<PAGE>
As filed with the Securities and Exchange Commission on June 3, 1997.
REGISTRATION NO. 333-24689
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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LOOMIS, FARGO & CO.
(Exact Name of Co-Registrant as Specified in its Charter)
DELAWARE 76-0521092
(State or Other (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
File No. 333-24689-01 File No. 333-24689-02 File No. 333-24689-03
LFC HOLDING LOOMIS, FARGO & CO. LFC ARMORED
CORPORATION (Exact Name of Co- OF TEXAS INC.
(Exact Name of Co- Registrant as Specified (Exact Name of Co-
Registrant as Specified in its Charter) Registrant as Specified
in its Charter) in its Charter)
File No. 333-24689-04
LOOMIS, FARGO & CO. OF
PUERTO RICO
(Exact Name of Co-
Registrant as Specified
in its Charter)
DELAWARE TEXAS TEXAS TENNESSEE
(State or other (State or other (State or other (State or other
jurisdiction of jurisdiction of jurisdiction of jurisdiction of
incorporation or incorporation or incorporation or incorporation or
organization) organization) organization) organization)
75-2371825 75-0117200 58-1884701 66-0215016
(I.R.S. Employer (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.) Identification No.) Identification No.)
4214
(Primary Standard Industrial
Classification Code Number)
16225 PARK TEN PLACE, SUITE 600 JAMES B. MATTLY
HOUSTON, TEXAS 77084 (281) 647-6700 16225 PARK TEN PLACE, SUITE 600
(Address, including Zip Code, and HOUSTON, TEXAS 77084 (281) 647-6700
Telephone Number, including Area Code (Name, Address, including Zip Code,
of Co-Registrants' Principal Executive and Telephone Number, including Area
Offices) Code, of Agent for Service)
COPY TO:
MARY R. KORBY
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT
SUITE 1300
DALLAS, TEXAS 75201
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [_]________
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [_]________
--------------
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 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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LOOMIS, FARGO & CO.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<C> <C> <S>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus......... Cover Page of
Registration Statement;
Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Inside Front and Outside
Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges...................... Prospectus Summary; Risk
Factors; Business;
Selected Historical
Financial Information;
Pro Forma Combined
Financial Information
4. Use of Proceeds................................. Use of Proceeds
5. Determination of Offering Price................. Not Applicable
6. Dilution........................................ Not Applicable
7. Selling Security Holders........................ Not Applicable
8. Plan of Distribution............................ Front Cover Page of
Prospectus; The Exchange
Offer; Plan of
Distribution
9. Description of Securities to be Registered...... Description of New Notes
10. Interests of Named Experts and Counsel.......... Not Applicable
11. Information with Respect to the Registrant...... Cover Page of
Registration Statement;
Prospectus Summary; Risk
Factors; Business; The
Transactions; Selected
Historical Financial
Information; Pro Forma
Combined Financial
Information; Management's
Discussion and Analysis
of Financial Condition
and Results of
Operations; Management;
Security Ownership of
Certain Beneficial Owners
and Management; Certain
Relationships and Related
Transactions; Description
of New Credit Facility;
Legal Matters
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... Not Applicable
</TABLE>
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 3, 1997
OFFER FOR ALL OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2004
IN EXCHANGE FOR
10% SENIOR SUBORDINATED NOTES DUE 2004
OF
LOOMIS, FARGO & CO.
Loomis, Fargo & Co., a Delaware Corporation (the "Company"), and the
Guarantors (as hereinafter defined) hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange
$1,000 principal amount of registered 10% Senior Subordinated Notes Due 2004
(the "New Notes") issued by the Company, for each $1,000 principal amount of
unregistered 10% Senior Subordinated Notes Due 2004 (the "Old Notes") issued by
the Company, of which an aggregate principal amount of $85,000,000 is
outstanding. The form and terms of the New Notes are identical to the form and
terms of the Old Notes except that (i) interest on the New Notes shall accrue
from the date of issuance of the Old Notes, and (ii) the New Notes are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will not bear any legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the indenture governing the Old Notes. The
Exchange Offer is being made in order to satisfy certain contractual
obligations of the Company. See "The Exchange Offer" and "Description of New
Notes." The New Notes and the Old Notes are sometimes collectively referred to
herein as the "Notes."
Interest on the New Notes will be payable semi-annually on January 15 and
July 15 of each year, commencing July 15, 1997. The Company will not be
required to make any sinking fund payment with respect to the New Notes. The
New Notes will be redeemable at the option of the Company, in whole or in part,
at any time on or after January 15, 2001 at the redemption prices set forth
herein, plus accrued and unpaid interest and Liquidated Damages (as defined),
if any, to the date of redemption. In addition, prior to January 15, 2000, the
Company may on any one or more occasions redeem up to $25.0 million in
principal amount of the Notes at a redemption price equal to 110% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of redemption, with the net proceeds of
one or more public offerings of common stock, par value $.01 per share ("Common
Stock"), of the Company; provided that at least $60.0 million in aggregate
principal amount of the Notes remains outstanding immediately after the
occurrence of such redemption. See "Description of New Notes--Optional
Redemption."
The net proceeds from the sale of the Old Notes (the "Original Offering")
were used to effect the business combination of Loomis Armored Inc. ("Loomis
Armored"), a wholly-owned subsidiary of Loomis Holding Corporation ("Loomis"),
and Wells Fargo Armored Service Corporation ("Wells Fargo Armored"), a wholly-
owned subsidiary of Borg-Warner Security Corporation ("Borg-Warner"), and
related transactions (together, the "Transactions"). Following the consummation
of the Transactions, the Company is owned 51% by a Delaware business trust, the
beneficiaries of which are the former stockholders of Loomis (the "Business
Trust"), and 49% by Borg-Warner, through its wholly-owned subsidiary Wells
Fargo Armored. See "The Transactions."
In the event of a Change of Control (as defined), holders of the New Notes
will have the right to require the Company to purchase their New Notes, in
whole or in part, at a price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase.
The New Notes will be general unsecured obligations of the Company
subordinate in right of payment to all existing and future Senior Debt (as
defined) of the Company. The Company conducts its operations solely through its
subsidiaries. Certain of the Company's subsidiaries (the "Guarantors") will
guarantee the New Notes (collectively, the "Subsidiary Guarantees") that will
be subordinated in right of payment to all existing and future senior debt of
such Guarantors. As of March 31, 1997, there was approximately $165.7 million
of total debt of the Company and its subsidiaries, $73.5 million of which was
Senior Debt, and there was not any indebtedness of the Company expressly
subordinated by its terms in right and priority of payment to the Notes; in
addition, there was approximately $29.9 million available to be drawn by the
Company under the New Credit Facility.
----------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
NEW NOTES.
----------------------------------
The Company and the Guarantors will accept for exchange any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1997, unless extended (as so extended, the "Expiration Date"). Tenders of
Old Notes may be withdrawn at any time prior to the Expiration Date. The
Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."
In order for a holder of Old Notes to participate in the Exchange Offer, such
holder must represent to the Company that, among other things, (i) the New
Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving New Notes, whether or not
such person is the holder of the Old Notes, (ii) neither the holder nor any
such other person is engaging in or intends to engage in a distribution of such
New Notes, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, and (iv) neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated under the Securities Act, of
the Company. See "The Exchange Offer--Purpose and Effect."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. The letter of transmittal
accompanying this Prospectus (the "Letter of Transmittal"), states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed, for a period of one year after the date of
this Prospectus, to make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution."
No public market has existed for the Old Notes before the Exchange Offer. The
Company and the Guarantors currently do not intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system, and no active public market for the New Notes is currently
anticipated. The Company and the Guarantors will pay all the expenses incident
to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE 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 JUNE , 1997. +
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+ REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+ SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+ OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+ BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+ THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+ SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+ UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
AVAILABLE INFORMATION
As a result of the filing of its Registration Statement with the Securities
and Exchange Commission (the "Commission"), the Company and the Guarantors
will become subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, will be required to file reports and other information
with the Commission. Such reports and other information can be inspected and
copied at the principal office of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and the following Regional Offices of
the Commission: Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60611 and New York Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission at http://www.sec.gov.
The Company and the Guarantors have filed with the Commission a Registration
Statement (which term shall encompass any amendments thereto) on Form S-1
under the Securities Act with respect to the securities offered hereby. This
Prospectus does not contain all information set forth in the Registration
Statement and the exhibits thereto, to which reference is hereby made.
Although the Company believes that statements made in this Prospectus as to
the contents of any contract, agreement, or other document describe all
material elements of such documents, such statements are not necessarily
complete. With respect to each such contract, agreement, or other document
filed as an exhibit to the Registration Statement, reference is hereby made to
such exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
The Company will furnish holders of the securities offered hereby with
annual reports containing, among other information, audited financial
statements certified by an independent public accounting firm and quarterly
reports containing unaudited financial information for the first three
quarters of each fiscal year. The Company will also furnish such other reports
as it may determine or as may be required by law or by the Indenture. Based
upon certain provisions of the Staff Accounting Bulletins of the Commission
and interpretations of the staff of the Commission set forth in no-action
letters issued to third parties unrelated to the Company and the Guarantors,
the Guarantors do not intend to file separate periodic and other reports with
the Commission under the Exchange Act because (i) the Company is a holding
company with no independent operations, (ii) the Guarantors are direct and
indirect wholly-owned consolidated subsidiaries of the Company that will fully
and unconditionally guarantee the New Notes on a joint and several basis, and
(iii) the Guarantors comprise all of the Company's direct and indirect
subsidiaries.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED UNDER THE CAPTIONS "PROSPECTUS SUMMARY,"
"RISK FACTORS," "PRO FORMA COMBINED FINANCIAL INFORMATION," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,"
"BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS MAY CONSTITUTE FORWARD-LOOKING
STATEMENTS FOR PURPOSES OF THE SECURITIES ACT AND THE EXCHANGE ACT AND AS SUCH
MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS
THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE
COMPANY TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ARE DISCLOSED IN
THIS PROSPECTUS ("CAUTIONARY STATEMENTS"), INCLUDING, WITHOUT LIMITATION,
THOSE STATEMENTS MADE IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS
INCLUDED UNDER "RISK FACTORS" AND OTHERWISE HEREIN. ALL WRITTEN OR ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY ARE EXPRESSLY QUALIFIED
IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
the related notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, (i) references to
"Loomis" herein mean Loomis Holding Corporation prior to the consummation of
the Transactions, (ii) references to "Loomis Armored" herein mean Loomis
Armored Inc. prior to the consummation of the Transactions, (iii) references to
"Wells Fargo Armored" herein mean Wells Fargo Armored Service Corporation prior
to the consummation of the Transactions, and (iv) references to "Loomis, Fargo
& Co." or the "Company" herein mean the combined entity, including Loomis,
Loomis Armored and the assets transferred to the Company by Wells Fargo Armored
pursuant to the Transactions. Unless otherwise specified, all financial,
statistical and other data regarding the Company contained herein is presented
on a pro forma basis after giving effect to the Original Offering, the
Transactions, borrowings under the New Credit Facility and the application of
the proceeds therefrom.
THE COMPANY
Loomis, Fargo & Co., created through the combination of Loomis Armored and
Wells Fargo Armored, is one of the largest armored transport companies in the
United States. Loomis, Fargo & Co. operates over 150 branches, employs
approximately 8,700 persons, and utilizes a fleet of approximately 2,700
armored vehicles nationwide to provide armored ground transport services,
automated teller machine ("ATM") services, and cash vault and related services
to financial institutions and commercial customers. Serving all 50 states and
Puerto Rico, the Company is one of only two armored transport companies in the
United States that provides these services on a national basis. Management
believes that the combination of Loomis Armored and Wells Fargo Armored into a
national service provider favorably positions the Company for additional
revenue opportunities as large financial and retail institutions are
increasingly seeking vendors capable of providing an array of services on a
national basis. In addition, management believes the proliferation of ATMs and
the trend of banks and other financial and retail institutions towards
outsourcing cash vault and related services will contribute to the Company's
growth prospects. For the twelve months ended December 31, 1996, the Company
would have had pro forma revenues of $373.7 million and earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $35.2 million.
The Company is implementing the management principles and decentralized
structure utilized by the Loomis Armored management team, which have proven to
be highly effective in reducing employee turnover, increasing customer
satisfaction and decreasing "cost of risk," which consists of the cost of cargo
and casualty losses, related insurance costs and claims administration
expenses. Since implementing this strategy at Loomis Armored in 1991, Loomis
Armored's total cost of risk decreased from 10.9% of revenues for the year
ended June 30, 1992 to 7.4% of revenues for the twelve months ended December
31, 1996, and EBITDA as a percent of revenues increased from 2.4% to 7.5% over
the same period. Management believes that by combining the business strategy
and risk management skills of Loomis Armored with the larger customer base and
leading ATM Services (as defined) position of Wells Fargo Armored, the Company
will be well-positioned to capitalize on the numerous opportunities developing
in the armored transport industry.
The Company provides a wide range of services within the following
categories:
Traditional Armored Transport. The Company's armored fleet transports
currency and other valuables in sealed packages between commercial
enterprises and banks, between banks, and from the Federal Reserve Banks to
commercial banks. The Company provides traditional armored transport
services to numerous banks including Bank of America and Wells Fargo Bank
as well as national and regional
1
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businesses such as Wal-Mart Stores, Inc., Kmart Corporation and Kroger.
Traditional armored transport represented approximately 62.9% of the
Company's revenues for the twelve months ended December 31, 1996, making it
the largest component of the Company's business.
ATM Services. The Company provides cash replenishment, deposit pick-up,
and first-line maintenance services (collectively, "ATM Services") to over
28,000 ATM locations nationwide, making it the leading provider of ATM
Services in the United States. The total number of ATM locations in the
United States is expected to increase significantly over the next five
years. Additionally, many ATM owners have begun outsourcing the servicing
and maintenance of ATM locations formerly serviced and maintained
internally. Management believes these trends provide the Company with
further opportunities to build upon its leading position in the ATM
Services industry by offering broad geographic coverage as well as a high
level of service. The Company's ATM customers include NationsBank, NCR
Corporation and Electronic Data Systems Corporation. ATM Services
represented approximately 29.9% of the Company's revenues for the twelve
months ended December 31, 1996, and have increased at a compounded annual
growth rate of approximately 12.3% over the three year period ended
December 31, 1996.
Cash Vault and Related Services. The Company provides a wide array of
cash vault and related services ranging from passive, secured storage of
valuables such as currency, securities and computer chips to active
services such as deposit processing and consolidation, change order
preparation, coin wrapping and storage and food stamp processing. In
addition, the Company's cash vault capacity is a key element in supporting
services to larger customers and ATM networks. Cash vault and related
services represented approximately 7.2% of the Company's revenues for the
twelve months ended December 31, 1996.
The Company's principal executive offices are located at 16225 Park Ten
Place, Suite 600, Houston, Texas 77084, and its telephone number at such
address is (281) 647-6700.
INDUSTRY OVERVIEW
Management estimates that the ten largest armored transport companies in the
United States have aggregate annual revenues of approximately $1.0 billion. The
ground transportation portion of the armored transport industry, currently the
single largest sector, has historically maintained moderate growth. ATM
services represent the most dynamic growth sector of the armored transport
industry, with the total number of ATM locations served by the armored
transport industry expected to increase significantly over the next five years.
This expected growth results from a fundamental change in the retail delivery
channel strategy of banks in the United States as traditional, full service
bank branches are being replaced by ATMs, drive-through service centers and
banks located in supermarkets and other nontraditional locations. In addition,
while cash vault and related services currently represent a relatively small
portion of the armored transport industry's revenues, this market is also
expected to expand over the next several years as banks and other financial
institutions continue the trend toward outsourcing such services.
POST-COMBINATION STRATEGY
Management believes that Loomis, Fargo & Co. has several distinct competitive
strengths within the armored transport industry, including a strong national
presence, the leading ATM Services operation, and a management team experienced
in maximizing service value, reducing cost of risk and improving cash flow and
profitability. The Company's business strategy is to capitalize on its
competitive strengths by implementing the following initiatives:
Promote the National Presence of Loomis, Fargo & Co. The Company provides
its services to a much larger geographic area than either Loomis Armored or
Wells Fargo Armored serviced on a stand-alone
2
<PAGE>
basis. With services in all 50 states and Puerto Rico, the Company is able
to expand its business with national financial institutions and retail
customers which require armored ground transport, ATM Services and/or cash
vault and related services in numerous locations across the country.
