By: /s/ [signature illegible]
-----------------------------------
Name:
Title:
KELLMAN SHAREHOLDERS:
FAMILY REVOCABLE TRUST
By: /s/ Joseph Kellman
------------------------------------
Joseph Kellman, not individually
but solely as trustee
J-K GIFT TRUST U/A/D 12/16/91
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF RICHARD U/A/D 11/8/95
JOSEPH KELLMAN 1995 DESCENDANTS TRUST
FOR THE FAMILY OF CELIA U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF JACK U/A/D 11/8/95
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF RICHARD U/A/D 11/8/95
-18-
<PAGE> 19
JOSEPH KELLMAN 1995 GIFT TRUST FOR THE
FAMILY OF CELIA U/A/D 11/8/95
By: /s/ Allan B. Muchin
------------------------------------
Allan B. Muchin, not
individually but solely as
trustee of each of the above
seven trusts
By: /s/ Maurice P. Raizes
------------------------------------
Maurice Raizes, not individually
but solely as trustee of each of
the above seven trusts
By: /s/ Marvin Zimmerman
------------------------------------
Marvin Zimmerman, not
individually but solely as
trustee of each of the above
seven trusts
TH LEE SHAREHOLDERS:
THOMAS H. LEE EQUITY FUND, III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
-19-
<PAGE> 20
THL-CCI INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
General Partner
By: /s/ Scott M. Sperling
-----------------------------------
Scott M. Sperling
MANAGEMENT SHAREHOLDERS:
/s/ Garen K. Staglin
-----------------------------------
Garen K. Staglin
/s/ John F. Barlow
-----------------------------------
John F. Barlow
/s/ D. A. Herron
-----------------------------------
Douglas A. Herron
/s/ Elizabeth A. Wolszon
-----------------------------------
Elizabeth A. Wolszon
/s/ Douglas R. Maehl
-----------------------------------
Douglas R. Maehl
/s/ James K. West
-----------------------------------
James K. West
/s/ Poe A. Timmons
-----------------------------------
Poe A. Timmons
-20-
<PAGE> 21
EXHIBIT A
THE KELLMAN SHAREHOLDERS
<TABLE>
<CAPTION>
TRUST TRUSTEE(S)
----- ----------
<S> <C>
Family Revocable Trust Joseph Kellman
J-K Gift Trust Allan B. Muchin
U/A/D 12/16/91 Maurice Raizes
Marvin Zimmerman
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Jack Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Richard Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
Joseph Kellman 1995 Allan B. Muchin
Descendants Trust for the Family of Celia Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Jack Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Richard Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
Joseph Kellman 1995 Gift Allan B. Muchin
Trust for the Family of Celia Maurice Raizes
U/A/D 11/8/95 Marvin Zimmerman
</TABLE>
-21-
<PAGE> 22
EXHIBIT B
TH LEE SHAREHOLDERS
Thomas H. Lee Equity Fund III, L.P.
Thomas H. Lee Foreign Fund III, L.P.
THL-CCI Investors Limited Partnership
Big Bend Investments, L.P.
-22-
<PAGE> 23
EXHIBIT C
MANAGEMENT SHAREHOLDERS
Garen K. Staglin
John F. Barlow
Douglas A. Herron
Elizabeth A. Wolszon
Douglas R. Maehl
Poe A. Timmons
James A. West
Thomas Feeney
James W. Crystal
Frederick R. Barnard
Garth R. Beck
Ronald H. Duncan
August N. Gassiot
Allen B. Oblow
Gary J. Strain
David P. Stagner
Robert A. Carlson
Craig D. Douglas
Michael V. Fenstermacher
Michael G. Ridgway
Brian D. O'Mara
Steven B. Micheli
Clark B. Wilson
Robert L. Avers
Carl W. Blackburn
James P. Catalino
William Dane
Donald P. Giles
Nicholas A. Greville
Stanley J. Hoffman
M. Keith Jones
Paul J. Krakenberg
Gary Mazeffa
Morton H. Meyerson
Peter T. Pearson
James R. Randolph
William J. Rapp
John Ritucci
Richard J. Scheer
Jack L. Warren
James E. Whittlesey
David W. Wood
Larry J. Binham, Trustee for the Shannon
Carole Barlow Irrevocable Trust
Larry J. Binham, Trustee for the Diane
Michelle Barlow Irrevocable Trust
Donald A. Poirier
Garen and Sharalyn Staglin 1997
Charitable Remainder Unitrust
Michael F. Hallenberger
-23-
<PAGE> 1
EXHIBIT 10.15
EXHIBIT G
SECURITY AGREEMENT
among
SAFELITE GLASS CORP.
and
THE CHASE MANHATTAN BANK,
as Collateral Agent
Dated as of December 20, 1996, as amended and restated through December
17, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
SECURITY INTERESTS........................................ 2
1.1. Grant of Security Interests..................................................... 2
1.2. Power of Attorney............................................................... 3
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS........................ 3
2.1. Necessary Filings............................................................... 3
2.2. No Liens........................................................................ 4
2.3. Other Financing Statements...................................................... 4
2.4. Chief Executive Office; Records................................................. 4
2.5. Location of Inventory and Equipment............................................. 5
2.6. Trade Names; Change of Name..................................................... 5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS............................ 6
3.1. Additional Representations and Warranties....................................... 6
3.2. Maintenance of Records.......................................................... 6
3.3. Direction to Account Debtors; Contracting Parties; etc.......................... 6
3.4. Modification of Terms; etc...................................................... 7
3.5. Collection...................................................................... 7
3.6. Instruments..................................................................... 7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS............................. 8
4.1. Additional Representations and Warranties....................................... 8
4.2. Licenses and Assignments........................................................ 8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.3. Infringements................................................................... 8
4.4. Preservation of Marks........................................................... 9
4.5. Maintenance of Registration..................................................... 9
4.6. Future Registered Marks......................................................... 9
4.7. Remedies........................................................................ 9
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS.............................. 10
5.1. Additional Representations and Warranties....................................... 10
5.2. Licenses and Assignments........................................................ 10
5.3. Infringements................................................................... 10
5.4. Maintenance of Patents.......................................................... 11
5.5. Prosecution of Patent Application............................................... 11
5.6. Other Patents and Copyrights.................................................... 11
5.7. Remedies........................................................................ 11
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL............................... 12
6.1. Protection of Collateral Agent's Security....................................... 12
6.2. Further Actions................................................................. 12
6.3. Financing Statements............................................................ 13
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT........................... 13
7.1. Remedies; Obtaining the Collateral Upon Default................................. 13
7.2. Remedies; Disposition of the Collateral......................................... 14
7.3. Waiver of Claims................................................................ 15
7.4. Application of Proceeds......................................................... 16
7.5. Remedies Cumulative............................................................. 17
7.6. Discontinuance of Proceedings................................................... 18
</TABLE>
(ii)
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<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE VIII
INDEMNITY............................................ 18
8.1. Indemnity....................................................................... 18
8.2. Indemnity Obligations Secured by Collateral; Survival........................... 19
ARTICLE IX
DEFINITIONS........................................... 19
ARTICLE X
MISCELLANEOUS.......................................... 24
10.1. Notices......................................................................... 24
10.2. Waiver; Amendment............................................................... 25
10.3. Obligations Absolute............................................................ 25
10.4. Successors and Assigns.......................................................... 25
10.5. Headings Descriptive............................................................ 26
10.6. Governing Law................................................................... 26
10.7. Assignor's Duties............................................................... 26
10.8. Termination; Release............................................................ 26
10.9. Counterparts.................................................................... 27
10.10. The Collateral Agent............................................................ 27
10.11. Additional Assignors............................................................ 27
ANNEX A Schedule of Chief Executive Offices and other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Assignment of Security Interest in United States Trademarks and Patents
ANNEX H Assignment of Security Interest in United States Copyrights
</TABLE>
(iii)
<PAGE> 5
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 20, 1996 (the
"Existing Security Agreement"), as amended and restated through December 17,
1997, among each of the undersigned (each an "Assignor" and, together with any
other entity that becomes a party hereto pursuant to Section 10.11 hereof, the
"Assignors") and The Chase Manhattan Bank, as Collateral Agent (the "Collateral
Agent"), for the benefit of the Secured Creditors (as defined below). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Safelite Glass Corp. (the "Borrower"), the lenders
from time to time party thereto (the "Banks"), Bankers Trust Company, as
Syndication Agent, Goldman Sachs Credit Partners L.P., as Documentation Agent,
and The Chase Manhattan Bank, as Administrative Agent (together with any
successor agent, the "Administrative Agent," and together with the Collateral
Agent, the Syndication Agent, the Documentation Agent and the Banks, the "Bank
Creditors"), have entered into a Credit Agreement, dated as of December 20,
1996, as amended and restated through December 17, 1997 (as further amended,
modified or supplemented from time to time, the "Credit Agreement"), providing
for the making of Loans to the Borrower and the issuance of, and participation
in, Letters of Credit for the account of the Borrower, all as contemplated
therein;
WHEREAS, the parties hereto have elected to amend and restate
the Existing Security Agreement pursuant to this Agreement rather than enter
into a new security agreement for their convenience and intend that all
indebtedness, obligations and liens created under the Existing Security
Agreement and the other Credit Documents be continued hereunder and thereunder
and remain in full force and effect and not be discharged, paid, satisfied or
cancelled;
WHEREAS, the Borrower may from time to time be party to one or
more (i) interest rate agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements, (ii) foreign
exchange contracts, currency swap agreements or similar agreements or
arrangements designed to protect against the fluctuations in currency values
and\or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
"Interest Rate Protection Agreement or Other Hedging Agreement"), with a Bank or
an affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's
<PAGE> 6
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successors and assigns, collectively, the "Other Creditors", and together with
the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor
(other than the Borrower) has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to
the Borrower under the Credit Agreement that the Assignors shall have executed
and delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of its Obligations,
each Assignor does hereby assign and transfer unto the Collateral Agent, and
does hereby pledge and grant to the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest of first priority in all of
the right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts (other than Excluded Contracts
except to the extent provided in the definition thereof), together with all
Contract Rights arising thereunder, (iii) all Inventory, (iv) all Equipment, (v)
all Investment Property, (vi) all Marks, together with the registrations and
right to all renewals thereof, and the goodwill of the business of such Assignor
symbolized by the Marks, (vii) all Patents and Copyrights, (viii) all computer
pro grams of such Assignor and all intellectual property rights therein (to the
extent not constituting Excluded Contracts) and all other proprietary
information of such Assignor, including, but not limited to, trade secrets, (ix)
all other Goods, General Intangibles, Chattel Paper, Documents and Instruments,
(x) the Cash Collateral Account and all monies, securities and instruments
deposited or required to be deposited in such Cash Collateral
<PAGE> 7
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Account, and (xi) all Proceeds and products of any and all of the foregoing (all
of the above, collectively, the "Collateral"). Notwithstanding the foregoing,
the term "Collateral" shall not include any Equipment that, as of the date
hereof, serves as security for any Existing Indebtedness but only to the extent
that (and so long as) the terms of such Existing Indebtedness specifically
prohibit the granting of a prior, pari passu or junior Lien and security
interest in such Equipment, and then only so long as any such Existing
Indebtedness remains outstanding after which time such Equipment shall be
subject to the security interests and Liens created by this Agreement.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve and perfect the security
interest granted by such Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral creates a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement or other appropriate documents under the Uniform
<PAGE> 8
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Commercial Code as enacted in any relevant jurisdiction or in the United States
Patent and Trademark Office or United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of, or has rights in, all Collateral free from any Lien, security interest,
encumbrance or other right, title or interest of any Person (other than
Permitted Liens), and such Assignor shall defend the Collateral to the extent of
its rights therein against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering any interest of any kind in the
Collateral (other than financing statements filed in respect of Permitted
Liens), and so long as the Total Commitment has not been terminated or any Note
remains unpaid or any of the Obligations remain unpaid or any Interest Rate
Protection Agreement or Other Hedging Agreement or Letter of Credit remains in
effect (other than Letters of Credit, together with all Fees that have accrued
and will accrue thereon through the stated termination date of such Letters of
Credit, which have been supported in a manner satisfactory to the Letter of
Credit Issuer as provided in the Credit Agreement) or any Obligations are owed
with respect thereto, such Assignor will not execute or authorize to be filed in
any public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Assignor or as permitted
by the Credit Agreement.