Management believes that the ability to provide nationwide service is
becoming more important in the armored transport industry as banks are
expanding geographically through the continuing consolidation of the
banking industry and as other institutions are shifting toward centralized
purchasing of goods and services. As one of only two armored transport
providers in the United States with nationwide service, the Company is
well-positioned to augment its base of customers requiring broad geographic
coverage. The Company has dedicated a segment of its sales force to manage
national account relationships.
Focus on Growing ATM Services Market. The Company provides ATM Services
to over 27,000 ATM locations nationwide, making it the leading provider of
ATM Services in the United States. Both the number of ATM locations and the
types of items being dispensed through ATMs, such as travelers checks,
lottery tickets, coupons, postage stamps and other valuables, continue to
grow. Additionally, many ATM owners have begun outsourcing the servicing
and maintenance of ATM locations formerly serviced and maintained
internally. The Company uses its proprietary automated national dispatching
system to coordinate customer requests, provide service data to customers
and dispatch service technicians nationwide. To complement the national
dispatching system, the Company has developed an automated network cash
management system that optimizes ATM cash loads and provides ATM balance
reporting. With its broad range of services and automated systems, the
Company intends to build upon its leading position in the ATM Services
market.
Reduce Cost of Risk and Emphasize Risk Management Partnership with
Customers. Management intends to improve cash flow and profitability not
only by reducing the Company's overall cost of risk but also by using a
risk management partnership approach with its customers as a means of
differentiating the Company from its competitors. A comprehensive risk
management program which emphasizes incident avoidance and loss
minimization is being implemented throughout the Company's operations. The
program focuses on (i) employee culture and attitude, (ii) selectivity in
hiring, (iii) operating procedures designed to recognize and avoid
potential danger or accidents, (iv) safety and security procedures,
including training in the proper use of firearms and the operation of the
Company's vehicles, (v) limits on the amounts of cash or other valuables
contained in a branch or vehicle or under the control of an employee, (vi)
utilization of three-person crews and surveillance or chase cars in high-
risk areas, and (vii) an extensive security oversight program, including
surveillance and evaluation by AMSEC, an independent, international
security firm. This risk management program produced significant cost
savings with respect to cargo loss and casualty liability claims for Loomis
Armored over the five years prior to the consummation of the Transactions.
To provide the quality of service necessary to enhance customer loyalty in
support of this business strategy, the Company emphasizes an operating
philosophy dedicated to:
Attracting and Retaining Quality, Loyal Employees. Management believes
that a loyal employee base directly contributes to reducing cost of risk
and improving customer service and that the combination of selectivity in
hiring, a commitment to employee training, responsibility and safety, and
competitive wage and benefit packages will enable the Company to attract
and retain quality, loyal employees. As a result of Loomis Armored's
commitment to these principles, its employee turnover rate decreased from
41% for the twelve months ended December 31, 1992 to 29% for the twelve
months ended December 31, 1996.
Encouraging Employee Initiative. The Company operates so that many of the
daily operational decisions such as local sales, routing, hiring, and fleet
maintenance are made at the branch level while the Company's corporate and
five regional management teams support the branches, particularly with
respect to pricing and risk management. This delegation of responsibility
is expected to improve efficiency and responsiveness to customer needs,
while maintaining Company-wide security, safety and quality of revenue
standards. Management believes that this structure, together with an
incentive program that links a branch
3
<PAGE>
manager's compensation to branch profitability, gives branch managers and
other employees a sense of empowerment and accountability. This structure
was successfully implemented at Loomis Armored's operations and is
currently being implemented at all of the Company's locations.
CONSOLIDATION SAVINGS
The Company has developed an integration plan focused on reducing corporate
overhead and consolidating branches in overlapping service areas. The Company
expects to achieve cost savings in consolidation through (i) adopting the most
effective business practices of Loomis Armored and Wells Fargo Armored, (ii)
consolidating corporate, regional and branch offices, and (iii) achieving
routing and servicing efficiencies as well as reducing occupancy costs by
combining operations in the areas where both Loomis Armored and Wells Fargo
Armored previously operated.
Management estimates that, upon successful completion of its consolidation
plan over the 12-month period following the consummation of the Transactions,
the Company will realize $7.5 million in cost savings on an annualized basis
(approximately $3.4 million of which is related to headcount reduction and $3.7
million of which is related to the elimination of management fees) compared to
the cost of operating Loomis Armored and Wells Fargo Armored as separate
entities. There can be no assurance, however, that all of such savings will
occur as planned. The Company's actual consolidation savings could differ
materially from management's estimate. Factors that could cause or contribute
to such differences include those discussed elsewhere in this Prospectus,
including, but not limited to, risks and uncertainties relating to leverage,
risks inherent in the armored transport industry, issues concerning integration
of operations and the ability of the Company to attract and retain qualified
employees. See "Risk Factors--Implementation of Post-Combination Strategy," "--
Employees" and "Pro Forma Combined Financial Information."
4
<PAGE>
THE TRANSACTIONS
The Business Combination. On November 28, 1996, Borg-Warner, Wells Fargo
Armored, the Company, Loomis, Loomis Armored and the Business Trust entered
into the Contribution Agreement (as defined), pursuant to which, on January 24,
1997, the Business Trust contributed all of the issued and outstanding common
stock of Loomis and Wells Fargo Armored contributed substantially all of its
assets and certain liabilities to the Company in exchange for 51% and 49%,
respectively, of the Common Stock and certain other consideration. See "The
Transactions--The Business Combination."
The Financing. The Transactions were financed through the establishment of
the New Credit Facility and the issuance of the Old Notes. The following table
illustrates the sources and uses of cash in connection with the Transactions.
See "The Transactions--The Business Combination." The Transactions were
consummated on January 24, 1997.
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
SOURCES OF CASH
New Credit Facility (1)...................................... $ 73.3
10% Senior Subordinated Notes................................ 85.0
------
Total sources of cash..................................... $158.3
======
USES OF CASH
Retirement of Loomis and Loomis Armored obligations:
Existing indebtedness (2) (3).............................. $ 29.6
Accrued management fees (4)................................ 1.6
Casualty and employee claims (5)........................... 8.5
Payments to the Loomis Indemnity Trust....................... 4.7
Payments to Wells Fargo Armored and related entities (6)(7).. 106.6
Fees and expenses............................................ 5.3
Payment escrowed to retire Wells Fargo Armored IRB and
accrued interest............................................ 1.1
Contribution to the Operating Subsidiary for working capital
purposes.................................................... 0.9
------
Total uses of cash........................................ $158.3
======
</TABLE>
- --------
(1) The New Credit Facility provides initially for aggregate borrowings of
$115.0 million and matures in January 2002. As of March 31, 1997,
approximately $11.7 million in letters of credit were outstanding under the
New Credit Facility, leaving approximately $29.9 million in available
borrowing capacity under the New Credit Facility.
(2) Includes (i) $10.3 million of 14% senior subordinated notes that were
scheduled to mature on September 30, 1999, including accrued interest, (ii)
$9.2 million of a 9% junior subordinated note that was scheduled to mature
on September 30, 1999, including accrued interest (iii) $3.3 million of a
term loan that was scheduled to mature on September 30, 1999, including
accrued interest, and (iv) $6.8 million in borrowings under Loomis
Armored's credit facility.
(3) $3.5 million of the borrowings by Loomis Armored under its credit facility
were used to redeem the Loomis Preferred Stock (as defined) immediately
prior to the Closing (as defined). See "The Transactions--The Business
Combination."
(4) Accrued management fees were paid at Closing to an affiliate of Loomis
pursuant to a Financial Advisory Agreement (as defined). See "Certain
Relationships and Related Transactions--Financial Advisory Agreement."
(5) Represents a lump sum payment on behalf of the Business Trust to CIGNA
Insurance Company and related entities pursuant to an Early Program Close-
Out Agreement dated January 24, 1997, related to insuring and managing
casualty and employee claims of Loomis incurred prior to the Closing (the
"Early Program Close-Out Agreement"). See "The Transactions--The Business
Combination" and "Pro Forma Combined Financial Information."
(6) Includes approximately $1.4 million of reimbursement for fees and expenses
related to the Transactions.
(7) A portion of such consideration was paid at Closing by the Company to Borg-
Warner and/or one or more of its wholly-owned subsidiaries to satisfy
certain intercompany indebtedness of Wells Fargo Armored assumed by the
Company.
5
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer applies to $85.0 million aggregate principal amount of the
Old Notes. The form and terms of the New Notes are the same as the form and
terms of the Old Notes except that (i) interest on the New Notes shall accrue
from the date of issuance of the Old Notes, and (ii) the New Notes are being
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer. The New Notes will evidence the same debt as the
Old Notes and will be entitled to the benefits of the Indenture pursuant to
which the Old Notes were issued. The Old Notes and the New Notes are sometimes
referred to collectively herein as the "Notes." See "Description of New Notes."
The Exchange Offer........ $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, Old Notes representing $85.0
million aggregate principal amount are outstanding.
The terms of the New Notes and the Old Notes are
substantially identical.
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Company and the
Guarantors, the Company and the Guarantors believe
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any
person receiving the New Notes, whether or not that
person is the holder (other than any such holder or
such other person that is an "affiliate" of the
Company or any Guarantors within the meaning of
Rule 405 under the Securities Act), without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that (i) the New Notes are acquired in the ordinary
course of business of that holder or such other
person, (ii) neither the holder nor such other
person is engaging in or intends to engage in a
distribution of the New Notes, and (iii) neither
the holder nor such other person has an arrangement
or understanding with any person to participate in
the distribution of the New Notes. See "The
Exchange Offer--Purpose and Effect." Each broker-
dealer that receives New Notes for its own account
in exchange for Old Notes, where those Old Notes
were acquired by the broker-dealer as a result of
its market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of these
New Notes. See "Plan of Distribution."
Registration Rights
Agreement................ The Old Notes were sold by the Company on January
24, 1997, in a private placement. In connection
with the sale, the Company entered into a
Registration Rights Agreement with the purchasers
(the "Registration Rights Agreement") providing for
the Exchange Offer. See "The Exchange Offer--
Purpose and Effects."
Expiration Date........... The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1997, or such later date and
time to which it is extended.
Withdrawal................ The tender of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Any Old Notes not accepted for exchange for any
reason will be returned without expense to the
tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.
6
<PAGE>
Interest on the New Notes
and Old Notes............ Interest on each New Note will accrue from the date
of issuance of the Old Note for which the New Note
is exchanged.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Company. See "The Exchange Offer--Certain
Conditions to Exchange Offer."
Procedures for Tendering
Old Notes................ Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Notes and any other required documentation,
to the Exchange Agent at the address set forth in
the Letter of Transmittal. Persons holding Old
Notes through the Depository Trust Company ("DTC")
and wishing to accept the Exchange Offer must do so
pursuant to the DTC's Automated Tender Offer
Program, by which each tendering Participant will
agree to be bound by the Letter of Transmittal. By
executing or agreeing to be bound by the Letter of
Transmittal, each holder will represent to the
Company that, among other things, (i) the New Notes
acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the
person receiving such New Notes, whether or not
such person is the holder of the Old Notes, (ii)
neither the holder nor any such other person is
engaging in or intends to engage in a distribution
of such New Notes, (iii) neither the holder nor any
such other person has an arrangement or
understanding with any person to participate in the
distribution of such New Notes, and (iv) neither
the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated
under the Securities Act, of the Company. Pursuant
to the Registration Rights Agreement, the Company
and each of the Guarantors are required to use
their reasonable best efforts to file a "shelf"
registration statement for a continuous offering
pursuant to Rule 415 under the Securities Act in
respect of the Old Notes (and cause such shelf
registration statement to be declared effective by
the Commission and keep it continuously effective,
supplemented and amended for prescribed periods) if
(i) the Company is not required to file an Exchange
Offer Registration Statement (as defined in the
Registration Rights Agreement) or to consummate the
Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy,
or (ii) any holder of Old Notes is prohibited from
participating in the Exchange Offer by applicable
law or Commission policy, or such holder would be
required to deliver a prospectus in connection with
any resale of New Notes acquired in the Exchange
Offer and the prospectus contained in the Exchange
Offer Registration Statement would not be
appropriate or available for such resales, or such
holder is a broker-dealer that holds Old Notes
acquired directly from the Company or its
affiliates.
7
<PAGE>
Acceptance of Old Notes
and Delivery of New
Notes.................... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Exchange Agent............ Marine Midland Bank is serving as Exchange Agent in
connection with the Exchange Offer.
Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."
Effect of Not Tendering... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer
thereof. The Company will have no further
obligation to provide for the registration under
the Securities Act of such Old Notes.
8
<PAGE>
TERMS OF NEW NOTES
Securities Offered........ $85.0 million aggregate principal amount of 10%
Senior Subordinated Notes due 2004.
Issuer.................... Loomis, Fargo & Co.
Interest Payment Dates.... January 15 and July 15, commencing July 15, 1997.
Maturity.................. January 15, 2004.
Sinking Fund Provisions... None.
Optional Redemption....... The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or
after January 15, 2001 at the Redemption Prices (as
defined) set forth herein, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the date of redemption. In addition, prior to
January 15, 2000, the Company may on any one or
more occasions redeem up to $25.0 million aggregate
principal amount of the New Notes at a Redemption
Price equal to 110% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of
redemption, with the net proceeds of one or more
public offerings of Common Stock; provided that at
least $60.0 million principal amount of the Notes
remains outstanding immediately after the
occurrence of such redemption. See "Description of
New Notes--Optional Redemption."
Change of Control......... In the event of a Change of Control (as defined),
the holders of the New Notes will have the right to
require the Company to purchase their New Notes at
a price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
purchase.
Ranking...................
The New Notes will be general unsecured obligations
of the Company, subordinate in right of payment to
all existing and future Senior Debt of the Company,
which will include all indebtedness incurred under
the New Credit Facility. As of March 31, 1997,
there was approximately $165.7 million of total
debt of the Company and its subsidiaries, $73.5
million of which was Senior Debt, and there was not
any indebtedness of the Company expressly
subordinated to the Notes by its terms in right and
priority of payment; in addition, there was
approximately $29.9 million available to be drawn
by the Company as secured Senior Debt under the New
Credit Facility. See "Risk Factors--Subordination,"
"Capitalization" and "Description of New Notes--
Subordination."
Subsidiary Guarantees..... The Company's payment obligations under the New
Notes will be jointly and severally guaranteed by
the Guarantors. The Subsidiary Guarantees will be
subordinated in right of payment to all existing
and future
senior debt of each Guarantor, which include
guarantees of all indebtedness incurred under the
New Credit Facility. See "Description of New
Notes--Subsidiary Guarantees."
9
<PAGE>
Certain Covenants......... The indenture pursuant to which the New Notes will
be issued (the "Indenture") will contain covenants
that, among other things, limit the ability of the
Company and its subsidiaries to: (i) incur
additional indebtedness; (ii) pay dividends or make
certain other restricted payments; (iii) enter into
transactions with affiliates; (iv) create certain
liens; (v) engage in certain sale and leaseback
transactions; (vi) make certain asset dispositions;
and (vii) merge or consolidate with, or transfer
substantially all of their assets to, another
person. See "Description of New Notes--Certain
Covenants."
Use of Proceeds........... There will be no cash proceeds to the Company from
the exchange of New Notes for Old Notes pursuant to
the Exchange Offer. The net proceeds from the
Original Offering were used, together with
borrowings under the New Credit Facility, to effect
the Transactions.
RISK FACTORS
In considering an investment in the New Notes offered hereby, the investor is
encouraged to consider many risk factors involved, including the Company's
leverage and debt service, subordination of the New Notes, the Company's
holding company structure, risks inherent in the armored transport industry,
the Company's implementation of its post-combination strategy, competition,
control of the Company by Borg-Warner and the Business Trust, considerations of
fraudulent conveyance and enforceability of the Subsidiary Guarantees,
environmental matters, restrictions imposed by the Indenture and New Credit
Facility, employee related issues, regulation and legal proceedings and the
absence of a public market for the New Notes. For a more detailed discussion of
these factors, see "Risk Factors" beginning on page 17.
10
<PAGE>
SUMMARY PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited Summary Pro Forma Combined Financial Information set forth
below should be read in conjunction with the unaudited Pro Forma Combined
Financial Information included elsewhere herein, and is based on the historical
financial statements of Loomis and Wells Fargo Armored and gives effect to (i)
the acquisition of substantially all of the assets and certain liabilities of
Wells Fargo Armored and other adjustments relating to the Transactions, (ii)
the sale of the Old Notes and borrowings under the New Credit Facility, and the
application of the net proceeds therefrom to repay certain indebtedness of
Loomis Armored, repay accrued management fees of Loomis and Loomis Armored,
fund a distribution to the Loomis Indemnity Trust, make a lump sum payment to
CIGNA Insurance Company and related entities pursuant to the Early Program
Close-Out Agreement on behalf of the Business Trust, and fund the purchase of
substantially all of the assets and certain liabilities of Wells Fargo Armored
pursuant to the Contribution Agreement, all as described in the Notes to Pro
Forma Combined Financial Information, and (iii) the redemption by Loomis of the
Loomis Preferred Stock. See "The Transactions--The Business Combination." The
unaudited Summary Pro Forma Combined Financial Information is intended for
informational purposes only and is not necessarily indicative of the future
financial position or results of operations of the Company had the transactions
described above occurred on the indicated dates or been in effect for the
period presented. The unaudited Summary Pro Forma Combined Financial
Information should be read in conjunction with, and is qualified in its
entirety by, the historical consolidated financial statements of Loomis and
Wells Fargo Armored, including the related notes thereto, included elsewhere
herein.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
------------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues............................... $373,742 $95,221
Cost of operations:
Payroll and related expenses.......... 219,561 56,401
Vehicle expense....................... 50,022 12,834
Facilities expense.................... 16,862 4,148
Other operating expenses.............. 69,085 20,132
Gains associated with benefit plans... (954) --
Expenses related to the Transactions.. -- 1,139
-------- -------
Operating income....................... 19,166 567
Interest expense, net................. 15,847 3,915
-------- -------
Income (loss) before income taxes and
extraordinary item.................... 3,319 (3,348)
Income taxes........................... 108 25
-------- -------
Net income (loss) before extraordinary
item.................................. $ 3,211 $(3,373)
======== =======
Ratio of earnings to fixed charges
(1)................................... 1.2x --
OTHER DATA:
EBITDA (2)............................. $ 31,370 $ 4,561
EBITDA as a % of revenues.............. 8.4% 4.8%
Depreciation and amortization.......... $ 13,158 $ 3,994
Capital expenditures................... 11,811 696
SELECTED FINANCIAL RATIOS:
Ratio of EBITDA to cash interest
expense (3)........................... 2.2x 1.3x
Ratio of total debt to EBITDA.......... 5.2x 36.3x
</TABLE>
- --------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases, and
amortization of debt issuance costs and debt discount. For the three months
ended March 31, 1997, pro forma earnings were insufficient to cover fixed
charges by approximately $3,300.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes certain gains related to benefit plans of $954 in
1996. EBITDA is presented because it is commonly used by certain investors
and analysts to analyze and compare companies on the basis of operating
performance and to
11
<PAGE>
determine a company's ability to service and incur debt. EBITDA should not
be considered in isolation from or as a substitute for net income, cash
flows from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(3) Cash interest expense represents total interest expense for the twelve
months ended December 31, 1996 and the three months ended March 31, 1997
less (i) $910 and $252, respectively, of amortization of financing fees
and (ii) $523 and $127, respectively, of accretion of discount on non-
interest bearing NOL Note.
12
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION--LOOMIS, FARGO & CO.
The summary historical financial data of Loomis, Fargo & Co., successor to
Loomis, set forth below for each of the three fiscal years in the period ended
June 30, 1996 and the six months ended December 31, 1996 has been derived from
the consolidated financial statements of Loomis, Fargo & Co. which have been
audited by Ernst & Young LLP, independent auditors. The summary financial
information for the six months ended December 31, 1995 and the three months
ended March 31, 1996 and 1997 are unaudited and in the opinion of the Company's
management reflects all adjustments, consisting only of normal recurring
accruals, considered necessary for a fair presentation of such data. The
results of operations for any interim period are not necessarily indicative of
results of operations for the fiscal year and should be read in conjunction
with, and are qualified in their entirety by, "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Loomis, Fargo & Co."
and the financial statements of Loomis, Fargo & Co. included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
ENDED ENDED
YEARS ENDED JUNE 30, DECEMBER 31, MARCH 31,
---------------------------- ---------------- -----------------
1994 1995 1996 1995 1996 1996 1997
-------- -------- -------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............... $106,447 $115,136 $119,455 $57,806 $65,765 $30,229 $ 79,892
Cost of operations:
Payroll and related
expenses.............. 72,447 77,270 79,974 38,029 43,031 19,629 47,632
Vehicle expense........ 13,583 13,815 14,035 7,010 7,637 3,565 10,423
Facilities expense..... 5,395 4,991 5,094 2,531 2,661 1,288 3,286
Other operating
expenses.............. 14,679 15,936 17,120 8,381 8,745 4,930 17,524
Expenses related to the
Transactions (1)...... -- -- -- -- -- -- 1,139
Gains associated with
benefit plans......... (1,677) -- (954) -- -- -- --
-------- -------- -------- ------- ------- ------- --------
Operating income....... 2,020 3,124 4,186 1,855 3,691 817 (112)
Interest expense, net.. 3,053 3,158 2,981 1,528 1,445 734 3,078
-------- -------- -------- ------- ------- ------- --------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle............. (1,033) (34) 1,205 327 2,246 83 (3,190)
Income taxes........... -- -- 78 25 50 -- 25
Cumulative effect of
change in accounting
principle............. (453) -- -- -- -- -- --
-------- -------- -------- ------- ------- ------- --------
Income (loss) before
extraordinary item.... (1,486) (34) 1,127 302 2,196 83 (3,215)
Extraordinary item
(2)................... -- -- -- -- -- -- (124)
-------- -------- -------- ------- ------- ------- --------
Net income (loss)...... (1,486) (34) 1,127 302 2,196 83 (3,339)
======== ======== ======== ======= ======= ======= ========
Ratio of earnings to
fixed charges (3)..... -- 1.0x 1.3x 1.2x 2.1x 1.1x --
BALANCE SHEET DATA (AT
PERIOD END):
Total assets........... $ 39,935 $ 38,879 $ 39,755 $36,449 $43,046 $37,744 $209,822
Total debt (4)......... 26,985 26,791 27,392 27,253 27,767 26,977 165,674
Common stockholders'
deficit............... (11,316) (11,350) (10,550) (11,048) (8,354) (10,725) (2,727)
OTHER DATA:
EBITDA (5)............. $ 7,423 $ 8,344 $ 8,118 $ 4,323 $ 5,752 $ 2,080 $ 3,265
EBITDA as a % of
revenues.............. 7.0% 7.2% 6.8% 7.5% 8.7% 6.9% 4.1%
Depreciation and
amortization.......... $ 7,080 $ 5,220 $ 4,886 $ 2,468 $ 2,061 $ 1,263 $ 3,377
Capital expenditures... 419 809 2,231 1,056 2,571 619 537
Cost of risk (6)....... 10,578 10,134 10,210 5,007 3,974 2,674 9,823
Cost of risk as a % of
revenues.............. 9.9% 8.8% 8.5% 8.7% 6.0% 8.8% 12.3%
Monthly fixed billing
revenue per location
served (dollars not in
thousands) (7)........ $ 280 $ 329 $ 368 $ 345 $ 345 N/A N/A
Number of ATMs serviced
(8)................... 906 1,172 3,181 2,400 3,925 N/A N/A
</TABLE>
13
<PAGE>
- --------
(1) Expenses related to the Transactions include payroll-related and other
costs of consolidating operations following the business combination,
including the maintenance of two corporate offices and other duplicate
functions during the period of transition.
(2) Extraordinary item represents a loss on extinguishment of debt, net of
provision for income taxes of $1.
(3) For the purposes of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases, and
amortization of debt issuance costs and debt discount. For the year ended
June 30, 1994 and the three months ended March 31, 1997, earnings were
insufficient to cover fixed charges by approximately $1,000 and $3,200,
respectively.
(4) Total debt includes long-term capital lease obligations, redeemable
preferred stock and redeemable common stock warrants.
(5) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes certain gains related to benefit plans of $1,677
in 1994 and $954 in 1996, the cumulative effect of the change in accounting
principle of $(453) in 1994, and the $124 extraordinary item during the
three months ended March 31, 1997. EBITDA is presented because it is
commonly used by certain investors and analysts to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service and incur debt. EBITDA should not be
considered in isolation from or as a substitute for net income, cash flows
from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(6) Cost of risk is defined as the total cost of cash-in-transit insurance
coverage (cargo), casualty and other insurance (worker's compensation,
automobile liability, general liability and other coverage), and surety and
includes premiums, broker's fees, administration charges, payments under
deductibles provisions, collateral fees and insurance related incentive
programs.
(7) Monthly fixed billing revenue per location served is defined as the total
fixed fee monthly contract revenue for all types and frequency of service
divided by the number of customer service locations billed in such manner
at the end of each period. Monthly fixed billing revenue constitutes
approximately 70% of Loomis' total revenue in all years.
(8) Number of ATMs serviced is defined as the number of ATM machines under
contract at the end of each period whether on a fixed fee monthly contract
or on a variable fee for service basis. Figures prior to 1995 are
management estimates.
14
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION--WELLS FARGO ARMORED
The summary historical financial data of Wells Fargo Armored set forth below
for each of the three years in the period ended December 31, 1996 has been
derived from the financial statements of Wells Fargo Armored which have been
audited by Deloitte & Touche LLP, independent auditors.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues............ $211,204 $230,999 $246,328
Cost of services................ 177,093 188,639 204,543
-------- -------- --------
Gross profit.................... 34,111 42,360 41,785
Selling, general, and
administrative expenses........ 21,406 18,705 20,309
Depreciation.................... 7,096 7,150 6,997
Management fees to Borg-Warner.. 3,004 3,185 3,353
Amortization of excess purchase
price.......................... 1,325 1,474 1,466
-------- -------- --------
Earnings from operations........ 1,280 11,846 9,660
Interest expense and finance
charges........................ 6,567 7,135 7,683
-------- -------- --------
Earnings (loss) before income
taxes.......................... (5,287) 4,711 1,977
Provision (benefit) for income
taxes.......................... (1,798) 1,866 860
-------- -------- --------
Net earnings (loss)............. $ (3,489) $ 2,845 $ 1,117
======== ======== ========
Ratio of earnings to fixed
charges (1).................... -- 1.5x 1.2x
BALANCE SHEET DATA (AT PERIOD
END):
Total assets.................... $124,812 $128,192 $136,204
Total debt...................... 58,477 54,114 53,102
Stockholder's equity............ 35,341 43,705 50,285
OTHER DATA:
EBITDA (2)...................... $ 9,701 $ 20,470 $ 18,123
EBITDA as a % of net service
revenues....................... 4.6% 8.9% 7.4%
Depreciation and amortization... $ 8,421 $ 8,624 8,463
Capital expenditures............ 6,231 3,695 8,065
Cost of risk (3)................ 29,734 30,086 28,262
Cost of risk as a % of net
service revenues............... 14.1% 13.0% 11.5%
Number of ATMs serviced (4)..... 18,185 23,980 24,062
</TABLE>
15
<PAGE>
- --------
(1) For the purposes of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases. For the year
ended December 31, 1994, earnings were insufficient to cover fixed charges
by $5,287.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability
or liquidity.
(3) Cost of risk is defined as the total cost of cash-in-transit insurance
coverage (cargo), casualty and other insurance (worker's compensation,
automobile liability, general liability and other coverage), and surety and
includes premiums, broker's fees, administration charges, payments under
deductibles provisions, collateral fees and insurance related incentive
programs.
(4) Number of ATMs serviced is defined as the number of ATM machines under
contract at the end of each period whether on a fixed fee monthly contract
or on a variable fee for service basis.
16
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment
in the New Notes offered hereby. This Prospectus contains forward-looking
statements. These statements are subject to a number of risks and
uncertainties, including the factors set forth below, many of which are beyond
the Company's control.
LEVERAGE AND DEBT SERVICE
The Company has a significant amount of indebtedness following the
consummation of the Transactions. As of March 31, 1997, the Company's
consolidated total indebtedness and stockholders' deficit was $165.7 million
and $2.7 million, respectively.
The degree to which the Company is leveraged could have important
consequences to holders of the New Notes, including, without limitation, the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, potential acquisition
opportunities, general corporate purposes or other purposes may be impaired;
(ii) a substantial portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness; and
(iii) the Company may be more vulnerable to economic downturns, may be limited
in its ability to withstand competitive pressures, and may have reduced
flexibility in responding to changing business and economic conditions. The
Company's ability to service its indebtedness will be dependent on its future
performance, which, in turn, will be affected by prevailing economic
conditions and financial, business and other factors, many of which are beyond
the Company's control.
The Company believes that, based upon current levels of operations, it will
be able to meet its debt service obligations, including principal and interest
payments on the Notes, when due. However, if the Company cannot generate
sufficient cash flow from operations to meet its debt service obligations,
defaults may occur thereunder and the Company might be required to refinance
its indebtedness. There is no assurance that refinancings could be effected on
satisfactory terms or would be permitted by the terms of the New Credit
Facility. See "Description of New Credit Facility" and "Description of New
Notes."
A substantial portion of the indebtedness incurred by the Company to finance
the Transactions bears interest at variable rates. Any increase in the
interest rates on the Company's indebtedness will reduce funds available to
the Company for its operations and future business opportunities and will
exacerbate the consequences of the Company's leveraged capital structure.
SUBORDINATION
The indebtedness evidenced by the New Notes and the Subsidiary Guarantees
(including principal, Redemption Price and Purchase Price (as defined) of,
interest and Liquidated Damages, if any, on the New Notes) will be
subordinated in right of payment to present and future Senior Debt of the
Company and senior debt of each Guarantor. In the event of the dissolution or
liquidation of the Company, or in the case of certain events of default with
respect to the New Notes or such Senior Debt, certain creditors of the Company
holding Senior Debt will be entitled to be paid in full before any payment is
made to holders of the New Notes. Senior Debt would currently include, among
other things, the debt incurred under the New Credit Facility and the
Company's current and future obligations under capitalized leases. As of March
31, 1997, there was approximately $165.7 million of total debt of the Company
and its subsidiaries, $73.5 million of which was Senior Debt, and there was
not any indebtedness of the Company expressly subordinated to the Notes by its
terms in right and priority of payment; in addition, there was approximately
$29.9 million available to be drawn by the Company as secured Senior Debt
under the New Credit Facility. The Indenture does not prohibit or limit the
designation of indebtedness otherwise permitted to be incurred as Senior Debt.
See "Pro Forma Combined Financial Information" and "Description of New Notes--
Subordination."
17
<PAGE>
HOLDING COMPANY STRUCTURE
The Company is a holding company, the sole asset of which is all of the
issued and outstanding capital stock of its subsidiaries. The Company has no
independent means of generating revenues. As a holding company, the Company
will depend on dividends and other permitted payments from its subsidiaries to
meet cash needs, including payment of dividends on the Common Stock and
principal, Redemption Price and Purchase Price of, interest and Liquidated
Damages, if any, on the New Notes. The Company will be the sole obligor on the
New Notes, which will be initially guaranteed by all of the Company's
subsidiaries. The New Notes will not be secured by any of the assets of the
Company or its subsidiaries. In addition, the obligations of the Company and
its subsidiaries under the New Credit Facility will be secured by pledges of
substantially all of such entities' assets. The right of the Company to
participate in any distribution of earnings or assets of its subsidiaries will
be subject to the prior claims of the creditors of such subsidiaries. See "The
Transactions," "Description of New Credit Facility" and "Description of New
Notes."
RISKS INHERENT IN THE ARMORED TRANSPORT INDUSTRY
The nature of the services provided by the Company potentially exposes the
Company to greater risks than are experienced in many businesses. The
potential for substantial cargo losses, as well as claims for personal injury,
wrongful death, worker's compensation, punitive damages and general liability,
despite risk management efforts, is inherent in the armored transport
business. While the Company seeks to maintain appropriate levels of insurance,
there can be no assurance that the Company will avoid significant future
catastrophic claims or adverse publicity related thereto. Furthermore, there
can be no assurance that the Company's insurance will be adequate to cover the
Company's liabilities or that such insurance coverage will remain available at
acceptable costs. The availability of quality and reliable insurance coverage
is an important factor in the Company's ability to obtain and retain
customers. A successful claim brought against the Company for which coverage
is denied or which is in excess of its insurance coverage could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--The Industry."