2.4. Chief Executive Office; Records. The chief executive
office of such Assignor is located at the address or addresses indicated on
Annex A hereto for such Assignor. Such Assignor will not move its chief
executive office except to such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.4. The originals of all
documents evidencing all Receivables and Contract Rights of such Assignor and
the only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office, at one or
more of the locations set forth on Annex B hereto or at such new locations as
such Assignor may establish in accordance with the last sentence of this Section
2.4. All Receivables and Contract Rights of such Assignor are, and will continue
to be, maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, the office locations
described above or such new location established in accordance with the last
sentence of this Section 2.4. No Assignor shall establish new locations for such
offices until (i) it shall have given to the Collateral Agent not less than 30
days' prior written notice of its intention to do so, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new
location, it shall have taken all action, satisfactory to the Collateral Agent,
to maintain the
<PAGE> 9
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security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.5. Location of Inventory and Equipment. (a) All Inventory
and Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor (other than (i) immaterial
portions of Inventory as may be transferred to another location in connection
with a sale of such Inventory in the ordinary course of business, so long as
such sale occurs within 30 days from the date of such transfer and (ii) various
spare parts held for maintenance or repair of Equipment). Each Assignor agrees
that all Inventory and Equipment now held or subsequently acquired by it shall
be kept at (or shall be in transport to) any one of the locations shown on Annex
B hereto, or such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.5 (other than (i) immaterial portions of
Inventory may be transferred to another location in connection with a sale of
such Inventory in the ordinary course of business, so long as such sale occurs
within 30 days from the date of such transfer or (ii) various spare parts held
for maintenance or repair of Equipment). Any Assignor may establish a new
location for Inventory and Equipment only if (i) it shall have given to the
Collateral Agent not less than 30 days prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may request and (ii) with
respect to such new location, it shall have taken all action satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
(b) Inventory and Equipment may be transferred in accordance
with the terms of the Credit Agreement subject to procedures set forth herein
relating to releases of Collateral.
2.6. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or in the preceding 12 months has had or has operated
in any jurisdiction under, any trade names, fictitious names or other names
except its legal name and such other trade or fictitious names as are listed on
Annex C hereto. No Assignor shall change its legal name or assume or operate in
any jurisdiction under any trade, fictitious or other name except those names
listed on Annex C hereto and new names established in accordance with the last
sentence of this Section 2.7. No Assignor shall assume or operate in any
jurisdiction under any new trade, fictitious or other name until (i) it shall
have given to the Collateral Agent not less than 30 days' prior written notice
of its intention so to do, clearly describing such new name and the
jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the Collateral Agent may request and (ii)
with respect to such new name, it shall have taken all action requested by the
Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
<PAGE> 10
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ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable is genuine and represents a bona
fide transaction completed in accordance with the terms and provisions contained
in any document related thereto and for which payment is owed to Assignor.
3.2. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense accurate records of its Receivables and
Contracts, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and such Assignor will
make the same available on such Assignor's premises to the Collateral Agent for
inspection, at such Assignor's own cost and expense, at any and all reasonable
times upon reasonable prior notice to an Authorized Officer of such Assignor.
Upon the occurrence and during the continuance of an Event of Default and at the
request of the Collateral Agent, such Assignor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including, without limitation, all documents evidencing the Receivables and all
Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor). Upon the occurrence and during the continuance of an Event of
Default and if the Collateral Agent so directs, such Assignor shall legend, in
form and manner satisfactory to the Collateral Agent, the Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any Assignor, such Assignor agrees (x) upon the
written request of the Collateral Agent, unless an Event of Default of the type
specified in Section 9.05 has occurred and is continuing, to cause all payments
on account of the Receivables and Contracts to be made directly to the Cash
Collateral Account, (y) that the Collateral Agent may, at its option, directly
notify the obligors with respect to any Receivables and/or under any Contracts
to make payments with respect thereto as provided in the preceding clause (x)
and (z) that the Collateral Agent may enforce collection of any Receivables and
Contracts and may adjust, settle or compromise the amount of payment thereof, in
the same manner and to the same extent as such Assignor. Without notice to or
assent by any Assignor, the Collateral Agent
<PAGE> 11
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may apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account which application shall be effected in the manner provided in
Section 7.4 of this Agreement. The reasonable costs and expenses (including
reasonable attorneys' fees) of collection, whether incurred by the Assignor or
the Collateral Agent, shall be borne by the relevant Assignor. The Collateral
Agent shall use reasonable efforts to deliver a copy of each notice referred to
in the preceding clause (y) to the relevant Assignor not later than the date of
delivery of such notice to obligors; provided that the failure by the Collateral
Agent to so notify such Assignor shall not affect the effectiveness of such
notice or the other rights of the Collateral Agent created by this Section 3.3.
3.4. Modification of Terms; etc. No Assignor shall rescind or
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify in any material respect any term thereof or make any material adjustment
with respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof. Each
Assignor will duly fulfill all obligations on its part to be fulfilled under or
in connection with the Receivables and Contracts and will do nothing to impair
the rights of the Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance
with reasonable business practices to cause to be collected from the account
debtor named in each of its Receivables or obligor under any Contract, as and
when due (including, without limitation, amounts which are delinquent, such
amounts to be collected in accordance with generally accepted lawful collection
procedures) any and all amounts owing under or on account of such Receivable or
Contract, and apply forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Receivable or under such Contract,
except that, prior to the occurrence of an Event of Default, any Assignor may
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables and Contracts (i) an extension or renewal of the time or times
of payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
of collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any
Instrument constituting Collateral with a face amount of $500,000 or more, such
Assignor will within 10 Business Days notify the Collateral Agent thereof, and
upon request by the Collateral Agent will promptly deliver such Instrument to
the Collateral Agent appropriately endorsed
<PAGE> 12
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in blank or to the order of the Collateral Agent as further security hereunder
as requested by the Collateral Agent.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks listed in Annex D hereto for such Assignor
and that said listed Marks constitute all the United States marks and
applications for United States marks registered in the United States Patent and
Trademark Office that such Assignor presently owns or uses in connection with
its business. Each Assignor represents and warrants that it owns, is licensed to
use or otherwise has the right to use all Marks that it uses. Each Assignor
further warrants that it has no knowledge of any third party claim that any
aspect of such Assignor's present or currently contemplated business operations
infringes or will infringe any trademark, service mark or trade name held or
used by any other party. Each Assignor represents and warrants that it is the
true and lawful owner of or otherwise has the right to use all U.S. trademark
registrations and applications listed in Annex D hereto and that said
registrations are valid, subsisting, have not been cancelled and that such
Assignor is not aware of any third-party claim that any of said registrations is
invalid or unenforceable, or is not aware that there is any reason that any of
said registrations is invalid or unenforceable, or is not aware that there is
any reason that any of said applications will not pass to registration. Each
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and Trademark Office
in order to effect an absolute assignment of all right, title and interest in
each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted
by the Credit Agreement or this Agreement, each Assignor hereby agrees not to
divest itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who such Assignor believes is infringing or diluting or
otherwise violating in any material respect any of such Assignor's rights in and
to any Mark material to such Assignor's business, or with respect to any party
claiming that such Assignor's use of any Mark material to such Assignor's
business violates in any material respect any property right of that party. Each
Assignor further agrees, absent direction by the Collateral Agent to the
contrary, diligently to prosecute if it determines to do so in accordance with
reasonable business judgment any
<PAGE> 13
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Person infringing any such Mark owned by such Assignor, in accordance with
reasonable business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its
Marks in interstate commerce during the time in which this Agreement is in
effect, sufficiently to preserve such Marks as trademarks or service marks under
the laws of the United States; provided that no Assignor shall be obligated to
preserve any Mark in the event such Assignor determines, in its reasonable
business judgment, that the preservation of such Mark is no longer desirable in
the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. Sections 1051 et seq. to maintain trademark registrations,
including but not limited to affidavits of use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
registered Marks pursuant to 15 U.S.C. Sections 1058(a), 1059 and 1065,
and shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent; provided that no Assignor shall
be obligated to maintain registration of any Mark in the event that such
Assignor determines, in its reasonable business judgment, that such maintenance
of such Mark is no longer necessary or desirable in the conduct of its business.