Pursuant to the terms of the Company's insurance policies, the Company is
required to maintain standby letters of credit with its insurance providers to
satisfy any deductible requirements in the event of an insurable loss. Such
standby letters of credit are counted against the amount available to be
borrowed by the Company under the New Credit Facility and therefore constrain
the Company's financial flexibility. The exercise of all or a significant
portion of the Company's outstanding standby letters of credit to satisfy
deductible claims would have a material adverse effect on the Company's
business, financial condition and results of operations. As of March 31, 1997,
the Company had outstanding approximately $11.7 million in standby letters of
credit, which amounts are expected to substantially increase over time as the
Company's reserve for casualty losses increases. Because the casualty and
employee claims incurred by Wells Fargo Armored prior to the consummation of
the Transactions are liabilities of Wells Fargo Armored and those incurred by
Loomis Armored prior to the consummation of the Transactions are liabilities
of the Business Trust and are subject to the Early Program Close-Out
Agreement, the Company did not have any reserve for casualty losses
immediately following the consummation of the Transactions. See "The
Transactions--The Business Combination."
On March 29, 1997 and on May 13, 1997 the Company experienced material cargo
losses from its Jacksonville, Florida and Ponce, Puerto Rico branches,
respectively. Both cargo losses are under active investigation. The Company
believes that the cargo losses will not have a material adverse effect on the
Company's liquidity or earnings in 1997, but that such losses could have
negative consequences on the Company's insurance coverage and/or costs at some
future time. Due to the fact that the Company's premiums on insurance relating
to its cargo losses are influenced by various factors, including general
market conditions and the Company's risk management performance in future
periods, management for the Company is unable to predict the effect or
magnitude such cargo losses will have on the Company's insurance coverage or
costs when its current policies expire.
IMPLEMENTATION OF POST-COMBINATION STRATEGY
The Company's future operations and earnings will be largely dependent upon
the Company's ability to integrate the businesses separately conducted by
Loomis Armored and Wells Fargo Armored. In addition, management will be
required to apply its business strategy to an entity which is significantly
larger than the entity
18
<PAGE>
it previously managed. The Company must, among other things, consolidate
certain regional and branch offices, integrate management and employee
personnel, combine customer bases and relocate certain billing, security, and
other database systems. There can be no assurance that the Company will
successfully integrate the separate businesses of Loomis Armored and Wells
Fargo Armored, and the failure to do so would have a material adverse effect
on the Company's results of operations and financial condition. Additionally,
the need to focus management's attention on integration of the businesses and
implementation of the Company's post-combination strategy may limit the
Company's ability to successfully pursue other opportunities related to its
business for the foreseeable future.
As presented under "Prospectus Summary--Consolidation Savings" and "Pro
Forma Combined Financial Information," management anticipates that the Company
will realize approximately $7.5 million in annualized cost savings as a result
of a successful integration of the businesses of Wells Fargo Armored and
Loomis Armored. The achievement of these savings is significantly dependent on
such successful integration. There can be no assurance that all such savings
will be achieved or sustained and the failure to achieve or sustain such
savings could result in a material adverse effect on the Company's business,
financial condition and results of operations.
The Company has not yet received all necessary third party and state and
local governmental consents, approvals and waivers in connection with the
Transactions. While the Company believes that all material consents, approvals
and waivers ultimately will be received, the failure to obtain certain of such
consents, approvals and waivers, in the aggregate, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
COMPETITION
The armored transport industry is highly competitive. Some of the Company's
competitors have a greater presence in certain markets in which the Company
competes and may have greater financial and other resources available to them.
There can be no assurance that the Company can compete with such other
companies in any given market or that the Company will continue to be
competitive in the markets it presently serves. See "Business--Competition."
CONTROL BY THE BUSINESS TRUST AND BORG-WARNER
The Business Trust owns 51%, and Borg-Warner, through its wholly-owned
subsidiary Wells Fargo Armored, owns 49%, of the outstanding shares of Common
Stock. Frederick B. Hegi, Jr., an indirect general partner of Wingate
Partners, L.P. ("Wingate Partners"), a Delaware limited partnership and
private investment firm located in Dallas, Texas, serves as Manager of the
Business Trust. Acting together, the Business Trust and Borg-Warner have the
power to elect all of the directors of the Company and to approve any action
requiring stockholder approval. See "Security Ownership of Certain Beneficial
Owners and Management."
FRAUDULENT CONVEYANCE; ENFORCEABILITY OF SUBSIDIARY GUARANTEES
The Company's obligations under the Notes may be subject to review under
federal or state fraudulent transfer law if the Company becomes a debtor in a
subsequent bankruptcy case or otherwise has financial difficulties after
consummation of the Original Offering. In that event, if a court in a lawsuit
by an unpaid creditor or by a representative of creditors (such as a trustee
in a bankruptcy or a debtor-in-possession) were to find that the Company
received less than fair consideration or reasonably equivalent value for
incurring the indebtedness represented by the Notes and (i) was insolvent,
(ii) was rendered insolvent by reason of such transaction, (iii) was engaged
in a business or transaction, or was about to be engaged in a business or
transaction, for which its remaining assets constituted unreasonably small
capital or (iv) intended to incur, or believed or reasonably should have
believed that it would incur, debts beyond its ability to pay such debts as
they matured, such court could void the Company's obligations under the Notes
and direct the return of any amounts paid thereunder to the Company or to a
fund for the benefit of its creditors. The measure of insolvency for purposes
of the foregoing will vary depending upon the law of the jurisdiction being
applied. Management believes that at the time the Old Notes were issued, the
Company received fair consideration and reasonably equivalent value in
exchange for its
19
<PAGE>
obligations thereunder, was, is and will be solvent, will have sufficient
capital for the business in which it is engaged and will not incur debts
beyond its ability to pay such debts as they mature. There can be no
assurance, however, as to what standard a court would apply in making such
determinations or whether a court would agree with such assessments. See "--
Leverage and Debt Service" above.
The Guarantors will guarantee the Company's obligations under the New Notes.
See "Description of New Notes--Subsidiary Guarantees." Under applicable
provisions of the federal bankruptcy law or comparable provisions of state
law, if any Guarantor is insolvent at the time it incurs its Subsidiary
Guarantee, such Guarantee could be voided, or claims in respect of such
Subsidiary Guarantees could be subordinated to all other debts of such
Guarantor. The measures of insolvency will vary depending upon the law applied
in any such proceeding. See "Description of New Notes--Subordination."
ENVIRONMENTAL MATTERS
The Company is subject to numerous and increasingly stringent federal, state
and local laws and regulations relating to the protection of the environment
as well as the storage, handling, use, emission, discharge, release or
disposal of hazardous materials and solid wastes into the environment and the
investigation and remediation of contamination associated with such materials.
These laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, the Water Pollution Control Act, the
Clean Air Act and the Resource Conservation and Recovery Act, as those laws
have been amended and supplemented, the regulations promulgated thereunder,
and any applicable state analogs. The Company's operations also are governed
by laws and regulations relating to employee health and safety. The Company
believes that it is in material compliance with such applicable laws and
regulations and that its existing environmental controls are adequate to
address existing regulatory requirements.
As is the case with other companies engaged in similar businesses, the
Company could incur costs relating to environmental compliance, including
remediation costs related to historical hazardous materials handling and
disposal practices, principally petroleum products related to the Company's
fleet, at certain facilities. The Company has undertaken remedial activities
in the past to address on-site soil contamination caused by historic
operations. None of these cleanups has resulted in any material liability.
Currently, the Company is involved in remedial/closure activities at various
locations, none of which, individually or in the aggregate, is expected to
have a material adverse effect on the Company's operations, financial
condition or competitive position. As mentioned above, however, the risk of
environmental liability and remediation costs is present in the Company's
business and, therefore, there can be no assurance that material environmental
costs, including remediation costs, will not arise in the future. Moreover, it
is possible that future developments (e.g., new regulations or stricter
regulatory requirements) could result in the Company incurring material costs
to comply with applicable environmental laws and regulations. In addition, the
Company has not undertaken an independent investigation of each facility;
accordingly, there can be no assurance that in the future additional
conditions requiring remediation will not be identified.
The Company has identified 41 underground fuel storage tanks on the
properties owned or operated by it. Federal governmental regulations require
that by the end of 1998 all underground storage tanks located within the
United States must satisfy stricter safety standards or be removed. If the
Company fails to comply with these regulations, it could be subject to fines,
penalties or other governmental actions, the imposition of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Pursuant to the Contribution Agreement, the Company will be indemnified by
Borg-Warner and the Business Trust for environmental liabilities associated
with underground storage tanks and other known and identified environmental
liabilities existing as of the Closing Date. The indemnification obligations
will survive until the earlier of December 31, 1998 or the first anniversary
of an initial public offering of Common Stock. To the extent that there are
remedial activities in process as of the date of termination of such
indemnification obligations, the Company will provide Borg-Warner and the
Business Trust, as applicable, with a written estimate describing in
reasonable detail the remaining costs and expenses expected to be incurred by
the
20
<PAGE>
Company which would otherwise have been covered by such indemnification. Such
estimated costs and expenses may be satisfied in cash (subject to a present
value discount rate) or pursuant to an irrevocable letter of credit issued in
the full amount of such estimated costs and expenses.
RESTRICTIONS IMPOSED BY THE INDENTURE AND THE NEW CREDIT FACILITY
The Indenture contains covenants which restrict, among other things, the
ability of the Company to incur additional indebtedness, pay dividends or make
certain other Restricted Payments (as defined), enter into transactions with
affiliates, create certain liens, engage in certain sale and leaseback
transactions, make certain asset dispositions and merge or consolidate with,
or transfer substantially all of its assets to, another person. In addition,
the New Credit Facility contains other and more restrictive covenants and
prohibits the Company from prepaying certain of its indebtedness, including
the Notes. Under the New Credit Facility, the Company is also required to
maintain specified financial ratios and comply with certain financial tests.
The failure by the Company to maintain such financial ratios or to comply with
the restrictions contained in the New Credit Facility or the Indenture could
result in a default thereunder, which in turn could cause such indebtedness
(and by reason of cross-default provisions, other indebtedness) to become
immediately due and payable. No assurance can be given that the Company's
future operating results will be sufficient to enable compliance with such
covenants, or in the event of default, to remedy such default. See
"Description of New Credit Facility" and "Description of New Notes."
EMPLOYEES
The Company's business is labor intensive and, as a result, is affected by
the availability of qualified personnel and the cost of labor, including the
cost of insurance and other employee benefits provided to the Company's
employees. The Company's ability to pass along any increases in labor costs
may be limited by contract or by price competition within the industry. In
addition, the Company's operations could be adversely affected if the Company
is unable to hire suitable personnel in certain markets due to a lack of
qualified candidates in those markets.
REGULATION AND LEGAL PROCEEDINGS
The Company is subject to and complies with a large number of state and
federal occupational licensing and firearm laws that apply to its employees.
In addition, many states have laws requiring training and registration of
certain of the Company's employees and imposing minimum bond surety or
insurance standards. The Company, either directly or through industry trade
associations, generally supports the creation of minimum standards for the
industry. Due to its high qualification and training standards, the Company
does not expect any future establishment of minimum federal standards or new
state standards to have a material adverse effect on the Company's business.
However, there can be no assurance that future regulatory actions will not
have a material adverse effect on the Company's operations, financial
condition or competitive position.
ABSENCE OF PUBLIC MARKET
The New Notes are being offered to the holders of Old Notes, and the Company
does not intend to apply to have the New Notes listed on any securities
exchange. The initial purchasers of the Old Notes (the "Initial Purchasers")
have advised the Company that they currently intend to make a market in the
New Notes after the consummation of the Exchange Offer, as permitted by
applicable laws and regulations; however, the Initial Purchasers are not
obligated to do so, and may discontinue any such market-making activity at any
time without notice. Therefore, there can be no assurance that an active
market for the New Notes will develop. If a trading market for the New Notes
does develop, the New Notes may trade at a discount from their face value
depending upon prevailing interest rates, the market for similar securities,
the performance of the Company and other factors.
21
<PAGE>
THE TRANSACTIONS
THE BUSINESS COMBINATION
Contribution Agreement. On November 28, 1996, Borg-Warner, Wells Fargo
Armored, the Company, Loomis, Loomis Armored, and the Business Trust entered
into a Contribution Agreement (the "Contribution Agreement"), pursuant to
which, at the closing of the Transactions (the "Closing" and the date on which
such Closing occurred, the "Closing Date"), (a) the Business Trust contributed
all of the issued and outstanding shares of common stock of Loomis to the
Company in exchange for (i) 5,100,000 shares of Common Stock issued to the
Business Trust, (ii) a cash payment of $8.5 million was delivered to CIGNA
Insurance Company and related entities on behalf of the Business Trust for the
purpose of administering casualty and employee claims of Loomis incurred prior
to the Closing, (iii) a cash payment of approximately $4.7 million was made on
behalf of the Business Trust to an indemnity trust established to satisfy
indemnity claims of the Company (the "Loomis Indemnity Trust"), and (iv) a
promissory note issued to the Business Trust in the original principal amount
of $6.0 million (the "NOL Note"), and (b) Wells Fargo Armored contributed
substantially all of its assets, including all of the capital stock of two
wholly-owned subsidiaries of Wells Fargo Armored (collectively, the
"Transferred Assets"), and assigned certain liabilities (including
intercompany indebtedness) (the "Assumed Liabilities") to the Company in
exchange for (i) 4,900,000 shares of Common Stock to be issued to Wells Fargo
Armored and (ii) a cash payment made to Wells Fargo Armored and related
entities equal to approximately $106.6 million (as adjusted based upon a
formula set forth in the Contribution Agreement). In addition, at the Closing,
the Company, the Business Trust and Wells Fargo Armored entered into the
Stockholders Agreement (as defined). See "Certain Relationships and Related
Transactions." The Contribution Agreement also provides that, after the
Closing, certain post-closing cash adjustments will be made among the parties
based upon specified minimum working capital requirements. The capitalization
of the Company and the combination of Loomis and Wells Fargo Armored has been
accounted for as a recapitalization of Loomis and the purchase of
substantially all the assets and certain liabilities of Wells Fargo Armored by
Loomis.
Immediately following the consummation of the transactions contemplated by
the Contribution Agreement, the Company: (i) filed a certificate of amendment
to the certificate of incorporation of Loomis changing its name to LFC Holding
Corporation (the "Intermediate Holding Company"); (ii) filed articles of
amendment to the articles of incorporation of Loomis Armored changing its name
to Loomis, Fargo & Co. (the "Operating Subsidiary"); and (iii) contributed all
of the assets acquired from Wells Fargo Armored to the Operating Subsidiary.
The Company and the Operating Subsidiary have the same name, except that the
Company is incorporated under the laws of Delaware and the Operating
Subsidiary is incorporated under the laws of Texas.
22
<PAGE>
The following diagrams set forth (i) the structure of Loomis and Wells Fargo
Armored immediately prior to the consummation of the Transactions, and (ii)
the structure of the Company following the consummation of the Transactions.
Loomis and Wells Fargo Armored prior to the Transactions:
LOOMIS, FARGO & CO.
(a newly-formed Delaware
corporation)
UNITHOLDERS LOOMIS BORG-WARNER
(former stockholders STOCKHOLDERS SECURITY
of Loomis TRUST CORPORATION
LOOMIS HOLDING WELLS FARGO
CORPORATION ARMORED SERVICE
CORPORATION
WELLS FARGO WELLS FARGO
LOOMIS ARMORED INC. ARMORED SERVICE ARMORED
CORPORATION OF SERVICE
TEXAS CORPORATION OF
PUERTO RICO
23
<PAGE>
The Company following the Transactions:
BORG-WARNER
SECURITY
CORPORATION
UNITHOLDERS LOOMIS 51% 49% WELLS FARGO
(former stockholders STOCKHOLDERS LOOMIS, FARTO & CO. ARMORED SERVICE
of Loomis) TRUST (a Delaware corporation) CORPORATION
LFC HOLDING
CORPORATION
(formerly Loomis Holding
Corporation
LOOMIS, FARGO & CO.
(A Texas Corporation)
(formerlly Loomis Armored
Inc.
LOOMIS, FARGO &
LFC ARMORED OF CO. OF PUERTO
TEXAS INC. RICO
(formerly Wells Fargo (formerly Wells Fargo
Armored Service Armored Service
Corporation of Texas) Corporation of Puerto
Rico)
Loomis Preferred Stock. Pursuant to the Contribution Agreement, at the
Closing, Loomis redeemed $3.5 million aggregate liquidation preference of
Series I Preferred Stock, par value $.01 per share, of Loomis (the "Loomis
Preferred Stock"), representing all issued and outstanding shares of Loomis
Preferred Stock, out of proceeds of the former credit facility of Loomis
Armored. All of such shares of Loomis Preferred Stock were owned of record and
beneficially by Wingate Partners or its affiliates. See "Certain Relationships
and Related Transactions."
Historical Casualty and Employee Claims. At the Closing, the Company
delivered $8.5 million to CIGNA Insurance Company and related entities on
behalf of the Business Trust pursuant to the Early Program Close-Out
Agreement, related to casualty and employee claims of Loomis incurred prior to
Closing. In addition, pursuant to an Excess Claims Assumption Agreement dated
January 24, 1997, among the Company, the Intermediate Holding Company, the
Operating Subsidiary and the Business Trust, the Business Trust is liable for
all casualty and employee claims of Loomis incurred prior to Closing not
covered by CIGNA pursuant to the Early Program Close-Out Agreement. Casualty
and employee claims of Wells Fargo Armored incurred prior to Closing were not
assumed by the Company and remain liabilities of Wells Fargo Armored. As of
December 31, 1996, the estimated aggregate insurance liability for casualty
and employee claims of Wells Fargo Armored was $16.0 million.
NOL Note. At the Closing, the NOL Note, which does not accrue interest, was
issued by the Company to the Business Trust and is carried at March 31, 1997
at a discount of $567,000 from its original principal amount
24
<PAGE>
to approximate its fair value. The NOL Note has a term of fifteen years,
subject to mandatory prepayments as, and to the extent that, the Company
realizes a tax benefit attributable to the utilization of net operating losses
of Loomis available as of the Closing Date.
Environmental Indemnification. Pursuant to the Contribution Agreement, the
Company will be indemnified by Borg-Warner and the Business Trust for
environmental liabilities associated with existing underground storage tanks
and other known and identified environmental liabilities. The indemnification
obligations will survive until the earlier of December 31, 1998 or the first
anniversary of an initial public offering of Common Stock. To the extent that
there are remedial activities in process as of the date of termination of such
indemnification obligations, the Company will provide Borg-Warner and the
Business Trust, as applicable, with a written estimate describing in
reasonable detail the remaining costs and expenses expected to be incurred by
the Company which would otherwise have been covered by such indemnification.
Such estimated costs and expenses may be satisfied in cash (subject to a
present value discount rate) or pursuant to an irrevocable letter of credit
issued in the full amount of such estimated costs and expenses.
USE OF PROCEEDS
The Company will not receive any proceeds for the exchange of New Notes for
Old Notes pursuant to the Exchange Offer.
The net proceeds from the sale of the Old Notes of approximately $81.8
million, together with borrowings under the New Credit Facility, were used to
consummate the Transactions and meet ongoing working capital needs. See "The
Transactions."
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
SOURCES OF CASH
New Credit Facility (1)...................................... $ 73.3
10% Senior Subordinated Notes................................ 85.0
------
Total sources of cash..................................... $158.3
======
USES OF CASH
Retirement of Loomis and Loomis Armored obligations:
Existing indebtedness (2)(3)............................... $ 29.6
Accrued management fees (4)................................ 1.6
Casualty and employee claims (5)........................... 8.5
Payment to the Loomis Indemnity Trust........................ 4.7
Payments to Wells Fargo Armored and related entities (6)(7).. 106.6
Fees and expenses............................................ 5.3
Payment escrowed to retire Wells Fargo Armored IRB and
accrued interest............................................ 1.1
Contribution to the Operating Subsidiary for working capital
purposes.................................................... 0.9
------
Total uses of cash........................................ $158.3
======
</TABLE>
- --------
(1) The New Credit Facility provides initially for aggregate borrowings of
$115.0 million and matures in January 2002. As of March 31, 1997,
approximately $11.7 million in letters of credit were outstanding under
the New Credit Facility, leaving approximately $29.9 million in available
borrowing capacity under the New Credit Facility.
(2) Includes (i) $10.3 million of 14% senior subordinated notes that were
scheduled to mature on September 30, 1999, including accrued interest,
(ii) $9.2 million of a 9% junior subordinated note that was scheduled to
mature on September 30, 1999, including accrued interest (iii) $3.3
million of a term loan that was scheduled to mature on September 30, 1999,
including accrued interest, and (iv) $6.8 million in borrowings under
Loomis Armored's credit facility.
(3) $3.5 million of the borrowings by Loomis Armored under its credit facility
were used to redeem the Loomis Preferred Stock immediately prior to the
Closing. See "The Transactions--The Business Combination."
(4) Accrued management fees were paid at Closing to an affiliate of Loomis
pursuant to a Financial Advisory Agreement. See "Certain Relationships and
Related Transactions--Financial Advisory Agreement."
(5) Represents a lump sum payment on behalf of the Business Trust to CIGNA
Insurance Company and related entities pursuant to the Early Program
Close-Out Agreement related to insuring and managing casualty and employee
claims of Loomis incurred prior to the Closing. See "The Transactions--The
Business Combination" and "Pro Forma Combined Financial Information."
(6) Includes approximately $1.4 million of reimbursement for fees and expenses
related to the Transactions.
(7) A portion of such consideration was paid at Closing by the Company to
Borg-Warner and/or one or more of its wholly-owned subsidiaries to satisfy
certain intercompany indebtedness of Wells Fargo Armored assumed by the
Company.
25
<PAGE>
CAPITALIZATION
The following table sets forth the Company's historical capitalization at
March 31, 1997. The table should be read in conjunction with the audited and
unaudited financial statements appearing elsewhere herein. For additional
information with respect to the New Credit Facility, see "Description of New
Credit Facility."
<TABLE>
<CAPTION>
HISTORICAL AT
MARCH 31, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Total Debt:
New Credit Facility (1)................................. $ 73,450
10% Senior Subordinated Notes........................... 85,000
Non-interest bearing NOL Note (2)....................... 5,433
Other debt.............................................. 1,791
--------
Total debt............................................. 165,674
Total stockholders' equity............................... (2,727)
--------
Total capitalization................................... $162,947
========
</TABLE>
- --------
(1) The New Credit Facility provides initially for an aggregate principal
amount of $115.0 million in borrowings and matures in January 2002. As of
March 31, 1997, approximately $11.7 million in letters of credit would
have been outstanding under the New Credit Facility, leaving approximately
$29.9 million in available borrowing capacity under the New Credit
Facility.
(2) The $6.0 million NOL Note does not accrue interest and has a term of
fifteen years, subject to mandatory prepayments as, and to the extent
that, the Company realizes a tax benefit attributable to the utilization
of net operating losses of Loomis available as of the Closing Date. The
NOL Note is being carried on the Company's balance sheet at March 31, 1997
at a discount of $567,000 from its original principal amount to
approximate its fair value.
26
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
The accompanying unaudited Pro Forma Combined Financial Information is based
on the historical financial statements of Loomis, Fargo & Co., successor to
Loomis, and Wells Fargo Armored and gives effect to (i) the acquisition of
substantially all of the assets and certain liabilities of Wells Fargo Armored
and other adjustments related to the Transactions, (ii) the issuance and sale
of the Old Notes, together with borrowings under the New Credit Facility, and
the application of the net proceeds therefrom to repay all indebtedness of
Loomis Armored, repay certain accrued management fees of Loomis and Loomis
Armored, fund a distribution to the Loomis Indemnity Trust on behalf of the
Business Trust, make a lump sum payment on behalf of the Business Trust to
CIGNA Insurance Company and related entities pursuant to the Early Program
Close-Out Agreement, related to casualty and employee claims of Loomis and
Loomis Armored prior to the Closing Date, and fund the purchase of
substantially all of the assets and certain liabilities of Wells Fargo Armored
pursuant to the Contribution Agreement, and (iii) the redemption by Loomis of
the Loomis Preferred Stock. See "The Transactions--The Business Combination."
The unaudited Pro Forma Combined Income Statements for the twelve months ended
December 31, 1996 and the three months ended March 31, 1997 give effect to the
transactions described above as if they had been consummated on January 1,
1996. The Pro Forma Combined Financial Information has been prepared on the
basis of a December 31 fiscal year end as the Company reports on a calendar
year basis. The historical Wells Fargo Armored financial statements have been
conformed to the Loomis financial statement presentation format in the
accompanying Pro Forma Combined Financial Information.
The unaudited Pro Forma Combined Financial Information is intended for
informational purposes only and is not necessarily indicative of the future
financial position or results of operation of the Company had the transactions
described in the preceding paragraph occurred on the indicated dates or been
in effect for the periods presented.
The unaudited Pro Forma Combined Financial Information and the accompanying
notes should be read in conjunction with, and are qualified in their entirety
by, the historical consolidated financial statements of Loomis and Wells Fargo
Armored, including the related notes thereto, included elsewhere herein.
27
<PAGE>
LOOMIS, FARGO & CO.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WELLS FARGO
LOOMIS HOLDING ARMORED SERVICE PRO FORMA PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED (1)
-------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues................ $ 127,414 $246,328 $ -- $ 373,742
Cost of operations:
Payroll and related
expense............... 84,976 134,585 -- 219,561
Vehicle expense........ 14,663 35,371 (12)(a) 50,022
Facilities expense..... 5,224 11,442 196 (a) 16,862
Other operating
expenses.............. 17,484 55,270 (3,669)(b) 69,085
Gains associated with
benefit plans......... (954) -- -- (954)
---------- -------- ------ -----------
121,393 236,668 (3,485) 354,576
---------- -------- ------ -----------
Operating income........ 6,021 9,660 (3,485) 19,166
Interest expense--
affiliates............. 1,097 7,683 (8,780)(c) --
Interest expense--
other.................. 1,799 -- 14,048 (c) 15,847
---------- -------- ------ -----------
Total interest
expense............... 2,896 7,683 5,268 15,847
---------- -------- ------ -----------
Income before income
taxes.................. 3,125 1,977 (1,783) 3,319
Income taxes............ 103 860 (855)(d) 108
---------- -------- ------ -----------
Net income.............. 3,022 1,117 (928) 3,211
Increase in value of
redeemable warrants.... 327 -- (327)(e) --
---------- -------- ------ -----------
Net income available to
common stockholders.... $ 2,695 $ 1,117 $ (601) $ 3,211
========== ======== ====== ===========
Net income per common
and common equivalent
share.................. $ 0.53 $ 0.32
========== ===========
Weighted average common
and common equivalent
shares................. 5,092,171 10,000,000
========== ===========
OPERATING AND OTHER
DATA:
EBITDA (2)............. $ 9,544 $ 18,123 $ 31,370
EBITDA as a % of
revenues.............. 7.5% 7.4% 8.4%
Depreciation and
amortization.......... $ 4,477 $ 8,463 $ 13,158
Capital expenditures... 3,746 8,065 11,811
Ratio of EBITDA to
total cash interest
expense (3)........... 2.2x
Ratio of earnings to
fixed charges (4)..... 1.2x
</TABLE>
- --------
(1) Management estimates that, upon successful completion of its consolidation
plan over the 12-month period following the consummation of the
Transactions, the Company will realize $3.8 million in savings on an
annualized basis compared to the cost of operating Loomis and Wells Fargo
Armored as separate entities. The costs associated with implementing this
plan have been recognized as liabilities assumed in the business
combination and included in the allocation of purchase price in accordance
with EITF Issue No. 95-3, "Recognition of Liabilities in Connection with a
Purchase Business Combination." The following table itemizes these
consolidation and related cost savings on an annualized basis:
<TABLE>
<CAPTION>
PAYROLL AND OTHER TOTAL
RELATED FACILITIES OPERATING COST
EXPENSES EXPENSE EXPENSES SAVINGS
----------- ---------- --------- -------
<S> <C> <C> <C> <C>
Headquarters office headcount
reduction...................... $2,376 $ -- $-- $2,376
Information systems
duplication.................... -- -- 319 319
Branch headcount and facilities
duplication.................... 739 103 -- 842
ATM dispatch center
duplication.................... 236 -- 10 246
------ ----- ---- ------
$3,351 $ 103 $329 $3,783
====== ===== ==== ======
</TABLE>
Had these cost savings been reflected in the Pro Forma Combined Income
Statement above, net income and net income per share would have been $6,994
and $0.70, respectively.
28
<PAGE>
LOOMIS, FARGO & CO.
TWELVE MONTHS ENDED DECEMBER 31, 1996
NOTES TO PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes certain gains related to benefit plans of $954.
EBITDA is presented because it is commonly used by certain investors and
analysts to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur
debt. EBITDA should not be considered in isolation from or as a substitute
for net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity.
(3) Cash interest expense represents total interest expense less (i)
amortization of financing fees and (ii) accretion of discount on non-
interest bearing NOL note. See Note (c) to the Pro Forma Combined Income
Statement.
(4) For the purpose of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on non-cancelable leases, and
amortization of debt issuance costs and debt discount.
See accompanying notes to Pro Forma Combined Income Statement.
29
<PAGE>
LOOMIS, FARGO & CO.
TWELVE MONTHS ENDED DECEMBER 31, 1996
NOTES TO PRO FORMA COMBINED INCOME STATEMENT--(CONTINUED)
(UNAUDITED)
Pro Forma adjustments have been made to the unaudited Pro Forma Combined
Income Statement to reflect the following (in thousands):
(a) To adjust depreciation expense resulting from the adjustment in basis
of Wells Fargo Armored property and equipment to fair market value.
(b) Represents (i) the elimination of management fees for both Loomis and
Wells Fargo Armored that will no longer be charged to the Company.
There are no direct services associated with the Wingate Partners
management fees. Any services previously associated with the management
fees paid to Borg-Warner are duplicative of activities already
performed by Loomis; (ii) the adjustment of depreciation expense
resulting from the adjustment in basis of Wells Fargo Armored property
and equipment to fair market value (iii) the amortization over 40 years
of goodwill arising from the Transactions and (iv) the elimination of
Wells Fargo Armored historical goodwill amortization.
<TABLE>
<S> <C>
Elimination of management fees to Borg-Warner.................... $(3,353)
Elimination of management fees to Wingate Partners............... (350)
Depreciation and amortization.................................... (968)
Record revised goodwill amortization............................. 2,468
Reverse historical Wells Fargo Armored goodwill amortization..... (1,466)
-------
$(3,669)
=======
</TABLE>
(c) Reflects the net change in interest expense based on the financing of
the Transactions:
<TABLE>
<S> <C>
Elimination of historical interest expense....................... $(10,579)
Interest on New Credit Facility.................................. 5,770
Interest on Notes................................................ 8,500
Interest on other existing debt.................................. 144
Amortization of financing fees................................... 910
Accretion of discount on non-interest bearing NOL note........... 523
--------
$ 5,268
========
</TABLE>
The interest rates on the New Credit Facility are variable rates based
on LIBOR and are assumed to be 7.75%. For each 1/8% change in the
assumed average rate on the New Credit Facility, interest expense would
change by approximately $92 for the twelve months ended December 31,
1996. The non-interest bearing NOL note has been discounted at a rate
of 10.0%.
(d) Reflects the income tax effect of the pro forma adjustments based on
the availability of net operating loss carryforwards and the
requirements of the alternative minimum tax.
(e) Eliminates the accretion in carrying value of redeemable warrants that
were exercised prior to the closing of the Transactions.