Each Assignor agrees to notify the Collateral Agent three (3) months prior to
the dates on which the affidavits of use or the applications for renewal
registration are due with respect to any registered Mark that the affidavits of
use or the renewal is being processed or being abandoned, as the case may be.
4.6. Future Registered Marks. If any Mark registration issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, such Mark shall be
deemed to have been assigned by such Assignor for security to the Collateral
Agent and within 30 days of receipt of a certificate of registration, such
Assignor shall deliver to the Collateral Agent a copy of such certificate, and
an assignment for security in such Mark, to the Collateral Agent and at the
expense of such Assignor, confirming the assignment for security in such Mark to
the Collateral Agent hereunder, the form of such security to be substantially
the same as the form hereof or in such other form as may be reasonably
satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the relevant
Assignor, take any or all of the following actions: (i) declare the entire
right, title and interest of such Assignor in and to each of the Marks, together
with all trademark rights and rights of protection to the same, vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
rights, title and interest shall immediately vest in the Collateral Agent for
the benefit of the
<PAGE> 14
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Secured Creditors, and the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 4.1 hereof to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and use or sell the Marks and the goodwill of such
Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to refrain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, execute such other and
further documents that the Collateral Agent may request to further confirm this
and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office to the
Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in (i) all material United States trade secrets and proprietary
information necessary to operate the business of the Assignor (the "Trade Secret
Rights"), (ii) the Patents listed in Annex E hereto for such Assignor and that
said Patents constitute all the United States patents and applications for
United States patents that such Assignor now owns and (iii) the Copyrights
listed in Annex F hereto for such Assignor and that said Copyrights constitute
all registrations of United States copyrights and applications for United States
copyright registrations that such Assignor now owns. Each Assignor further
warrants that it has no knowledge of any third party claim that any aspect of
such Assignor's present or currently contemplated business operations infringes
or will infringe any patent or any copyright owned or held by any other party or
such Assignor has misappropriated any trade secret or proprietary information
owned or held by any other party. Each Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office or the United States Copyright Office
in order to effect an absolute assignment of all right, title and interest in
each Patent and Copyright, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted
by the Credit Agreement or this Agreement, each Assignor hereby agrees not to
divest itself of any right under any Patent or Copyright absent prior written
approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such
<PAGE> 15
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Assignor with respect to any infringement, contributing infringement or active
inducement to infringe in any Patent or Copyright material to such Assignor's
business or to any claim that the practice of any such Patent or the use of any
such Copyright violates any property right of a third party, or with respect to
any misappropriation of any Trade Secret Right material to such Assignor's
business or any claim that practice of any such Trade Secret Right violates any
property right of a third party. Each Assignor further agrees, absent direction
of the Collateral Agent to the contrary, diligently to prosecute, if it
determines to do so in accordance with reasonable business judgment, any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right in accordance with reasonable business practices.
5.4. Maintenance of Patents. At its own expense, each Assignor
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. Section 41 to maintain in force rights under each Patent, absent prior
written consent of the Collateral Agent; provided that no Assignor shall be
obligated to maintain any Patent in the event such Assignor determines, in its
reasonable business judgment, that the maintenance of such Patent is no longer
necessary or desirable in the conduct of its business.
5.5. Prosecution of Patent Application. At its own expense,
each Assignor shall diligently prosecute all applications for United States
Patents listed in Annex E hereto for such Assignor and shall not abandon any
such application prior to exhaustion of all administrative and judicial
remedies, absent written consent of the Collateral Agent; provided that no
Assignor shall be obligated to prosecute any application in the event such
Assignor determines, in its reasonable business judgment, that the prosecuting
of such application is no longer necessary or desirable in the conduct of its
business.
5.6. Other Patents and Copyrights. Within 30 days of the
acquisition or issuance of a United States Patent, registration of a Copyright,
or acquisition of a registered Copyright, or of filing of an application for a
United States Patent or Copyright, such United States Patent or Copyright shall
be deemed to have been assigned by such Assignor for security to the Collateral
Agent, and the relevant Assignor shall deliver to the Collateral Agent a copy of
said Copyright or certificate or registration of, or application therefor, said
Patents, as the case may be, with an assignment for security as to such Patent
or Copyright, as the case may be, to the Collateral Agent and at the expense of
such Assignor, confirming the assignment for security, the form of such
assignment for security to be substantially the same as the form hereof or in
such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may by written notice to the relevant Assignor,
take any or all of the following actions: (i) declare the entire right, title,
and interest of such Assignor in each of the Patents and Copyrights vested in
the Collateral Agent for the benefit of the Secured
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Creditors, in which event such right, title, and interest shall immediately vest
in the Collateral Agent for the benefit of the Secured Creditors, in which case
the Collateral Agent shall be entitled to exercise the power of attorney
referred to in Section 5.1 hereof to execute, cause to be acknowledged and
notarized and to record said absolute assignment with the applicable agency;
(ii) take and practice or sell the Patents and Copyrights; and (iii) direct such
Assignor to refrain, in which event such Assignor shall refrain, from practicing
the Patents and using the Copyrights directly or indirectly, and such Assignor
shall execute such other and further documents as the Collateral Agent may
request further to confirm this and to transfer ownership of the Patents and
Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor
will do nothing to impair the rights of the Collateral Agent in the Collateral.
Each Assignor will at all times keep its Inventory and Equipment insured in
favor of the Collateral Agent, at such Assignor's own expense to the extent and
in the manner provided in the Credit Agreement; all policies or certificates
with respect to such insurance (and any other insurance maintained by such
Assignor) (i) shall be endorsed to the Collateral Agent's satisfaction for the
benefit of the Collateral Agent (including, without limitation, by naming the
Collateral Agent as additional insured and loss payee) and (ii) shall state that
such insurance policies shall not be cancelled or revised without at least 30
days' prior written notice thereof by the insurer to the Collateral Agent; and
certified copies of such policies or certificates shall be deposited with the
Collateral Agent. If any Assignor shall fail to insure its Inventory and
Equipment in accordance with the preceding sentence, or if any Assignor shall
fail to so endorse and deposit all policies or certificates with respect
thereto, the Collateral Agent shall have the right (but shall be under no
obligation) to procure such insurance and such Assignor agrees to promptly
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance. Except as otherwise permitted to be retained by the relevant Assignor
pursuant to the Credit Agreement, the Collateral Agent shall, at the time such
proceeds of such insurance are distributed to the Secured Creditors, apply such
proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of such Assignor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to such
Assignor.
6.2. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the
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nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, which the Collateral Agent deems reasonably appropriate or advisable to
perfect, preserve or protect its security interest in the Collateral.
6.3. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law, shall have all rights
as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
such Assignor's premises where any of the Collateral is located and
remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent;
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(iii) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in
accordance with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof,
or direct the relevant Assignor to sell, assign or otherwise liquidate
any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there
delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further
action by the Collateral Agent as provided in Section 7.2
hereof; and
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition; and
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as
the Collateral Agent shall in its sole judgment determine (taking into
account such provisions as may be necessary to protect and preserve
such Marks, Patents or Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Collateral Agent, in each case acting upon
the instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least the
majority of the outstanding Other Obligations) and that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Administrative Agent or the Collateral Agent or the holders of at least a
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majority of the outstanding Interest Rate Obligations, as the case may be, for
the benefit of the Secured Creditors upon the terms of this Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent may bid for and become the purchaser
of the Collateral or any item thereof, offered for sale in accordance with this
Section without accountability to the relevant Assignor. If, under mandatory
requirements of applicable law, the Collateral Agent shall be required to make
disposition of the Collateral within a period of time which does not permit the
giving of notice to the relevant Assignor as hereinabove specified, the
Collateral Agent need give such Assignor only such notice of disposition as
shall be reason ably practicable in view of such mandatory requirements of
applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR
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ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and each Assignor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights here under; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement, the Mortgages or
Additional Security Documents require proceeds of collateral under such Security
Documents to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the
Collateral Agent of the type provided in clauses (iii) and (iv) of the
definition of Obligations;
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(c) hereof with each Secured Creditor receiving
an amount equal to its outstanding Obligations or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share of
the amount remaining to be distributed; and
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(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) and
following the termination of this Agreement pursuant to Section 10.8
hereof, to the relevant Assignor or, to the extent directed by such
Assignor or a court of competent jurisdiction, to whomever may be
lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the Bank Creditors
hereunder shall be made to the Agent under the Credit Agreement for the account
of the Bank Creditors and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditors.
(d) For purposes of applying payments received in accordance
with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Other Creditors
for a determination (which the Administrative Agent, each Other Creditor and the
Secured Creditors agree (or shall agree) to provide upon request of the
Collateral Agent) of the outstanding Obligations owed to the Bank Creditors or
the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Bank Creditor or an Other Creditor)
to the contrary, the Administrative Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Credit
Document Obligations other than principal, interest and regularly accruing fees
are owing to any Bank Creditor and (y) no Interest Rate Protection Agreement or
Other Hedging Agreement, or Other Obligations in respect thereof, are in
existence.
(e) It is understood that the Assignors shall remain jointly
and severally liable to the extent of any deficiency remaining in the
Obligations after receipt of the proceeds of the Collateral.
7.5. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such
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rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees, agents
and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including attorneys' fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, con-
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trol, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other govern mental body or unit, any tort
(including, without limitation, claims arising or imposed under the doctrine of
strict liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Assignor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof,
each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral, provided that the
Collateral Agent shall not pay amounts due with respect to taxes, Liens or
insurance in respect of the Collateral unless such Assignor shall have failed to
do so following notice by the Collateral Agent.
(c) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
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ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms
of the terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"Agreement" shall mean this Security Agreement as the same may
be further modified, supplemented or amended from time to time in accordance
with its terms.
"Assignor" shall have the meaning provided in the first
paragraph of this Agreement.
"Bank Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Banks" shall have the meaning provided in the recitals to
this Agreement.
"Borrower" shall have the meaning provided in the recitals to
this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with, and in the sole dominion and control
of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of
this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor
(including, without limitation, all rights to payment) under each Contract
(including each Excluded Contract to the extent provided in the definition
thereof).