30
<PAGE>
LOOMIS, FARGO & CO.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WELLS FARGO
LOOMIS ARMORED
HOLDING SERVICE PRO FORMA PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues................... $ 79,892 $15,329 $ -- $ 95,221
Cost of operations:
Payroll and related
expense................. 47,632 8,769 -- 56,401
Vehicle expense.......... 10,423 2,413 (2)(a) 12,834
Facilities expense....... 3,286 829 83 (a) 4,148
Other operating
expenses................ 17,524 2,836 (228)(b) 20,132
Expenses related to the
Transactions(2)......... 1,139 -- -- 1,139
---------- ------- ----- -----------
80,004 14,847 (197) 94,654
---------- ------- ----- -----------
Operating income........... (112) 482 197 567
Interest expense--
affiliates................ 95 362 (457)(c) --
Interest expense--other.... 2,983 -- 932 (c) 3,915
---------- ------- ----- -----------
Total interest expense... 3,078 362 475 3,915
---------- ------- ----- -----------
Income (loss) before income
taxes and extraordinary
item...................... (3,190) 120 (278) (3,348)
Income taxes............... 25 -- -- 25
---------- ------- ----- -----------
Net income (loss) before
extraordinary item........ $ (3,215) $ 120 $(278) $ (3,373)
========== ======= ===== ===========
Net loss per common and
common equivalent share... $ (0.37) $ (0.34)
========== ===========
Weighted average common and
common equivalent shares.. 8,745,777 10,000,000
========== ===========
Operating and Other Data:
EBITDA(3).................. $ 3,265 $ 986 $ 4,561
EBITDA as a % of revenues.. 4.1% 6.4% 4.8%
Depreciation and
amortization.............. $ 3,377 $ 504 $ 3,994
Capital expenditures....... 537 159 696
Ratio of EBITDA to total
cash interest expense(4).. 1.3x
Ratio of earnings to fixed
charges(5)................ --
</TABLE>
- --------
(1) Management estimates that, upon successful completion of its consolidation
plan over the 12-month period following the consummation of the
Transactions, the Company will realize $3.8 million in savings on an
annualized basis compared to the cost of operating Loomis and Wells Fargo
Armored as separate entities. The costs associated with implementing this
plan have been recognized as liabilities assumed in the business
combination and included in the allocation of purchase price in accordance
with EITF Issue No. 95-3, "Recognition of Liabilities in Connection with a
Purchase Business Combination." The following table itemizes these
consolidation and related cost savings on an annualized basis:
<TABLE>
<CAPTION>
PAYROLL
AND OTHER TOTAL
RELATED FACILITIES OPERATING COST
EXPENSES EXPENSE EXPENSES SAVINGS
-------- ---------- --------- -------
<S> <C> <C> <C> <C>
Headquarters office headcount
reduction......................... $2,376 $-- $-- $2,376
Information systems duplication.... -- -- 319 319
Branch headcount and facilities
duplication....................... 739 103 -- 842
ATM dispatch center duplication.... 236 -- 10 246
------ ---- ---- ------
$3,351 $103 $329 $3,783
====== ==== ==== ======
</TABLE>
31
<PAGE>
LOOMIS, FARGO & CO.
THREE MONTHS ENDED MARCH 31, 1997
NOTES TO PRO FORMA COMBINED INCOME STATEMENT--(CONTINUED)
(UNAUDITED)
Had a proportionate share of these cost savings been reflected in the Pro
Forma Combined Income Statement above, net loss and net loss per share
would have been $(2,427) and $(0.24), respectively.
(2) Expenses related to the Transactions include payroll-related and other
costs of consolidating operations following the business combination,
including the maintenance of two corporate offices and other duplicate
functions during the period of transition.
(3) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
(4) Cash interest expense represents total interest expense less (i)
amortization of financing fees and (ii) accretion of discount on non-
interest bearing NOL note. See Note (c) to the Pro Forma Combined Income
Statement.
(5) For the purpose of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on non-cancelable leases, and
amortization of debt issuance costs and debt discount. For the three
months ended March 31, 1997, pro forma earnings were insufficient to cover
fixed charges by approximately $3,300.
See accompanying notes to Pro Forma Combined Income Statement.
32
<PAGE>
LOOMIS, FARGO & CO.
THREE MONTHS ENDED MARCH 31, 1997
NOTES TO PRO FORMA COMBINED INCOME STATEMENT--(CONTINUED)
(UNAUDITED)
Pro Forma adjustments have been made to the unaudited Pro Forma Combined
Income Statement to reflect the following (in thousands):
(a) To adjust depreciation expense resulting from the adjustment in basis
of Wells Fargo Armored property and equipment to fair market value.
(b) Represents (i) the elimination of management fees for both Loomis and
Wells Fargo Armored that will no longer be charged to the Company.
There are no direct services associated with the Wingate Partners
management fees. Any services previously associated with the management
fees paid to Borg-Warner are duplicative of activities already
performed by Loomis; (ii) the adjustment of depreciation expense
resulting from the adjustment in basis of Wells Fargo Armored property
and equipment to fair market value (iii) the amortization over 40 years
of goodwill arising from the Transactions and (iv) the elimination of
Wells Fargo Armored historical goodwill amortization.
<TABLE>
<S> <C>
Elimination of management fees to Borg Warner...................... $(287)
Elimination of management fees to Wingate Partners................. (23)
Depreciation and amortization...................................... 19
Record revised goodwill amortization............................... 158
Reverse historical Wells Fargo Armored goodwill amortization....... (95)
-----
$(228)
=====
</TABLE>
(c) Reflects the net change in interest expense based on the financing of
the Transactions:
<TABLE>
<S> <C>
Elimination of interest expense related to retired debt............. $(552)
Interest on New Credit Facility..................................... 379
Interest on Notes................................................... 543
Interest on other existing debt..................................... 9
Amortization of financing fees...................................... 60
Accretion of discount on non-interest bearing NOL note.............. 36
-----
$ 475
=====
</TABLE>
The interest rates on the New Credit Facility are variable rates based
on LIBOR and are assumed to be 7.75%. For each 1/8% change in the
assumed average rate on the New Credit Facility, interest expense would
change by approximately $23 for the three months ended March 31, 1997.
The non-interest bearing NOL note has been discounted at a rate of
10.0%.
33
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
LOOMIS, FARGO & CO.
The selected consolidated financial data of Loomis, Fargo & Co., successor
to Loomis, set forth below for each of the three fiscal years in the period
ended June 30, 1996 and the six months ended December 31, 1996 has been
derived from the financial statements of Loomis, Fargo & Co. which have been
audited by Ernst & Young LLP, independent auditors. The selected financial
information for the two years in the period ended June 30, 1993 and the six
months ended December 31, 1995 and the three months ended March 31, 1996 and
March 31, 1997 is unaudited and in the opinion of Loomis, Fargo & Co.
management reflects all adjustments, consisting only of normal recurring
accruals, considered necessary for a fair presentation of such data. The
results of operations for any interim period are not necessarily indicative of
results of operations for the fiscal year and should be read in conjunction
with, and are qualified in their entirety by, "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Loomis" and the
financial statements of Loomis, Fargo & Co. included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
ENDED ENDED
YEARS ENDED JUNE 30, DECEMBER 31, MARCH 31,
------------------------------------------------ ---------------- -----------------
1992 1993 1994 1995 1996 1995 1996 1996 1997
-------- -------- -------- -------- -------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............... $105,590 $107,249 $106,447 $115,136 $119,455 $57,806 $65,765 $30,229 $ 79,892
Cost of operations:
Payroll and related
expenses.............. 75,312 75,128 72,447 77,270 79,974 38,029 43,031 19,629 47,632
Vehicle expense........ 14,650 14,883 13,583 13,815 14,035 7,010 7,637 3,565 10,423
Facilities expense..... 5,404 5,184 5,395 4,991 5,094 2,531 2,661 1,288 3,286
Other operating
expenses.............. 13,793 12,857 14,679 15,936 17,120 8,381 8,745 4,930 17,524
Gains associated with
benefit plans......... -- -- (1,677) -- (954) -- -- -- --
Expenses related to the
Transactions (1)...... -- -- -- -- -- -- -- -- 1,139
-------- -------- -------- -------- -------- ------- ------- ------- --------
Operating income
(loss)................ (3,569) (803) 2,020 3,124 4,186 1,855 3,691 817 (112)
Interest expense, net.. 3,179 3,369 3,053 3,158 2,981 1,528 1,445 734 3,078
-------- -------- -------- -------- -------- ------- ------- ------- --------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle............. (6,748) (4,172) (1,033) (34) 1,205 327 2,246 83 (3,190)
Income taxes........... -- -- -- -- 78 25 50 -- 25
Cumulative effect of
change in accounting
principle............. -- -- (453) -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- --------
Income (loss) before ex-
traordinary item....... (6,748) (4,172) (1,486) (34) 1,127 302 2,196 83 (3,215)
Extraordinary item (2).. -- -- -- -- -- -- -- -- (124)
-------- -------- -------- -------- -------- ------- ------- ------- --------
Net income (loss)....... (6,748) (4,172) (1,486) (34) 1,127 302 2,196 83 (3,339)
======== ======== ======== ======== ======== ======= ======= ======= ========
Net income (loss) avail-
able to
common stockholders.... (6,748) (4,172) (1,486) (34) 800 302 2,196 83 (3,339)
Earnings (loss) per
share (dollars not in
thousands) (3)......... (2.34) (1.45) (0.51) (0.01) 0.16 0.11 0.43 0.02 (0.38)
Ratio of earnings to
fixed
charges (4)............ -- -- -- 1.0x 1.3x 1.2x 2.1x 1.1x --
BALANCE SHEET DATA (AT
PERIOD END):
Total assets........... $ 55,011 $ 46,244 $ 39,935 $ 38,879 $ 39,755 $36,449 $43,046 $37,744 $209,822
Total debt (5)......... 29,444 28,429 26,985 26,791 27,392 27,253 27,767 26,977 165,674
Common stockholders'
deficit............... (5,658) (9,830) (11,316) (11,350) (10,550) (11,048) (8,354) (10,725) (2,727)
OTHER DATA:
EBITDA (6)............. $ 2,529 $ 5,389 $ 7,423 $ 8,344 $ 8,118 $ 4,323 $ 5,752 $ 2,080 $ 3,265
EBITDA as a % of
revenues.............. 2.4% 5.0% 7.0% 7.2% 6.8% 7.5% 8.7% 6.9% 4.1%
Depreciation and
amortization.......... $ 6,098 $ 6,192 $ 7,080 $ 5,220 $ 4,886 $ 2,468 $ 2,061 $ 1,263 $ 3,377
Capital expenditures... 3,957 569 419 809 2,231 1,056 2,571 619 537
Cost of risk (7)....... 11,527 12,232 10,578 10,134 10,210 5,007 3,974 2,674 9,823
Cost of risk as a % of
revenues.............. 10.9% 11.4% 9.9% 8.8% 8.5% 8.7% 6.0% 8.8% 12.3%
Monthly fixed billing
revenue per location
served (dollars not in
thousands) (8)........ n/a $ 274 $ 280 $ 329 $ 368 $ 345 $ 345 N/A N/A
Number of ATMs serviced
(9)................... 722 734 906 1,172 3,181 2,400 3,925 N/A N/A
</TABLE>
34
<PAGE>
- --------
(1) Expenses relating to the Transactions include payroll-related and other
costs of consolidating operations following the business combination,
including the maintenance of two corporate offices and other duplicate
functions during the period of transition.
(2) Extraordinary item represents a loss on extinguishment of debt, net of
provision for income taxes of $1.
(3) Earnings (loss) per share have been restated to reflect retroactively the
effects of the recapitalization of Loomis described under "The
Transactions--The Business Combination."
(4) For the purposes of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases, and
amortization of debt issuance costs and debt discount. For the years ended
June 30, 1992, 1993 and 1994 and the three months ended March 31, 1997,
earnings were insufficient to cover fixed charges by approximately $6,700,
$4,200, $1,000 and $3,200, respectively.
(5) Total debt is defined as long-term debt, long-term capital lease
obligations, redeemable preferred stock and redeemable common stock
warrants.
(6) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes certain gains related to benefit plans of $1,677
in 1994 and $954 in 1996, the cumulative effect of the change in
accounting principle of $(453) in 1994, and the $124 extraordinary item
during the three months ended March 31, 1997. EBITDA is presented because
it is commonly used by certain investors and analysts to analyze and
compare companies on the basis of operating performance and to determine a
company's ability to service and incur debt. EBITDA should not be
considered in isolation from or as a substitute for net income, cash flows
from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(7) Cost of risk is defined as the total cost of cash-in-transit insurance
coverage (cargo), casualty and other insurance (worker's compensation,
automobile liability, general liability and other coverage), and surety
and includes premiums, broker's fees, administration charges, payments
under deductibles provisions, collateral fees and insurance related
incentive programs.
(8) Monthly fixed billing revenue per location served is defined as the total
fixed fee monthly contract revenue for all types and frequency of service
divided by the number of customer service locations billed in such manner
at the end of each period. Monthly fixed billing revenue constitutes
approximately 70% of Loomis' total revenue in all years. Information for
1992 is not available.
(9) Number of ATMs serviced is defined as the number of ATM machines under
contract at the end of each period whether on a fixed fee monthly contract
or on a variable fee for service basis. Figures prior to 1995 are
management estimates.
35
<PAGE>
WELLS FARGO ARMORED
The selected consolidated financial data of Wells Fargo Armored set forth
below for each of the three years in the period ended December 31, 1996 has
been derived from the financial statements of Wells Fargo Armored which have
been audited by Deloitte & Touche LLP, independent auditors. The selected
financial information for the two years in the period ended December 31, 1993
is unaudited and in the opinion of Wells Fargo Armored management reflects all
adjustments, consisting only of normal recurring accruals, considered
necessary for a fair presentation of such data.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues........ $156,388 $182,124 $211,204 $230,999 $246,328
Cost of services............ 120,916 142,210 177,093 188,639 204,543
-------- -------- -------- -------- --------
Gross profit................ 35,472 39,914 34,111 42,360 41,785
Selling, general, and
administrative expenses.... 17,973 17,306 21,406 18,705 20,309
Depreciation................ 5,953 6,753 7,096 7,150 6,997
Management fees to Borg-
Warner..................... 3,160 2,577 3,004 3,185 3,353
Amortization of excess
purchase price............. 959 1,332 1,325 1,474 1,466
-------- -------- -------- -------- --------
Earnings from operations.... 7,427 11,946 1,280 11,846 9,660
Interest expense and finance
charges.................... 4,738 5,363 6,567 7,135 7,683
-------- -------- -------- -------- --------
Earnings (loss) before
income taxes............... 2,689 6,583 (5,287) 4,711 1,977
Provision (benefit) for
income taxes............... 1,796 1,922 (1,798) 1,866 860
-------- -------- -------- -------- --------
Net earnings (loss) before
cumulative effect of
accounting change.......... 893 4,661 (3,489) 2,845 1,117
Cumulative effect of
accounting change.......... -- (2,000) -- -- --
-------- -------- -------- -------- --------
Net earnings (loss)......... $ 893 $ 2,661 $ (3,489) $ 2,845 $ 1,117
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges (1)................ 1.5x 2.0x -- 1.5x 1.2x
BALANCE SHEET DATA (AT PERIOD
END):
Total assets................ $113,344 $118,129 $124,812 $128,192 $136,204
Total debt.................. 59,741 58,110 58,477 54,114 53,102
Stockholder's equity........ 28,702 34,453 35,341 43,705 50,285
OTHER DATA:
EBITDA (2).................. $ 14,339 $ 20,031 $ 9,701 $ 20,470 $ 18,123
EBITDA as a % of net service
revenues................... 9.2% 11.0% 4.6% 8.9% 7.4%
Depreciation and
amortization............... $ 6,912 $ 8,085 $ 8,421 $ 8,624 $ 8,463
Capital expenditures........ 12,064 5,740 6,231 3,695 8,065
Cost of risk (3)............ 16,060 18,211 29,734 30,086 28,262
Cost of risk as a % of net
service revenues........... 10.3% l0.0% 14.1% 13.0% 11.5%
Number of ATMs serviced
(4)........................ 13,618 15,405 18,185 23,980 24,062
</TABLE>
36
<PAGE>
- --------
(1) For the purposes of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on non-cancelable leases. For the year
ended December 31, 1994 earnings were insufficient to cover fixed charges
by $5,287.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes the cumulative effect of a change in accounting
principle of ($2,000) in 1993. EBITDA is presented because it is commonly
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from
or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure
of profitability or liquidity.