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"Contracts" shall mean all contracts (other than Excluded
Contracts except to the extent provided in the definition thereof) between any
Assignor and one or more additional parties (including, without limitation, any
Interest Rate Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright
owned by any Assignor, including any registrations of any Copyrights, in the
United States Copyright Office or the equivalent thereof in any foreign country,
as well as any application for a United States copyright registration now or
hereafter made with the United States Copyright Office by any Assignor.
"Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Credit Document Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor and, in any event,
shall include, but shall not be limited to, all machinery, equipment,
furnishings, movable trade fixtures and vehicles now or hereafter owned by any
Assignor and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Excluded Contracts" shall mean one or more Contracts which by
their terms would be breached by the grant of the security interests created
therein pursuant to the terms of this Agreement (it being understood and agreed,
however, that notwithstanding the foregoing, all rights to payment for money due
or to become due pursuant to any Excluded Contract shall be subject to the
security interests created pursuant to this Agreement).
"Event of Default" shall mean any Event of Default under, and
as defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
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"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Goods" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of
this Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreements or Other Hedging
Agreements" shall have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods, supplies, incidentals, packaging materials, labels,
materials and any other items used or usable in manufacturing, processing,
packaging or shipping same; in all stages of production -- from raw materials
through work-in-process to finished goods -- and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor.
"Investment Property" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Liens" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement, lessor's interest
in a financing lease or analogous instrument, in, of, or on any Assignor's
property.
"Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration of any trademarks
and service marks, or the equivalent thereof in any foreign country in the
United States Patent and Trademark Office and any trade dress including logos
and/or designs used by any Assignor in the United States or any foreign country.
"Obligations" shall mean (i) all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and
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liabilities of each Assignor, now existing or hereafter incurred under, arising
out of or in connection with any Credit Document to which such Assignor is a
party and the due performance and compliance by each Assignor with the terms of
each such Credit Document (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements or Other Hedging Agreements,
being herein collectively called the "Credit Document Obligations"); (ii) all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, in the case of Assignors other than the Borrower, all
obligations of such Assignor under its Guaranty in respect of Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the "Other
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i) and (ii), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
"Other Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to
which any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by any Assignor.
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental
<PAGE> 28
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authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to payment
for goods sold or leased or services performed by such Assignor, whether now in
existence or arising from time to time hereafter, including, without limitation,
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (a) all
security pledged, assigned, hypothecated or granted to or held by such Assignor
to secure the foregoing, (b) all of any Assignor's right, title and interest in
and to any goods, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in
Section 10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Termination Date" shall have the meaning provided in Section
10.8 of this Agreement.
"Trade Secret Rights" shall have the meaning provided in
Section 5.1 of this Agreement.
ARTICLE X
MISCELLANEOUS
<PAGE> 29
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10.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at it address set forth opposite its
signature below;
(b) if to the Collateral Agent:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: William Caggiano
Telephone No.: (212) 270-1338
Facsimile No.: (212) 972-0009
(c) if to any Bank Creditor (other than the Collateral Agent),
at such address as such Bank Creditor shall have specified in the
Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor directly affected
thereby and the Collateral Agent (with the consent of (x) either the Required
Banks or, to the extent required by Section 12.12 of the Credit Agreement, all
of the Banks at all times prior to the time on which all Credit Document
Obligations have been paid in full or (y) the holders of at least a majority of
the outstanding Other Obligations at all times after the time on which all
Credit Document Obligations have been paid in full); provided that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class of Secured Creditors (and not all Secured Creditors in a like or similar
manner) shall require the written consent of the Requisite Creditors of such
Class of Secured Creditors. For the purpose of this Agreement the term "Class"
shall mean each class of Secured Creditors, i.e., whether (x) the Bank
Creditors as holders of the Credit Document Obligations or (y) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to the Credit Document Obligations, the Required Banks and (y)
with respect to the Other Obligations, the holders of at least a majority
<PAGE> 30
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of all obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and its successors and assigns; provided that no
Assignor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Collateral Agent. All
agreements, statements, representations and warranties made by each Assignor
herein or in any certificate or other instrument delivered by such Assignor or
on its behalf under this Agreement shall be considered to have been relied upon
by the Secured Creditors and shall survive the execution and delivery of this
Agreement, the other Credit Documents and the Interest Rate Protection
Agreements or Other Hedging Agreements regardless of any investigation made by
the Secured Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Assignor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of each
Assignor under or with respect to any Collateral.
<PAGE> 31
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10.8. Termination; Release. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note or Letter of Credit is outstanding
(other than Letters of Credit, together with all Fees that have accrued and will
accrue thereon through the stated termination date of such Letters of Credit,
which have been supported in a manner satisfactory to the Letter of Credit
Issuer in its sole and absolute discretion) and all other Obligations (other
than any indemnities described in Section 8.1 hereof and in Section 12.13 of the
Credit Agreement which are not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed in connection with a sale or other disposition permitted by
Section 8.02 of the Credit Agreement or is otherwise released at the direction
of the Required Banks (or all the Banks if required by Section 12.12 of the
Credit Agreement), the Collateral Agent, at the request and expense of such
Assignor, will duly release from the security interest created hereby and
assign, transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that the respective Assignor desires that
Collateral be released as provided in the foregoing Section 10.8(a) or (b), it
shall deliver to the Collateral Agent a certificate signed by an Authorized
Officer stating that the release of the respective Collateral is permitted
pursuant to Section 10.8(a) or (b) hereof.
10.9. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement.
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It is expressly understood and agreed that the obligations of the Collateral
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth in Section 11 of the Credit Agreement.
10.11. Additional Assignors. It is understood and agreed that
any Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.13 and/or 8.15 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
* * *
<PAGE> 33
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
Address: SAFELITE GLASS CORP.,
Safelite Glass Corp. as an Assignor
1105 Schrock Road
Columbus, OH 43227
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
Address: U.S. AUTO GLASS CENTERS, INC.,
2 North Lasalle as an Assignor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
Address: U.S.A. GLAS, INC.,
2 North Lasalle as an Assignor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
Address: CARCOMP SERVICES, INC.,
2 North Lasalle as an Assignor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
<PAGE> 34
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THE CHASE MANHATTAN BANK,
as Collateral Agent
By: /s/ Bruce Borden
---------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.16
EXHIBIT H
SUBSIDIARY GUARANTY
GUARANTY, dated as of December 20, 1996 (the "Existing
Guaranty"), as amended and restated through December 17, 1997 (as further
amended, modified or supplemented from time to time, this "Guaranty"), made by
each of the undersigned (each, a "Guarantor" and, together with any other entity
that becomes a party hereto pursuant to Section 26 hereof, the "Guarantors").
Except as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Safelite Glass Corp. ("Borrower"), the lenders from
time to time party thereto (the "Banks"), Bankers Trust Company, as Syndication
Agent, Goldman Sachs Credit Partners L.P., as Documentation Agent, and The Chase
Manhattan Bank, as Administrative Agent (together with any successor agent, the
"Administrative Agent"), have entered into a Credit Agreement, dated as of
December 20, 1996, as amended and restated through December 17, 1997 (as further
amended, modified or supplemented from time to time, the "Credit Agreement"),
providing for the making of Loans to the Borrower and the issuance of, and
participation in, Letters of Credit for the account of the Borrower, all as
contemplated therein (the Banks, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Collateral Agent are herein called the
"Bank Creditors");
WHEREAS, the parties hereto have elected to amend and restate
the Existing Guaranty pursuant to this Guaranty rather than enter into a new
guaranty for their convenience and intend that all indebtedness, obligations and
liens created under the Existing Guaranty and the other Credit Documents be
continued hereunder and thereunder and remain in full force and effect and not
be discharged, paid, satisfied or cancelled;
WHEREAS, the Borrower may from time to time be party to one or
more (i) interest rate agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements, (ii) foreign
exchange contracts, currency swap agreements or similar agreements or
arrangements designed to protect against the fluctuations in currency values
and\or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
"Interest Rate Protection Agreement or Other Hedging Agreement"), with a Bank or
an affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a
<PAGE> 2
Page 2
Bank under the Credit Agreement for any reason, together with such Bank's or
affiliate's successors and assigns, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Creditors");
WHEREAS, each Guarantor is a Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans under the
Credit Agreement that each Guarantor shall have executed and delivered this
Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans by the Borrower under the Credit Agreement and the entering
into of Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Guaranty in order to satisfy the conditions
described in the preceding paragraph and to induce the Banks to make Loans to
the Borrower and Other Creditors to enter into Interest Rate Protection
Agreements or Other Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Creditors and hereby covenants and agrees with each
Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Bank Creditors under the Credit Agreement (including,
without limitation, indemnities, Fees and interest thereon) and the other Credit
Documents to which the Borrower is a party, whether now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
such other Credit Document and the due performance and compliance with the terms
of the Credit Documents by the Borrower (all such principal, interest,
liabilities and obligations under this clause (i), except to the extent
consisting of obligations or liabilities with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein collectively
called the "Credit Document Obligations"); and (ii) to each Other Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities owing by the Borrower under any Interest Rate Protection
Agreements or Other
<PAGE> 3
Page 3
Hedging Agreements, whether now in existence or hereafter arising, and the due
performance and compliance by the Borrower with all terms, conditions and
agreements contained therein (all such obligations and liabilities being herein
collectively called the "Other Obligations", and together with the Credit
Document Obligations are herein collectively called the "Guaranteed
Obligations"). Anything herein or in any other Credit Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Credit Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors. Each Guarantor understands, agrees and confirms that
the Creditors may enforce this Guaranty without proceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made on
the same basis as payments by the Borrower under Sections 4.03 and 4.04 of the
Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 9.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or in crease, decrease or change in personnel by the
Borrower or (e) any payment made to any Creditor on the Guaranteed Obligations
which any Creditor repays the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor or the Borrower,
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower and
<PAGE> 4
Page 4
whether or not any other Guarantor, any other guarantor of the Borrower or the
Borrower be joined in any such action or actions. Each Guarantor waives, to the
fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof. Any payment by the
Borrower or other circumstance which operates to toll any statute of limitations
as to the Borrower shall operate to toll the statute of limitations as to each
Guarantor.
5. Each Guarantor hereby waives (to the fullest extent
permitted by applicable law) notice of acceptance of this Guaranty and notice of
any liability to which it may apply, and waives demands for performance,
promptness, diligence, presentment, demand of payment, protest, notices of
nonperformance, notices of protest, notices of the existence, creation or
incurring of new or additional indebtedness, notice of dishonor or nonpayment of
any such liabilities, suit or taking of other action by the Administrative Agent
or any other Creditor against, and any other notice to, any party liable thereon
(including such Guarantor or any other guarantor or the Borrower).