(3) Cost of risk is defined as the total cost of cash-in-transit insurance
coverage (cargo), casualty and other insurance (worker's compensation,
automobile liability, general liability and other coverage), and surety
and includes premiums, broker's fees, administration charges, payments
under deductibles provisions, collateral fees and insurance related
incentive programs.
(4) Number of ATMs serviced is defined as the number of ATM machines under
contract at the end of each period whether on a fixed fee monthly contract
or on a variable fee for service basis.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except as otherwise indicated, the following discussion and analysis of
results of operations and financial condition of Loomis, Fargo & Co.,
successor to Loomis and Wells Fargo Armored covers periods before the
consummation of the Transactions. Accordingly, the discussion and analysis of
such periods does not reflect the significant impact that the Transactions,
the Original Offering and the New Credit Facility have had on the Company. See
"Pro Forma Combined Financial Information" and "Prospectus Summary--
Consolidation Savings." In addition, the following discussion and analysis is
based upon and should be read in conjunction with "Selected Historical
Financial Information" and the consolidated financial statements of each of
Loomis, Fargo & Co., and Wells Fargo Armored, including the notes thereto,
included elsewhere in this Prospectus.
LOOMIS, FARGO & CO.
OVERVIEW
Loomis was incorporated and has operated under the name Loomis Holding
Corporation since 1991. On May 5, 1991, Loomis acquired Loomis Armored for
$27.8 million. Loomis Armored was incorporated in 1928. In connection with the
Transactions, Loomis was reorganized into Loomis, Fargo & Co. on January 24,
1997.
RESULTS OF OPERATIONS
The following table sets forth Loomis, Fargo & Co.'s results of operations
expressed as a percentage of revenue.
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
YEARS ENDED ENDED ENDED
JUNE 30, DECEMBER 31, MARCH 31,
-------------------- -------------- --------------
1994 1995 1996 1995 1996 1996 1997
----- ----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations:
Payroll and related
expense.............. 68.0 67.1 67.0 65.8 65.5 64.9 59.6
Vehicle expense....... 12.8 12.0 11.7 12.1 11.6 11.8 13.1
Facilities expense.... 5.1 4.3 4.3 4.4 4.0 4.3 4.1
Other operating
expenses............. 13.8 13.9 14.3 14.5 13.3 16.3 21.9
Gains associated with
benefit plans........ (1.6) 0.0 (0.8) 0.0 0.0 0.0 0.0
Expenses relating to
the Transactions..... 0.0 0.0 0.0 0.0 0.0 0.0 1.4
----- ----- ----- ------ ------ ------ ------
Operating income........ 1.9 2.7 3.5 3.2 5.6 2.7 (0.1)
Interest expenses, net.. 2.9 2.7 2.5 2.6 2.2 2.4 3.9
----- ----- ----- ------ ------ ------ ------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle.............. (1.0) 0.0 1.0 0.6 3.4 0.3 (4.0)
Income taxes............ 0.0 0.0 0.1 0.1 0.1 -- --
----- ----- ----- ------ ------ ------ ------
Cumulative effect of
change in accounting
principle.............. 0.4 0.0 0.0 0.0 0.0 -- --
----- ----- ----- ------ ------ ------ ------
Income (loss) before
extraordinary item..... (1.4%) 0.0% 0.0% 0.5% 3.3% 0.3% (4.0%)
Extraordinary item (net
of provision for income
tax)................... -- -- -- -- -- -- (0.2)
----- ----- ----- ------ ------ ------ ------
Net income (loss)....... (1.4%) 0.0% 0.9% 0.5% 3.3% 0.3% (4.2%)
===== ===== ===== ====== ====== ====== ======
</TABLE>
38
<PAGE>
Three months ended March 31, 1996 compared with three months ended March 31,
1997
A comparison of the Company's results of operations for the first quarter of
1997 with Loomis's results of operations for the first quarter of 1996 is
necessarily focused on the significant difference in the size of the Company
before and after the acquisition of certain assets and liabilities of Wells
Fargo Armored. The audited financial statements of the separate companies as
of December 31, 1996 reflect annual 1996 revenues and property and equipment
of Wells Fargo Armored that were approximately twice as large as those of
Loomis, and net assets of Well's Fargo Armored that were three times as large.
While this increase in the Company's size offers potential for future growth
and profitability, the business combination tends to dominate any financial
comparison of periods before and after the transactions. Results of operations
and related cash flows for the first three months of 1997 include 23 days of
Loomis alone before the combination, and 67 days of combined operations
beginning with the January 24, 1997 closing date. For a condensed comparison
of first quarter operations of 1996 and 1997 on a pro forma basis, as if the
companies had been combined for the entirety of the two periods, see the Pro
Forma Combined Financial Information included elsewhere in this Prospectus.
Revenues. Revenues increased from $30.2 million for the three months ended
March 31, 1996 to $79.9 million for the three months ended March 31, 1997, an
increase of $49.7 million or 164.6%, of which $46.6 million is due to the
acquisition of the assets of Wells Fargo Armored. Excluding the increase from
the acquisition, revenues increased $3.1 million or 10% over the three months
ended March 31, 1996. The following table analyzes revenues by type of
service.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31
---------------
1996 1997 CHANGE PERCENT
------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services..... $ 24.2 $ 47.9 $ 23.7 97.9%
ATM services............................... 3.6 23.3 19.7 547.2%
Cash vault and related services............ 2.4 8.7 6.3 262.5%
------- ------- ------
$ 30.2 $ 79.9 $ 49.7 164.6%
======= ======= ======
</TABLE>
ATM services have continued to expand dramatically with additional service
opportunities in both the number of ATM locations and the additional items
being dispensed through ATMs. Not including the ATM locations added in the
acquisition of Wells Fargo Armored, the number of ATMs served increased by
approximately 1,500 machines in the three months ended March 31, 1997 compared
to the three months ended March 31, 1996. The increase in ATMs served has also
benefitted armored transport and cash vault revenues as customers often prefer
to use one risk management service provider. The significant increase in ATM
services revenue reflects both Loomis Holding Corporation's strategic decision
to develop this market segment and the strong presence of Wells Fargo Armored
in the ATM services market even before the combination. Although the Company's
revenues are generally level throughout the year, revenues vary due to the
extent that demand for money increases during the major holiday seasons.
Payroll and related expense. Payroll and related expense increased from
$19.6 million for the three months ended March 31, 1996 to $47.6 million for
the three months ended March 31, 1997, an increase of $28.0 million or 142.9%.
Payroll and related expense as a percent of revenue decreased from 64.9% for
the three months ended March 31, 1996 to 59.6% for the three months ended
March 31, 1997. The increase in payroll and related expense was principally
related to the employee base acquired from Wells Fargo Armored of
approximately $24.6 million. Additional increases for growth in the employee
base for new business and wage increases totaled approximately $3.0 million.
The decrease of payroll and related expense as a percentage of revenues
reflects the lower wage rates of the employee base acquired from Wells Fargo
Armored. Management estimates that, upon completion of its consolidation plan
expected by December 31, 1997, annual savings of approximately $3.4 million
will be realized in the area of payroll and related expense over the cost of
operating Loomis and Wells Fargo Armored separately.
39
<PAGE>
Vehicle expense. Vehicle expense increased from $3.6 million for the three
months ended March 31, 1996 to $10.4 million for the three months ended March
31, 1997, an increase of $6.8 million, or 188.9%, of which $6.3 million was
related to the fleet acquired from Wells Fargo Armored. Vehicle expense as a
percent of revenue increased from 11.8% for the three months ended March 31,
1996 to 13.0% for the three months ended March 31, 1997. The increase as a
percentage of revenues can be attributed to the higher depreciation and lease
expenses of the relatively newer fleet of Wells Fargo Armored acquired in the
business combination, and management's emphasis on preventive maintenance
programs on the acquired fleet. The number of trucks in active service
increased from approximately 950 to approximately 2,800 with the business
combination.
Facilities expense. Facilities expense increased from $1.3 million for the
three months ended March 31, 1996 to $3.3 million for the three months ended
March 31, 1997, an increase of $2.0 million, or 153.8%. Facilities expense as
a percent of revenue decreased from 4.3% for the three months ended March 31,
1996 to 4.1% for the three months ended March 31, 1997. The number of
operating sites increased from 69 to 197 sites with the purchase of Wells
Fargo Armored, with $1.6 million of the increase in facilities expense
associated with the acquired branches. The remaining $0.4 million increase
includes the maintenance of the duplicate headquarters in Atlanta. The
phaseout of duplicate facilities is scheduled to be completed by December 31,
1997.
Other operating expenses. Other operating expenses increased from $4.9
million for the three months ended March 31, 1996 to $17.5 million for the
three months ended March 31, 1997, an increase of $12.6 million, or 257.1%.
Other operating expenses as a percent of revenue increased from 16.3% for the
three months ended March 31, 1996 to 21.9% for the three months ended March
31, 1997. Other operating expenses include such expenses as cargo insurance
premiums and losses, a centralized dispatch center, and the testing,
recruiting and training of employees. Other operating costs associated with
the facilities acquired from Wells Fargo Armored were approximately $8.0
million. The Company experienced higher cargo losses in the three months ended
March 1997 compared to the three months ended March 1996, due to the
substantially higher rate of cargo losses at the acquired Wells Fargo Armored
facilities. The total increase in retained cargo losses was $3.8 million over
the prior year. Also, cargo premiums increased from $0.6 million in the three
months ended March 31, 1996 to $0.8 million in the three months ended March
31, 1997. Additionally, operating expense increased by $0.4 million for the
incremental amortization of goodwill related to the business combination.
Expenses relating to the Transaction. Expenses related to the Transactions
include payroll-related and other costs of consolidating operations following
the business combination, including the maintenance of two corporate offices
and other duplicate functions during the period of transition. The
consolidation is expected to be completed by December 31, 1997.
Extraordinary item. An extraordinary item of $0.1 million was recorded in
the three months ended March 31, 1997, resulting from the write-off of
deferred financing costs associated with the debt retired in January 1997.
Six months ended December 30, 1995 compared with six months ended December
30, 1996
Revenues. Revenues increased from $57.8 million for the six months ended
December 31, 1995 to $65.8 million for the six months ended December 31, 1996,
an increase of $8.0 million or 13.8%. The following table analyzes revenues by
type of service.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31,
---------------
1995 1996 CHANGE PERCENT
------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services..... $ 48.2 $ 49.1 $0.9 1.9%
ATM services............................... 4.5 10.9 6.4 142.2
Cash vault and related services............ 5.1 5.8 0.7 13.7
------- ------- -----
Total revenue............................ $ 57.8 $65.8 $ 8.0 13.8
======= ======= =====
</TABLE>
40
<PAGE>
ATM services have continued to expand dramatically with additional service
opportunities in both the number of ATM locations and the additional items
being dispensed through ATMs. The significant improvement in ATM services
revenue has resulted from Loomis' strategic decision to increase its efforts
in developing this market segment.
Payroll and related expense. Payroll and related expense increased from
$38.0 million for the six months ended December 31, 1995 to $43.0 million for
the six months ended December 31, 1996, an increase of $5.0 million or 13.2%.
Payroll and related expense as a percent of revenue decreased slightly from
65.8% for the six months ended December 31, 1995 to 65.5% for the six months
ended December 31, 1996. The increase in payroll and related expenses is
primarily attributable to additional personnel required to support the growing
market for ATM services.
Vehicle expense. Vehicle expense increased from $7.0 million for the six
months ended December 31, 1995 to $7.6 million for the six months ended
December 31, 1996, an increase of $0.6 million or 8.6%. Vehicle expense as a
percent of revenue decreased from 12.1% for the six months ended December 31,
1995 to 11.6% for the six months ended December 31, 1996. The primary reason
for the $0.6 million increase in vehicle expense was related to an increase in
the price of gasoline and diesel fuel. The reduction in vehicle expense as a
percent of revenue primarily resulted from reduced vehicle repair expense as
new armored vehicles have replaced older vehicles that had previously been
utilized at near full capacity. The reduction in vehicle repairs has more than
offset the increase in armored vehicle depreciation.
Facilities expense. Facilities expense increased from $2.5 million for the
six months ended December 31, 1995 to $2.7 million for the six months ended
December 31, 1996. Facilities expense as a percent of revenue decreased from
4.4% for the six months ended December 31, 1995 to 4.0% for the six months
ended December 31, 1996. No new facilities have been opened since December 31,
1995.
Other operating expenses. Other operating expenses increased from $8.4
million for the six months ended December 31, 1995 to $8.7 million for the six
months ended December 31, 1996. Other operating expenses as a percent of
revenue decreased from 14.5% for the six months ended December 31, 1995 to
13.3% for the six months ended December 31, 1996. Other operating expenses
include such expenses as cargo insurance premiums and losses; subcontracting
costs; and testing, recruiting, uniforming, and training of employees.
Included in other operating expenses is the amortization of a covenant not to
compete and the cost of purchased contracts which became fully amortized
during fiscal year ended June 30, 1996. Consequently, amortization of these
intangible assets decreased by $0.5 million for the six months ended December
31, 1996.
Operating income. Operating income increased from $1.9 million for the six
months ended December 31, 1995 to $3.7 million for the six months ended
December 31, 1996, an increase of $1.8 million or 94.7%, for the reasons
stated above.
Net income. Net income increased from $0.3 million for the six months ended
December 31, 1995 to $2.2 million for the six months ended December 31, 1996,
an increase of $1.9 million or 633.3%, for the reasons stated above.
Fiscal year ended June 30, 1995 compared with fiscal year ended June 30, 1996
Revenues. Revenues increased from $115.1 million in fiscal 1995 to $119.5
million in fiscal 1996, an increase of $4.4 million or 3.8%. The following
table analyzes revenues by type of service.
<TABLE>
<CAPTION>
YEARS ENDED
JUNE 30,
---------------
1995 1996 CHANGE PERCENT
------- ------- -------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services.... $ 98.5 $ 96.2 $ (2.3) (2.3)%
ATM services.............................. 7.2 13.1 5.9 80.6
Cash vault and related services........... 9.4 10.2 0.8 8.5
------- ------- ------
Total revenue........................... $ 115.1 $ 119.5 $ 4.4 3.8
======= ======= ======
</TABLE>
41
<PAGE>
In fiscal 1995, Loomis developed an improved revenue management system which
effectively identified those contracts which were inappropriately priced
relative to cost of service. As a result of this review, traditional armored
transport and cash vault and related services revenues in fiscal 1996
initially declined with the loss of certain high risk and low profitability
customers. By mid-1996 Loomis returned to building the customer base with a
higher quality of revenue and finished the fiscal year with significantly
improved revenue per fixed billing location served. Fixed billing revenue per
location served increased from $329 monthly at June 30, 1995 to $368 monthly
at June 30, 1996, an 11.8% increase. ATM services revenues were responsible
for most of the revenue growth during fiscal 1996, with an 81% increase over
fiscal 1995, which more than offset a decrease in traditional armored
transport services.
Payroll and related expense. Payroll and related expense increased from
$77.3 million in fiscal 1995 to $80.0 million in fiscal 1996, an increase of
$2.7 million or 3.5%. Payroll and related expense as a percent of revenue
decreased slightly from 67.1% in fiscal 1995 to 66.9% in fiscal 1996, which in
part reflects improvement in the customer mix. With the growth in ATM
services, Loomis' wage structure has increased to support three-person crews
which are used on most ATM routes as well as service locations with higher
risk profiles. The effect of the increased wages has been more than offset
during this period due to a change to subcontracting work related to some of
Loomis' coin operations that previously were performed in-house. These
subcontracting expenses, which increased by $0.8 million in fiscal 1996, are
included in other operating expenses. Loomis established a $0.3 million
reserve for discretionary bonuses in fiscal 1996 that were unrelated to branch
performance. An additional expense of $0.2 million was incurred in fiscal 1996
to harmonize branch specific vacation policies to a region standard vacation
entitlement program.
Vehicle expense. Vehicle expense increased from $13.8 million in fiscal 1995
to $14.0 million in fiscal 1996, an increase of $0.2 million or 1.6%. Vehicle
expense as a percent of revenue decreased slightly from 12.0% in fiscal 1995
to 11.7% in fiscal 1996. The decrease as a percent of revenue primarily
related to a reduction of over $0.4 million related to auto and general
liability insurance losses. Additionally, armored truck depreciation continued
to decline, by $0.2 million, between fiscal 1995 and fiscal 1996 as a portion
of Loomis' vehicles became fully depreciated.