6. Any Creditor may (except as shall be required by applicable
statute and cannot be waived) at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations, any security therefor, or any
liability incurred directly or indirectly in respect thereof, and the
guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any
<PAGE> 5
Page 5
part thereof to the payment of any liability (whether due or not) of
the Borrower to creditors of the Borrower;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of such other
instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Creditor would otherwise have. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Creditor to
inquire into the capacity or powers of the Borrower or any of its Subsidiaries
or the officers, directors, partners or agents acting or purporting to act on
its behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
<PAGE> 6
Page 6
9. Any indebtedness of the Borrower now or hereafter held by
any Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred and is continuing,
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Creditors and be paid over to the Creditors on account of the
indebtedness of the Borrower to the Creditors, but without affecting or
impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any indebtedness of the Borrower to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Creditors
that it will not exercise any right of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute or law and cannot be waived) to require the
Creditors to: (i) proceed against the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other party; (ii) proceed against or exhaust
any security held from the Borrower, any other Guarantor, any other guarantor of
the Borrower or any other party; or (iii) pursue any other remedy in the
Creditors' power whatsoever. Each Guarantor waives (to the fullest extent
permitted by applicable law) any defense based on or arising out of any defense
of the Borrower, any other Guarantor, any other guarantor of the Borrower or any
other party other than payment in full of the Guaranteed Obligations, including,
without limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Borrower or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or the other Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Creditors may have against the Borrower or any other party,
or any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such election
by the Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
<PAGE> 7
Page 7
(b) Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
(c) Each Guarantor understands, is aware and hereby
acknowledges that to the extent the Guaranteed Obligations are secured by real
property located in the State of California, such Guarantor shall be liable for
the full amount of its liability hereunder notwithstanding foreclosure on such
real property by trustee sale or any other reason impairing such Guarantor's or
any Creditor's right to proceed against any Credit Party. Each Guarantor hereby
waives, to the fullest extent permitted by law, all rights and benefits under
Section 2809 of the California Civil Code purporting to reduce a guarantor's
obligation in proportion to the principal obligation. Each Guarantor hereby
waives all rights and benefits under Section 580a of the California Code of
Civil Procedure purporting to limit the amount of any deficiency judgment which
might be recoverable following the occurrence of a trustee's sale under a deed
of trust and all rights and benefits under Section 580b of the California Code
of Civil Procedure stating that no deficiency may be recovered on a real
property purchase money obligation. Each Guarantor further understands, is aware
and hereby acknowledges that if the Creditors elect to nonjudicially foreclose
on any real property security located in the State of California any right of
subrogation of such Guarantor against the Creditors may be impaired or
extinguished and that as a result of such impairment or extinguishment of
subrogation rights, such Guarantor may have a defense to a deficiency judgment
arising out of the operation of (i) Section 580d of the California Code of Civil
Procedure which states that no deficiency may be recovered on a note secured by
a deed of trust on real property in case such real property is sold under the
power of sale contained in such deed of trust, and (ii) related principles of
estoppel. To the fullest extent permitted by law, each Guarantor waives all
rights and benefits and any defense arising out of the operation of Section 580d
of the California Code of Civil Procedure and related principles of estoppel,
even though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
any Credit Party or any other party or any security. In addition, each Guarantor
hereby waives, to the fullest extent permitted by applicable law, without
limiting the generality of the foregoing or any other provision hereof, all
rights and benefits which might otherwise be available to such Guarantor under
Section 726 of the California Code of Civil Procedure and all rights and
benefits which might otherwise be available to such Guarantor under California
Civil Code Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845, 2848, 2849, 2850,
2899 and 3433.
<PAGE> 8
Page 8
(d) Each Guarantor hereby further waives (to the fullest
extent permitted by applicable law): (1) all rights and defenses arising out of
an election of remedies by the Creditors, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a Guaranteed
Obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise; (2) such Guarantor's rights of
subrogation and reimbursement and any other rights and defenses available to
such Guarantor by reason of the California Civil Code Sections 2787 to 2855,
inclusive, including, without limitation, (i) any defenses such Guarantor may
have to the Guaranteed Obligations by reason of an election of remedies by the
Creditors and (ii) any rights or defenses such Guarantor may have by reason of
protection afforded to the principal borrower with respect to the obligation so
guaranteed pursuant to the antideficiency or other laws of the State of
California limiting or discharging the borrower's indebtedness, including,
without limitation, California Code of Civil Procedure Sections 580a, 580b, 580d
or 726.
11. The Creditors agree that this Guaranty may be enforced
only by the action of the Administrative Agent or the Collateral Agent, in each
case acting upon the instructions of the Required Banks (or, after the date on
which all Credit Document Obligations have been paid in full, the holders of at
least a majority of the outstanding Other Obligations) and that no other
Creditor shall have any right individually to seek to enforce or to enforce this
Guaranty or to realize upon the security to be granted by the Security
Documents, it being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent or the Collateral Agent for the benefit of
the Creditors upon the terms of this Guaranty and the Security Documents. The
Creditors further agree that this Guaranty may not be enforced against any
director, officer, employee, or stockholder of any Guarantor (except to the
extent such stockholder is also a Guarantor hereunder).
12. In order to induce the Banks to make Loans and issue
Letters of Credit pursuant to the Credit Agreement, and in order to induce the
Other Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly
existing corporation and is in good standing under the laws of the
jurisdiction of its organization, and has the corporate power and
authority to own its property and assets and to transact the business
in which it is engaged and presently proposes to engage and (ii) is
duly qualified and is authorized to do business and is in good standing
in all jurisdictions where it is required to be so qualified and where
the failure to be so qualified could reasonably be expected to have a
Material Adverse Effect.
<PAGE> 9
Page 9
(b) Such Guarantor has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this
Guaranty and each other Credit Document to which it is a party and has
taken all necessary corporate action to authorize the execution,
delivery and performance by it of each such Credit Document. Such
Guarantor has duly executed and delivered this Guaranty and each other
Credit Document to which it is a party and each such Credit Document
constitutes the legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except to the extent that the
enforceability hereof or thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such
Guarantor of this Guaranty or any other Credit Document to which it is
a party, nor compliance by it with the terms and provisions hereof or
thereof (i) will contravene any applicable provision of any law,
statute, rule or regulation, or any order, writ, injunction or decree
of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under,
or (other than pursuant to the Security Documents) result in the
creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of such Guarantor or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, credit agreement or other material agreement or
other instrument to which such Guarantor or any of its Subsidiaries is
a party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws of such Guarantor or any of its
Subsidiaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption
by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with,
(i) the execution, delivery and performance of this Guaranty or any
other Credit Document to which such Guarantor is a party, or (ii) the
legality, validity, binding effect or enforceability of this Guaranty
or any other Credit Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or
threatened (i) with respect to such Guarantor that could reasonably be
expected to have a Material Adverse Effect or (ii) that could
reasonably be expected to have a material adverse effect on the rights
or remedies of the Creditors or on the ability of such Guarantor
<PAGE> 10
Page 10
to perform its respective obligations to the Creditors hereunder and
under the other Credit Documents to which it is a party.
13. Each Guarantor covenants and agrees that on and after the
date hereof and until the termination of the Total Commitment and all Interest
Rate Protection Agreements or Other Hedging Agreements and when no Note or
Letter of Credit remains outstanding (other than Letters of Credit, together
with all Fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been supported in a
manner satisfactory to the Letter of Credit Issuer as provided in the Credit
Agreement) and all Guaranteed Obligations have been paid in full (other than
indemnities described in Section 12.13 of the Credit Agreement and analogous
provisions in the Security Documents which are not then due and payable), such
Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 7 or 8 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay
all reasonable out-of-pocket costs and expenses of each Creditor in connection
with the enforcement of this Guaranty and any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) employed by any of the
Creditors).
15. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
16. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and either (x) the Required Banks (or
to the extent required by Section 12.12 of the Credit Agreement, with the
written consent of each Bank) at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Creditors (and not all Creditors in a like or
similar manner) shall require the written consent of the Requisite Creditors (as
defined below) of such Class of Creditors (it being understood that the addition
or release of any Guarantor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the Guarantor so
added or released). For the purpose of this Guaranty the term "Class" shall mean
each class of Creditors, i.e., whether (x) the Bank Creditors as holders of the
Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the
<PAGE> 11
Page 11
purpose of this Guaranty, the term "Requisite Creditors" of any Class shall mean
each of (x) with respect to the Credit Document Obligations, the Required Banks
and (y) with respect to the Other Obligations, the holders of at least a
majority of all obligations outstanding from time to time under the Interest
Rate Protection Agreements or Other Hedging Agreements.
17. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents and Interest Rate Protection
Agreements or Other Hedging Agreements has been made available to its principal
executive officers and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement continuing after any applicable grace period), each Creditor
is hereby authorized at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand here under and although said obligations, liabilities, deposits or
claims, or any of them, shall be contingent or unmatured. Notwithstanding
anything to the contrary contained in this Section 18, no Creditor shall
exercise any such right of set-off without the prior consent of the
Administrative Agent or the Required Banks so long as the Guaranteed Obligations
shall be secured by any Real Property located in the State of California, it
being understood and agreed, however, that this sentence is for the sole benefit
of the Creditors and may be amended, modified or waived in any respect by the
Required Banks without the requirement of prior notice to or consent by any
Credit Party and does not constitute a waiver of any rights against any Credit
Party or against any Collateral.
19. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below and (iii) in the case of any Other Creditor, at such address
as such Other Creditor shall have specified in writing to the Guarantor; or in
any case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
<PAGE> 12
Page 12
20. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
21. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty or any other Credit Document to which such
Guarantor is a party may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, each Guarantor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
such Guarantor, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Guaranty or any other Credit Document to which
such Guarantor is a party brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Guarantor. Each Guarantor further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each Guarantor at its address set forth
opposite its signature below, such service to become effective 30 days after
such mailing. Each Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder or under any other Credit
Document to which such Guarantor is a party that service of process was in any
way invalid or ineffective. Nothing herein shall affect the right of any of the
Creditors to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against each Guarantor in any other
jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty or any other credit document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees
<PAGE> 13
Page 13
not to plead or claim in any such court that such action or proceeding brought
in any such court has been brought in an inconvenient forum.
22. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or other
disposition or liquidation has been approved in writing by the Required Banks
(or all Banks if required by Section 12.12 of the Credit Agreement)) and the
proceeds of such sale, disposition or liquidation are applied in accordance with
the provisions of the Credit Agreement, to the extent applicable, such Guarantor
shall be released from this Guaranty and this Guaranty shall, as to each such
Guarantor or Guarantors, terminate, and have no further force or effect (it
being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock or partnership interests of any
Guarantor shall be deemed to be a sale of such Guarantor for the purposes of
this Section 22).
23. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
24. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
25. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
26. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty after the
date hereof pursuant to Sections 7.13 and/or 8.15 of the Credit Agreement shall
automatically become a Guarantor hereunder by executing a counterpart hereof and
delivering the same to the Agent.
* * *
<PAGE> 14
Page 14
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
Address: U.S. AUTO GLASS CENTERS, INC.,
2 North Lasalle as a Guarantor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
Address: U.S.A. GLAS, INC.,
2 North Lasalle as a Guarantor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
Address: CARCOMP SERVICES, INC.,
2 North Lasalle as a Guarantor
Chicago, Illinois 60602
Attention: Douglas A. Herron By: /s/ Douglas A. Herron
------------------------------
Title: Chief Financial Officer
<PAGE> 15
Accepted and Agreed to:
THE CHASE MANHATTAN BANK,
as Administrative Agent for the Banks
By: /s/ Bruce Borden
-------------------------------
Title: Vice President
<PAGE> 1
Exhibit 12.1
SAFELITE GLASS CORP.
RATIO OF EARNINGS
TO FIXED CHARGES
(Dollars in Millions)
<TABLE>
<CAPTION>
FISCAL YEAR (1) Three Months
Ended
1993 1994 1995 1996 1997 April 4, 1998
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS & LOSSES:
PRE-TAX INCOME (LOSS) FROM
CONTINUING OPERATIONS ($21.6) ($2.9) $7.5 $19.2 $(0.4) $(5.9)
INTEREST EXPENSE 15.5 4.5 6.0 6.7 27.5 10.9
PORTION OF RENTAL EXPENSE
REPRESENTATIVE OF AN INTEREST
FACTOR 11.0 11.5 12.0 12.5 14.3 7.1
----- ----- ----- ----- ------ ------
TOTAL EARNINGS (LOSSES) $4.9 $13.1 $25.5 $38.4 $41.4 $12.1
FIXED CHARGES:
INTEREST EXPENSE $15.5 $4.5 $6.0 $6.7 $27.5 $10.9
PORTION OF RENTAL EXPENSE
REPRESENTATIVE OF AN INTEREST
FACTOR 11.0 11.5 12.0 12.5 14.3 7.1
---- ----- ----- ----- ------ ----
TOTAL FIXED CHARGES $26.5 $16.0 $18.0 $19.2 $41.8 $18.0
RATIO OF EARNINGS TO FIXED CHARGES -- -- 1.4X 2.0X -- --
</TABLE>
(1) Prior to 1998, the Company's fiscal year ended on the Saturday closest
to December 31 of each year. On May 18, 1998, the Company changed its
fiscal year to the Saturday closest to March 31.
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-21949 of Safelite Glass Corp. on Form S-4 of our report dated June 25, 1998
appearing in the prospectus, which is a part of such Registration Statement, and
to the reference to us under the headings "Summary Historical and Pro Forma
Financial Information," "Selected Consolidated Financial Data" and "Independent
Auditors" in such prospectus.
DELOITTE & TOUCHE LLP
Dayton, Ohio
August 11, 1998
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
registration statement of our report dated April 7, 1997 (except with respect
to the matter described in Note 15, as to which the date is July 22, 1998),
regarding Vistar, Inc. and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SAFELIFE
CLASS CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED JANUARY 3, 1998 AND THREE MONTHS ENDED APRIL 4, 1998 INCLUDED IN FORM S-4
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001033671
<NAME> SAFELITE GLASS, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JAN-03-1998 APR-04-1998
<PERIOD-START> DEC-29-1996 JAN-04-1998
<PERIOD-END> JAN-03-1998 APR-04-1998
<EXCHANGE-RATE> 1 1
<CASH> 7,404 10,254
<SECURITIES> 0 0
<RECEIVABLES> 70,755 74,622
<ALLOWANCES> (15,828) (12,622)
<INVENTORY> 48,133 50,535
<CURRENT-ASSETS> 141,582 152,587
<PP&E> 120,667 134,088
<DEPRECIATION> (56,847) (72,094)
<TOTAL-ASSETS> 558,054 576,355
<CURRENT-LIABILITIES> 111,773 112,268
<BONDS> 473,499 497,645
0 0
1 1
<COMMON> 142 142
<OTHER-SE> (47,017) (48,554)
<TOTAL-LIABILITY-AND-EQUITY> 558,054 576,355
<SALES> 0 0
<TOTAL-REVENUES> 483,304 213,792
<CGS> 0 0
<TOTAL-COSTS> 331,658 155,545
<OTHER-EXPENSES> 125,802 53,337
<LOSS-PROVISION> 1,469 1,319
<INTEREST-EXPENSE> (27,517) (10,987)
<INCOME-PRETAX> (419) (5,939)
<INCOME-TAX> 6,842 1,623
<INCOME-CONTINUING> 6,423 (4,316)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (2,835) 0
<CHANGES> 0 0
<NET-INCOME> 3,588 (4,316)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
FOR
OFFER FOR ALL OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
SAFELITE GLASS CORP.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON __________, 1998 (THE "EXPIRATION DATE")
UNLESS EXTENDED BY SAFELITE GLASS CORP.
The Exchange Agent
for the Exchange Offer
STATE STREET BANK & TRUST COMPANY
By Registered or Certified Mail: By Overnight Courier:
State Street Bank & Trust Company State Street Bank & Trust Company
2 International Place, 4th Floor 2 International Place, 4th Floor
Corporate Trust Department Corporate Trust Department
Boston, MA 02110 Boston, MA 02110
Attn.: Sandra Szczsponik Attn.: Sandra Szczsponik
By Hand: By Facsimile:
State Street Bank & Trust Company State Street Bank & Trust Company
2 International Place, 4th Floor (617) 664-5779
Corporate Trust Department Confirm by telephone:
Boston, MA 02110
Attn.: Sandra Szczsponik
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via a facsimile transmission to a
number other than set forth above will not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus dated
____________, 1998 (the "Prospectus") of Safelite Glass Corp. (the "Company"),
and this Letter of Transmittal (the "Letter of Transmittal"), which together
describe the Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of 9 7/8% Series B Senior Notes due 2006 (the "Exchange Notes")
for each $1,000 in principal amount of outstanding 9 7/8% Senior Subordinated
Notes due 2006 (the "Initial Notes"). The terms of the Exchange Notes are
substantially identical in all respects (including principal amount, interest
rate and maturity) to the terms of the Initial Notes for which they may be
exchanged pursuant to the Exchange Offer, except that the Exchange Notes are
freely transferable by holders thereof (except as provided herein or in the
Prospectus) and are issued without any covenant upon the Company regarding
registration.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
1
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
A holder that is a participant in the Depository Trust Company's system
may utilize the Depository Trust Company's Automated Tender Offer Program to
tender Initial Notes.
List below the Initial Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the Certificate Numbers and
Principal Amounts should be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF INITIAL NOTES TENDERED HEREWITH
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Certificate Aggregate Principal Principal Amount
Holder(s) (Please fill in) Number(s)* Amount Represented by Tendered*
Initial Notes
<S> <C> <C> <C>
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full aggregate amount represented by such Initial Notes. See
Instruction 2.
This Letter of Transmittal is to be used either if certificates of
Initial Notes are to be forwarded herewith or if delivery of Initial Notes is to
be made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company, pursuant to the procedures set forth in "The
Exchange Offer -- How To Tender" in the Prospectus. Delivery of documents to a
book-entry transfer facility does not constitute delivery to the Exchange Agent.
Holders whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date may tender their Initial Notes
according to the guaranteed procedure set forth in the Prospectus under the
caption "The Exchange Offer How To Tender."
CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution__________________________________________________
/ / The Depository Trust Company
Account Number________________________________________________________
Transaction Code Number_______________________________________________
/ / CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)__________________________________________
2
<PAGE> 3
Name of Eligible Institution that Guaranteed Delivery_________________
If Delivered by Book-Entry Transfer:
Account Number________________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE Registration Statement AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name__________________________________________________________________
Address:______________________________________________________________
______________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of the Initial Notes. Subject to, and effective upon, the acceptance for
exchange of the Initial Notes tendered herewith, the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Initial Notes. The undersigned hereby
irrevocably constitutes (with full knowledge that said Exchange Agent acts as
the Agent of the Company in connection with the Exchange Offer) to cause the
Initial Notes to be assigned, transferred and exchanged. The undersigned
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Initial Notes and to acquire Exchange Notes
issuable upon the exchange of such tendered Initial Notes, and that, when the
same are accepted for exchange, the Company will acquire good and unencumbered
title to the tendered Initial Notes, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. The undersigned
also warrants that it will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of tendered Initial
Notes or transfer ownership of such Notes on the account books maintained by a
book-entry transfer facility. The undersigned further agrees that acceptance of
any and all validly tendered Initial Notes by the Company and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by the
Company of its obligations under the Registration Rights Agreement (as defined
in the Prospectus) and that the Company shall have no further obligations or
liabilities thereunder.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company), as more particularly set
forth in the Prospectus, the Company may not be required to exchange any of the
Initial Notes tendered hereby and, in such event, the Initial Notes not
exchanged will be returned to the undersigned at the address above.
By tendering, each holder of Initial Notes represents that Exchange
Notes acquired in the exchange will be obtained in the ordinary course of such
holder's business, that such holder has no arrangement or understanding with any
person to participate in the distribution of such Exchange Notes and that such
holder is not an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act of 1933, as amended (the "Act"). 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 Exchange Notes. If the undersigned is
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<PAGE> 4
a broker-dealer that will receive Exchange Notes for its own account in exchange
for Initial Notes it represents that the Initial Notes to be exchanged for
Exchange Notes were acquired as a result of market-making activities or other
trading activities and it acknowledges that it will deliver a Prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a Prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Any holder of
Initial Notes using the Exchange Offer to participate in a distribution of the
Exchange Notes (i) cannot rely on the position of the staff of the Commission
enunciated in its interpretive letter with respect to Exxon Capital Holdings
Corporation (available May 13, 1988) or similar letters issued to third parties
and (ii) must comply with the registration and Prospectus requirements of the
Act in connection with a secondary resale transaction.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Initial Notes may be
withdrawn at any time prior to the Expiration Date.
Certificates for all Exchange Notes delivered in exchange for tendered
Initial Notes and any Initial Notes delivered herewith but not exchanged, and
registered in the name of the undersigned, shall be delivered to the undersigned
at the address shown below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
Signature of Holder(s)
Dated:___________________, 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) of Initial Notes. 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, please set forth the
full title of such person.)
See Instruction 3.
Name(s):_______________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT)
Capacity (full title):_________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.____________________________________________________
Taxpayer Identification No.____________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED - SEE INSTRUCTION 3)
Authorized Signature___________________________________________________________
Name___________________________________________________________________________
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<PAGE> 5
Title__________________________________________________________________________
Address________________________________________________________________________
Name of Firm___________________________________________________________________
Area Code and Telephone No.____________________________________________________
Dated:______________________________, 1998
________________________________________________
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<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITION OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
Certificates for all physically delivered Initial Notes or confirmation
of any book-entry transfer to the Exchange Agent's account at a book-entry
transfer facility of Initial Notes tendered by book-entry transfer, as well as a
properly completed and duly executed copy of this Letter of Transmittal or
facsimile thereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at any of its addresses set
forth herein on or prior to the Expiration Date (as defined in the Prospectus).
THE METHOD OF DELIVER OF THIS LETTER OF TRANSMITTAL, THE INITIAL NOTES
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
E USED.
Holders whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes and all other required documents to the Exchange
Agent on or prior to the Expiration Date or comply with book-entry transfer
procedures on a timely basis may tender their Initial Notes pursuant to the
guaranteed delivery procedure set forth in the Prospectus under "The Exchange
Offer -- How to Tender." Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution (as defined in the Prospectus); (ii)
on or prior to the Expiration Date the Exchange Agent must have received from
such Eligible Institution a letter, telex, telegram or facsimile transmission
setting forth the name and address of the tendering holder, the names in which
such Initial Notes are registered, and, if possible, the certificate numbers of
the Initial Notes to be tendered and a guarantee that within five New York Stock
Exchange Trading days after the date of execution of such letter, telegram or
facsimile transmission by the Eligible Institution, the Initial Notes, in proper
form for transfer (or a confirmation of book-entry transfer of such Initial
Notes into the Exchange Agent's account at the book-entry transfer facility),
will be delivered by such Eligible Institution, the Initial Notes, in proper
form for transfer (or a confirmation of book-entry transfer of such Initial
Notes, in proper form for transfer (or a confirmation of book-entry transfer of
such Initial Notes into the Exchange Agent's account at the book-entry transfer
of such Initial Notes into the Exchange Agent's account at a book-entry transfer
facility) as well as this Letter of Transmittal and all other documents required
by this Letter of Transmittal, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the date of execution of such
letter, telex, telegram or facsimile transmission, as all provided in the
Prospectus under the caption "The Exchange Offer -- How to Tender."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Initial Notes of exchange.
2. PARTIAL TENDERS: WITHDRAWALS.
If less than the entire principal amount of Initial Notes evidenced by
a submitted certificate is tendered, the tendering holder should fill in the
principal amount tendered in the box entitled "Principal Amount Tendered." A
newly issued certificate for the principal amount of Initial Notes submitted but
not tendered will be sent to such holder as soon as practicable after the
Expiration Date. All Initial Notes to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
Initial Notes tendered pursuant to the Exchange Offer may be withdrawn
at anytime prior to the Expiration Date. For a withdrawal to be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Exchange Agent. Any such notice of withdrawal must
specify the person named in the Letter of Transmittal as having tendered Initial
Notes to be withdrawn, the certificate numbers of the Initial Notes to be
withdrawn, the principal amount of Initial Notes delivered for exchange, a
statement that such holder is withdrawing his or her election to have such
Initial Notes exchanged, and the
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<PAGE> 7
name of the registered holder of such Initial Notes, and must be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accepted by evidence
satisfactory to the Company that the person withdrawing the tender has succeeded
to the beneficial ownership of the Initial Notes being withdrawn. The Exchange
Agent will return the properly withdrawn Initial Notes promptly following
receipt of notice of withdrawal. If Initial Notes have been tendered pursuant to
the procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Initial Notes or otherwise comply with the
book-entry transfer facility's procedures.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder(s) of
the Initial Notes tendered hereby, the signature must correspond with the
name(s) as written on the face of the certificates without alteration or any
change whatsoever.
If any of the Initial Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Initial Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Initial Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Initial Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include a
book-entry transfer facility whose name appears on a security listing as the
owner of the Initial Notes) of Initial Notes listed and tendered hereby, no
endorsements of certificates or separate written instruments of transfer or
exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Initial Notes listed, such Initial Notes
must be endorsed or accompanied by separate written instruments of transfer or
exchange in form satisfactory to the Company and duly executed by the registered
holder, in either case signed exactly as the name or names of the registered
holder or holders appear(s) on the Initial Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or 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 so to act must be submitted.
Endorsements on certificates or signatures on separate written
instruments of transfer or exchange required by this Instruction 3 must be
guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Initial Notes are tendered: (i) by a
registered holder of such Initial Notes; or (ii) for the account of an Eligible
Institution.
4. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfers and exchange of Initial Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any reason other than the
transfer and exchange of Initial Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exception therefrom
is
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<PAGE> 8
not submitted herewith the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Initial Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part,
any of the conditions to the Exchange Offer set forth in the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED INITIAL NOTES.
Any holder whose Initial Notes have been mutilated, lost, stolen or
destroyed, should contact the Exchange Agent at the address indicated below for
further instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number set forth on
the first page of this Letter of Transmittal. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Company at 1105 Schrock Road, 7th Floor, P.O. Box 2000, Columbus, OH 43216.
Attention: Poe A. Timmons (telephone: (614) 842-3325).
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES OF INITIAL NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
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<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER FOR ALL OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
OF
SAFELITE GLASS CORP.
Registered holders of outstanding 9 7/8% Senior Subordinated Notes due
2006 (the "Initial Notes") who wish to tender their Initial Notes in exchange
for a like principal amount of 9 7/8% Series B Senior Subordinated Notes due
2006 (the "Exchange Notes") and whose Initial Notes are not immediately
available or who cannot deliver their Initial Notes and Letter of Transmittal
(and any other documents required by the Letter of Transmittal) to Fleet
National Bank (the "Exchange Agent") prior to the Expiration Date, may use this
Notice of Guaranteed Delivery or one substantially equivalent hereto. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mail to the Exchange Agent, See "The Exchange Offer -- How to
Tender" in the Prospectus.
The Exchange Agent
for the Exchange Offer is:
STATE STREET BANK & TRUST COMPANY
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Overnight Courier:
<S> <C> <C>
State Street Bank & Trust Company State Street Bank & Trust Company
2 International Place, 4th Floor 2 International Place, 4th Floor
Corporate Trust Department Corporate Trust Department
Boston, MA 02110 Boston, MA 02110
Attn.: Sandra Szczsponik Attn.: Sandra Szczsponik
By Hand: By Facsimile:
State Street Bank & Trust Company State Street Bank & Trust Company
2 International Place, 4th Floor (617) 664-5779
Corporate Trust Department Confirm by telephone:
Boston, MA 02110
Attn.: Sandra Szczsponik
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via a facsimile transmission to a
number other than set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
Ladies and Gentlemen:
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<PAGE> 2
The undersigned hereby tenders the principal amounts of Initial Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated ___________, 1998 of Safelite Glass Corp. (the "Prospectus"),
receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
<S> <C> <C>
Name and address of registered holder as it appears on Certificate number(s) of Initial Principal
Amount of Initial the privately placed 9 7/8% Senior Subordinated Notes Notes transmitted
Notes Transmitted due 2006, ("Initial Notes")
</TABLE>
THE FOLLOWING MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the Initial Notes,
together with a properly completed and duly executed Letter of Transmittal
within five New York Stock Exchange, Inc. trading days after the date of
execution of this Notice of Guaranteed Delivery.
Name of Firm:__________________________ ___________________________________
(Authorized Signature)
Address:_______________________________ Title:_____________________________
_______________________________________ Name:______________________________
(Zip Code)
Area Code and Telephone Number:
Date:______________________________
___________________________________
NOTE: DO NOT SEND INITIAL NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY, INITIAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
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<PAGE> 1
Exhibit 99.3
EXCHANGE AGENT AGREEMENT
Dated as of _______, 1998
State Street Bank & Trust Company
2 International Place, 4th Floor
Corporate Trust Department
Boston, MA 02110
Attn.: Sandra Szczsponik
Ladies and Gentlemen:
Pursuant to the provisions of the Offer (the "Exchange Offer") for all
of the outstanding 9 7/8% Senior Subordinated Notes due 2006 (the "Initial
Notes") of Safelite Glass Corp., a Delaware corporation (the "Company"), in
exchange for 9 7/8% Series B Senior Subordinated Notes due 2006 (the "Exchange
Notes"), all of the Company's issued and outstanding Initial Notes accepted for
tender of exchange (the "Exchange") prior to 5:00 p.m. New York time on
__________, 1998, unless extended, for the Company's Exchange Notes will be
exchanged pursuant to the terms and conditions of the Exchange Offer. The
Exchange Offer is being made pursuant to a Prospectus (the "Prospectus")
included in the Company's registration statement on Form S-4 (File No.
__________) (the "Registration Statement") filed with the Securities and
Exchange Commission (the "SEC"). The term "Expiration Date" shall mean the date
on which the Exchange Offer, as it may be extended, shall expire. Upon receipt
and execution of this letter and confirmation of the arrangements herein set
forth, Fleet National Bank will act as the Exchange Agent for the Exchange (the
"Exchange Agent"). A copy of the Prospectus is attached hereto as Exhibit A.
A copy of the form of the letter of transmittal, including the related
notice of guaranteed delivery (the "Letters of Transmittal"), to be used by the
holders of record of the Initial Notes (the "Holders") to surrender their
Initial Notes in order to receive the Exchange Notes pursuant to the Exchange is
attached hereto as Exhibit B.
The Company hereby appoints you to act as Exchange Agent in connection
with the Exchange. In carrying out your duties as Exchange Agent, you are to act
in accordance with the following:
1. You are to mail the Prospectus and the Letters of Transmittal to all
of the Holders on the day that you are notified in writing by the Company that
the Registration Statement has become effective under the Securities Act of
1933, as amended, and to make subsequent mailings thereof to persons who become
Holders prior to the Expiration Date as may from time to time be requested by
the Company.
2. You are to examine the Letters of Transmittal and the Initial Notes
and other documents delivered or mailed to you, by or for the Holders, prior to
the Exchange Date, to ascertain whether (i) the Letters of Transmittal are
properly executed and completed in accordance with the instructions set forth
therein, (ii) the Initial Notes are in proper form for transfer and (iii) all
other documents submitted to you are in proper form. In each case where a Letter
of Transmittal or other document has been improperly executed or completed or,
for any other reason, is not in proper form, or some other irregularity exists,
you are authorized to endeavor to take such action as you consider appropriate
to notify the tenderer of such irregularity and as to the appropriate means of
resolving the same. Determination of questions as to the proper completion or
execution of the Letters of Transmittal, or as to the proper form for transfer
of the Initial Notes or as to any other irregularity in connection with the
submission of Letters of Transmittal and/or Initial Notes and other documents in
connection with the Exchange, shall be made by officers of the Company evidenced
by their written instructions or oral direction confirmed by facsimile. Any
determination made by the Company on such questions shall be final and binding.
As Exchange Agent, you are entitled to rely on any determination by the
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<PAGE> 2
Company as described above and shall be fully protected and indemnified in such
reliance.
3. Tender of the Initial Notes may be made only as set forth in the
Letter of Transmittal. Notwithstanding the foregoing, tenders which the Company
shall approve in writing as having been properly tendered shall be considered to
be properly tendered. Letters of Transmittal shall be recorded by you as to the
date and time of receipt and shall be preserved and retained by you. Exchange
Notes are to be issued in exchange for the Initial Notes pursuant to the
Exchange only (i) against deposit with you of the Initial Notes, together with
executed Letters of Transmittal and any other documents required by the Exchange
Offer on each business day from the execution hereof up to the Expiration Date
or (ii) in the event the holder is a participant in the Depository Trust Company
("DTC") system, by the utilization of DTC's Automated Tender Offer Program
("ATOP") and any evidence required by the Exchange Offer on each business day
from the execution hereof up to the Expiration Date.
4. Upon the oral or written request of the Company (with written
confirmation of such oral request thereafter), you will transmit by telephone,
and promptly thereafter confirm in writing to (i) Poe A. Timmons, Controller
(telephone (614) 842-3325) and (ii) Steven M. Peck, Esq., Hutchins, Wheeler &
Dittmar, A Professional Corporation, counsel to the Company (telephone (617)
951-6644) or such other persons as the Company may reasonably request, the
aggregate number of the Initial Notes tendered to you and the number of the
Initial Notes properly tendered that day. Furthermore, you shall transmit copies
of all Agents Messages (as defined in the Letter of Transmittal) received in
connection with ATOP to the aforementioned persons as they are received. In
addition, you will also inform the aforementioned persons, upon oral request
made from time to time (with written confirmation of such request thereafter)
prior to the Expiration Date, of such information as they or any of them may
reasonably request.
5. Upon the terms and subject to the conditions of the Exchange Offer,
delivery of Exchange Notes to be issued in exchange for accepted Initial Notes
will be made by you promptly after acceptance of the tendered Initial Notes.
6. If any Holder shall report to you that his/her failure to surrender
Initial Notes registered in his/her name is due to the loss, misplacement or
destruction of a certificate or certificates, you shall request such Holder (i)
to furnish to the Exchange Agent an affidavit of loss and, if required by the
Company, a corporate bond of indemnity in an amount and evidenced by such
certificate or certificates of a surety, as may be satisfactory to you and the
Company, and (ii) to execute and deliver an agreement to indemnify the Company
and you in such form as is acceptable to you and the Company. The obligees to be
named in each such indemnity bond shall include the Company and you. You shall
report to the Company the names of all Holders who claim that their Initial
Notes have been lost, misplaced or destroyed and the principal amount of such
Initial Notes.
7. As soon as practicable after you mail or deliver to an Initial
Holder the Exchange Notes that such Holder may be entitled to receive, you shall
arrange for cancellation of the Initial Notes submitted to you or returned by
DTC in connection with ATOP. Such Notes shall be forwarded to Fleet National
Bank, as trustee (the "Trustee") under the Indenture dated as of December 20,
1996 governing the Initial Notes, for cancellation and retirement as you are
instructed by the Company (or a representative designated by the Company).
8. For your services as the Exchange Agent hereunder, the Company shall
pay you in accordance with the schedule of fees attached hereto as Exhibit C.
The Company also will reimburse you for your reasonable out-of-pocket expenses
(including but not limited to counsel fees not previously paid to you as set
forth in Exhibit C) in connection with your services promptly after submission
to the Company of itemized statements.
9. As the Exchange Agent hereunder you:
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<PAGE> 3
(a) shall have no duties or obligations other than those
specifically set forth herein or in the Exhibits attached hereto or as
may be subsequently requested in writing of you by the Company and
agreed to by you in writing with respect to the Exchange;
(b) will be regarded as making no representations and having
no responsibilities as to the validity, accuracy, sufficiency, value or
genuineness of any of the Company's Holder record information, any
Initial Notes deposited with you hereunder or any Exchange Notes, any
Letters of Transmittal or other documents prepared by the Company in
connection with the Exchange Offer or any signatures or endorsements
other than your own, and will not be required to and will make no
representations as to the validity, value or genuineness of the
Exchange Offer;
(c) shall not be obligated to take any legal action hereunder
which might in your judgment involve any expenses or liability unless
you shall have been furnished with an indemnity reasonably satisfactory
to you;
(d) may rely on and shall be fully protected and indemnified
as provided in paragraph 10 hereof in acting in reliance upon any
certificate, instrument, opinion, notice, letter, telegram, facsimile
or other document or security delivered to you and reasonably believed
by you to be genuine and to have been signed by the proper party or
parties;
(e) may rely on and shall be fully protected and indemnified
as provided in paragraph 10 hereof in acting upon the written or oral
instructions with respect to any matter relating to your acting as
Exchange Agent specifically covered by this Agreement or supplementing
or qualifying any such action of any officer or agent of the Company or
such other person or persons as may be designated or whom you
reasonably believe has been designated by the Company;
(f) may consult with counsel satisfactory to you, including
counsel for the Company, and the opinion or advice of such counsel
shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith
and in accordance with the opinion or advice of such counsel;
(g) shall not at any time advise any person as to the wisdom
of the Exchange or as to the market value or decline or appreciation in
market value of any Initial Notes or Exchange Notes; and
(h) shall not be liable for anything which you may do or
refrain from doing in connection with this letter except for your gross
negligence, willful misconduct or bad faith.
10. The Company covenants and agrees to indemnify and hold harmless
State Street Bank & Trust Company and its officers, directors, employees, agents
and affiliates (collectively, the "Indemnified Parties" and each an "Indemnified
Party") and hold each Indemnified Party harmless against any loss, liability or
reasonable expense of any nature (including reasonable legal and other fees and
expenses) incurred in connection with the administration of the duties of the
Indemnified Parties hereunder; provided, however, that no Indemnified Party
shall be indemnified against any such loss, liability or expense arising out of
such party's gross negligence or bad faith. In no event shall you be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if you have been advised of
the likelihood of such loss or damage and regardless of the form of action. To
the extent stated below, the Company shall not be liable under this indemnity
with respect to any claim against any Indemnified Party unless the Company shall
be notified by such Indemnified Party by letter, or by cable, telex or
telecopier confirmed by letter, of the written assertion of a claim against such
Indemnified Party, or of any action commenced against such Indemnified Party,
promptly after but in any event within 10 days of the date such Indemnified
Party shall have received any such written assertion of a claim or shall have
been served with a summons, or other legal process, giving information as to the
nature and basis of the claim, but failure so to notify the Company shall not
relieve the Company of any liability which it may have otherwise than on account
of this Agreement or hereunder except such liability which is a direct result of
such Indemnified Party's failure to notify promptly. The Company shall be
entitled to participate at its own expense in the defense against any
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<PAGE> 4
such claim or legal action. If such Indemnified Party in such notice so directs,
the Company shall assume the defense of any suit brought to enforce any such
claim. If such Indemnified Party does not so direct the Company but elects not
to defend any such claim or legal action or if such Indemnified Party has
elected to defend any such claim or legal action but is not, in the reasonable
judgment of the Company, diligently pursuing such defense, then the Company may
elect to assume the defense of any suit brought to enforce any such claim. In
the event the Company assumes the defense, the Company shall not be liable for
any fees and expenses thereafter incurred by such Indemnified Party's counsel,
except for any reasonable fees and expenses of such Indemnified Party's counsel
incurred in representing such Indemnified Party that are necessary and
appropriate as a result of the need to have separate representation because of a
conflict of interest between such Indemnified Party and the Company. You shall
not enter into a settlement or other compromise with respect to any indemnified
loss, liability or expense without the prior written consent of the Company,
which shall not be unreasonably withheld or delayed.
11. This Agreement and your appointment as the Exchange Agent shall be
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts and shall inure to the benefit of, and the obligations created
hereby shall be binding upon, the successors and assigns of the parties hereto.
This Agreement may not be modified orally. Any inconsistency between this
Agreement and the Letter of Transmittal, as they may from time to time be
supplemented or amended, shall be resolved in favor of the latter, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent.
Please acknowledge receipt of this letter and confirm the arrangements
herein provided by signing and returning the enclosed copy.
Very truly yours,
SAFELITE GLASS CORP.
By:________________________________
Name:
Title:
Accepted and Agreed to:
State Street Bank & Trust Company
Exchange Agent
By:_______________________________
Name:
Title:
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