Facilities expense. Facilities expense increased from $5.0 million in fiscal
1995 to $5.1 million in fiscal 1996, an increase of $0.1 million or 2.0%.
Facilities expense as a percent of revenue remained constant for both fiscal
1995 and 1996 at 4.3%.
Other operating expenses. Other operating expenses increased from $15.9
million in fiscal 1995 to $17.1 million in fiscal 1996, an increase of $1.2
million or 7.4%. Other operating expenses as a percent of revenue increased
from 13.8% in fiscal 1995 to 14.3% in fiscal 1996. As noted above, the Company
shifted certain coin operation work previously performed in-house to
subcontractors. The shift resulted in an increase in subcontracting expense of
$0.8 million from fiscal 1995 to 1996. Excluding this shift in operational
strategy, other operating expense as a percent of revenue would have decreased
to 13.7%. Loomis established in fiscal 1996 a reserve of $0.3 million for a
potential settlement of a customer dispute and a reserve of $0.3 million for a
wrongful termination suit for an employee terminated in June 1994.
Gains associated with benefit plans. The $1.0 million gain associated with
benefit plans in fiscal 1996 related to the termination of Loomis'
postretirement benefit plan. See footnote 7 to the audited financial
statements of Loomis for further discussion.
Operating income. Operating income increased from $3.1 million in fiscal
1995 to $4.2 million in fiscal 1996, an increase of $1.1 million or 34.0%, for
the reasons stated above.
Net income. Net income increased from a slight loss in fiscal 1995 to $1.1
million net income in fiscal 1996, an increase of $1.2 million, for the
reasons stated above.
42
<PAGE>
Fiscal year ended June 30, 1994 compared with fiscal year ended June 30, 1995
Revenues. Revenues increased from $106.4 million in fiscal 1994 to $115.1
million in fiscal 1995, an increase of $8.7 million or 8.2%. The following
table analyzes revenues by type of service.
<TABLE>
<CAPTION>
YEARS ENDED
JUNE 30,
---------------
1994 1995 CHANGE PERCENT
------- ------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services......... $ 93.4 $ 98.5 $ 5.1 5.5%
ATM services................................... 5.0 7.2 2.2 44.0
Cash vault and related services................ 8.0 9.4 1.4 17.5
------- ------- -----
Total revenue................................ $ 106.4 $ 115.1 $ 8.7 8.2
======= ======= =====
</TABLE>
The increase in traditional armored transport services and cash vault and
related services revenues resulted in part from corrective price increases
associated with the development of the new revenue management system. In
addition, Loomis provided more cash vault and related services to an
increasing number of ATM customers.
Payroll and related expense. Payroll and related expense increased from
$72.4 million in fiscal 1994 to $77.3 million in fiscal 1995, an increase of
$4.9 million or 6.7%. Payroll and related expense as a percent of revenue
decreased from 68.1% in fiscal 1994 to 67.1% in fiscal 1995. Payroll and
related expense declined as a percentage of revenue due to higher revenue from
the improved price structure associated with the quality of revenue program
and a $0.4 million decrease in workers' compensation cost resulting from
improved loss history.
Vehicle expense. Vehicle expense increased from $13.6 million in fiscal 1994
to $13.8 million in fiscal 1995, an increase of $0.2 million or 1.7%. Vehicle
expense as a percent of revenue decreased from 12.8% in fiscal 1994 to 12.0%
in fiscal 1995. Fixed vehicle expense declined by $0.4 million as a portion of
Loomis' vehicles became fully depreciated.
Facilities expense. Facilities expense decreased from $5.4 million in fiscal
1994 to $5.0 million in fiscal 1995, a decrease of $0.4 million or 7.5%.
Facilities expense as a percent of revenue decreased from 5.1% in fiscal 1994
to 4.3% in fiscal 1995 due primarily to the 8.2% increase in revenues from
fiscal 1994 to fiscal 1995.
Other operating expenses. Other operating expenses increased from $14.7
million in fiscal 1994 to $15.9 million in fiscal 1995, an increase of $1.2
million or 8.6%. Other operating expenses as a percent of revenue remained
constant at 13.8%.
Gains associated with benefit plans. The gain associated with benefit plans
in fiscal 1994 related to the curtailment of future benefits under Loomis'
defined benefit plan. See footnote 7 to the audited financial statements for
further discussion.
Operating income. Operating income increased from $2.0 million in fiscal
1994 to $3.1 million in fiscal 1995, an increase of $1.1 million or 54.7%, for
the reasons stated above.
Cumulative effect of change in accounting principle. The cumulative effect
of change in accounting principle totaling $0.5 million expense in fiscal 1994
resulted from the adoption of Statement of Financial Accounting Standards No.
106, Employer's Accounting for Postretirement Benefits Other Than Pensions.
See footnote 7 to the audited financial statements for further discussion.
Net income (loss). Net income increased from a net loss of $1.4 million in
fiscal 1994 to a slight loss in fiscal 1995, an increase of $1.4 million, for
the reasons stated above.
43
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents at June 30, 1995, June 30, 1996, December
31, 1996, March 31, 1996 and March 31, 1997 were $1.9 million, $3.4 million,
$2.5 million, $2.5 million and $8.6 million, respectively. Included in these
amounts for June 30, 1995, June 30, 1996, December 31, 1996 and March 31, 1996
were $1.5 million in restricted cash and cash equivalents. Changes in cash and
cash equivalents and other working capital items are described in the
Company's consolidated statements of cash flows, which are summarized below.
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
YEARS ENDED ENDED ENDED MARCH
JUNE 30, DECEMBER 31, 31,
------------ ------------ --------------
1995 1996 1996 1996 1997
----- ----- ------------ ----- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.......... $ 0.7 $ 3.8 $ 1.2 $ 2.0 $ (1.8)
Net cash used in investing
activities.................... (0.4) (1.8) (1.3) (0.6) (105.8)
Net cash provided by (used in)
financing activities.......... -- (0.6) (0.8) (0.4) 115.3
</TABLE>
Net cash provided by operating activities in the three months ended March
31, 1996 decreased to net cash used in operating activities in the three
months ended March 31, 1997, primarily due to the net loss in 1997.
In the three months ended March 31, 1996, cash was used in investing
activities primarily for vehicles and computer equipment. In the three months
ended March 31, 1997, cash was primarily used in the acquisition of the assets
of Wells Fargo Armored.
In the three months ended March 31, 1996, cash was used to repay debt and
capital leases. In the three months ended March 31, 1997, cash was provided by
financing activities entered into in connection with the business combination.
Long-term obligations of $24.7 million were repaid, preferred stock of $3.5
million was redeemed, $8.7 million of cash distributions were made for the
benefit of stockholders of Loomis and $4.7 million of financing costs were
paid in connection with the refinancing of the Company's debt. Borrowings of
$73.5 million were drawn against the Company's New Credit Facility, and $85.0
million of Old Notes that were sold in the Original Offering.
Net cash provided by operating activities increased $3.2 million from fiscal
1995 to fiscal 1996. Loomis experienced improved net income over prior years
of $1.5 million in fiscal 1995 and $1.2 million in fiscal 1996. Despite the
improvement in net income during fiscal 1995, operating cash flows for the
period declined compared to fiscal 1994 due in part to a change in Loomis'
major medical plan. Also, operating cash flow was reduced in fiscal 1995 due
to the payment of $0.9 million in interest during fiscal 1995 that had been
recognized as expense in fiscal 1994. Finally, a change in Loomis' cash-in-
transit insurance program resulted in the use of $1.5 million in operating
cash flow during fiscal 1995 to fund a restricted cash requirement. Net cash
provided by operations was $1.2 million in the six months ended December 31,
1996. Loomis' net income of $2.2 million in the six months ended December 31,
1996 is consistent with the improving trend in net income. On an annualized
basis, the net income of the six month period would indicate an improvement of
$3.3 million over the fiscal year ended June 30, 1996.
Net cash used in investing activities in fiscal 1995 was $0.4 million,
reflecting capital expenditures necessary to maintain existing assets. Net
cash used in investing activities in fiscal 1996 was $1.8 million of which
$1.1 million was used for vehicle refurbishment and new vehicles to meet the
new equipment requirements of business growth. An additional $0.7 million was
used for support equipment, computer and software needs, and capital
expenditures necessary to maintain existing assets. The cash used in investing
activities in the six months ended December 31, 1996 was $1.3 million, of
which $0.9 million was used for computers and software purchased in
anticipation of the acquisition of Wells Fargo Armored.
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Net cash used in financing activities in fiscal 1994 was $2.5 million, of
which $1.5 million was used to repay principal of a long-term note with a
commercial finance company and the remainder was used to pay down on Loomis'
revolver. The remaining $0.4 million of the long-term note with the commercial
finance company was repaid in fiscal 1995. In fiscal 1996, Loomis borrowed a
$4.0 million term loan from a commercial finance company under its credit
facility for the purpose of repaying $4.0 million to certain senior and junior
subordinated debt holders and negotiated a deferral of the remaining principal
to September 30, 1999. Net cash of $0.8 million used in financing activities
in the six months ended December 31, 1996 was primarily payment of costs
related to the acquisition of Wells Fargo Armored, and the related refinancing
of debt.
The Company's balance sheet reflected working capital of $7.3 million at
March 31, 1997. The Company is highly leveraged, with long-term liabilities
comprising 80% of total liabilities and common stockholders' deficit at March
31, 1997.
The Company's revolving bank credit facility provides initial aggregate
commitments of $115 million through December 1997. These funds can be borrowed
for unspecified time periods at a base rate tied to the bank's prime rate, or
for fixed periods under variable rates tied to LIBOR. The facility includes
guarantees of letters of credit, of which approximately $11.7 million were
outstanding at March 31, 1997. The agreement includes a step-down of
commitments over the final four years of the facility. Remaining commitments
available under the facility at March 31, 1997 were $29.9 million.
In one year, total commitments under the agreement will decrease to $112.5
million. It is anticipated that letters of credit requirements, principally
for casualty liabilities, will increase to approximately $24.0 million,
leaving $88.5 million in commitments. The Company's management believes that
the operating cash flow and this remaining financing commitment will be more
than adequate to fund future operating needs and anticipated payment of the
NOL note in April 1998.
Planned capital expenditures for the next twelve months are $12 million,
primarily vehicles, which will depend on growth rate experienced. Committed
capital expenditures of $2.2 million include $1.5 million for vehicles.
TAX LOSS CARRYFORWARD
The Company had a net operating loss carryforward at December 31, 1996 of
$15.1 million and therefore has generally not been subject to federal and
state income taxes due to the availability of this net operating loss
carryforward resulting in a net deferred tax asset. The realization of this
deferred tax asset is dependent primarily on the Company's ability to generate
future taxable earnings. Because the Company's operating history does not
provide sufficient evidence to conclude that it is more likely than not that
it will generate sufficient future taxable earnings to realize this asset, a
valuation allowance for the full amount of the net deferred tax asset has been
recorded. Changes in this valuation allowance result primarily from
utilization of net operating loss carryforwards. See footnote 6 to the audited
financial statements for further discussion.
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that upon the occurrence of a more than 50% change in the ownership
of a corporation having a net operating loss carryforward, the annual
utilization of such net operating loss carryforward will be limited to an
amount generally determined by multiplying the value of the stock of the loss
corporation immediately before the ownership change times an applicable
federal rate (currently 5.64%) (an "Annual Limitation"). The Company currently
intends to take the position that the Transactions do not result in an
ownership change of Loomis for purposes of Section 382 of the Code. However,
there can be no assurance that the Internal Revenue Service will not disagree
with such position. Further, because small changes in the direct or indirect
ownership of the Company during the three year period following the Closing
Date may result in an ownership change with respect to the Company for
purposes of Section 382 of the Code, there can be no assurance that an Annual
Limitation will not become applicable to the Loomis net operating loss
carryforward following the Closing of the Transactions.
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SEASONALITY
Although the Company's sales are generally level throughout the year, the
Company's sales vary to the extent demand for money increases during major
holiday seasons. Additional charges apply to most deliveries made on bank
holidays. Extra charges are incurred by customers during the increased demand
during the pre-Christmas shopping season relating to increased item count,
liability limits, and special runs. Payroll related costs generally follow the
same seasonal pattern with paid holidays and overtime for work done on bank
holidays.
WELLS FARGO ARMORED
OVERVIEW
Wells Fargo Armored is a security-related cash services business that
provides traditional armored transport services, ATM services and cash vault
and related services in the United States and Puerto Rico. The traditional
armored transport services business, consisting of the transportation by
heavily armored vehicles of currency, securities and other valuables for the
banking industry, is a mature business that experiences modest growth. In
reaction to consolidation in the banking industry, Wells Fargo Armored has
expanded into additional areas of service, including ATM services and cash
vault and related services. It has also expanded the markets served by the
traditional armored transport business by providing service in small to mid-
size markets for retail clients that have not traditionally used armored
transport services. Consolidated net service revenues have increased from
$211.2 million in 1994 to $246.3 million in 1996, an annual compound increase
of 8.0%, and ATM services revenues have increased from $73.0 million in 1994
to $92.4 million in 1996, an annual compound increase of 12.6%.
During 1994 increased cargo losses relative to historic levels resulted in
increased security costs and insurance premiums. Wells Fargo Armored responded
with a pricing effort in 1995 and 1996 to better align prices with the cost of
risk of providing armored transport services. In addition, Wells Fargo Armored
expanded its programs to reduce cargo losses, the benefits of which began to
be seen in 1995 and continued into 1996. Such programs include lowering the
profile of its vehicles, increasing security training, improving security
measures through technology and route structure and eliminating certain
higher-risk services.
RESULTS OF OPERATIONS
The following table sets forth the Wells Fargo Armored's results of
operations expressed as a percentage of revenue.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues.... 100.0% 100.0% 100.0%
Gross profit............ 16.2 18.3 17.0
Selling, general and
administrative
expenses............... 10.1 8.1 8.2
Depreciation............ 3.4 3.1 2.8
Earnings from
operations............. 0.6 5.1 3.9
Net earnings (loss)..... (1.7) 1.2 0.5
</TABLE>
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<PAGE>
Fiscal year ended December 31, 1995 compared with fiscal year ended December
31, 1996.
The following table sets forth information concerning the revenue
contributed by each sector of Wells Fargo Armored:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------
1995 1996 CHANGE PERCENT
------ ------ ------ -------
<S> <C> <C> <C> <C>
Traditional armored transport.................. $133.5 $137.9 $ 4.4 3.3%
ATM services................................... 81.2 92.4 11.2 13.8
Cash vault and related services................ 16.3 16.0 (0.3) (0.2)
------ ------ -----
Total........................................ $231.0 $246.3 $15.3 6.6%
====== ====== =====
</TABLE>
Consolidated net service revenue increased 6.6% in 1996 compared with 1995.
Higher volume in ATM services, both for new and existing customers, and
selected price increases contributed to the revenue increase.
Gross profit margins declined to 17.0% in 1996 from 18.3% in 1995 due to
higher labor, vehicle and insurance costs, as well as higher cargo losses.
Beginning in 1995, Wells Fargo Armored increased its use of operating leases
relative to capital leases and purchases for capital investments, principally
vehicles. As a result, costs of services have increased while depreciation
expense has decreased as a percentage of revenues. Selling, general and
administrative expenses have stabilized as a percentage of revenues as Wells
Fargo Armored received the full impact of certain cost reduction programs
implemented in late 1994. Such programs included consolidation of certain
regions, administrative consolidation of certain traditional armored transport
and ATM Services offices and consolidation of certain back office functions at
the corporate and branch office levels.
Interest expense is based on financing decisions and allocations made by
Borg-Warner. Wells Fargo Armored participates in the receivables financing
facility that Borg-Warner established in November 1995 and the level of its
participation affects Borg-Warner's net investment in Wells Fargo Armored.
Because interest expense includes both the balance of receivables sold by
Wells Fargo Armored and certain debt allocations made by Borg-Warner,
management does not believe that the reported amount of interest expense is
material to an analysis of Wells Fargo Armored's results.
Wells Fargo Armored is included in Borg-Warner's consolidated United States
income tax return. The provision for income taxes is determined on a separate
return basis. Effective tax rates have varied from the federal tax rate
primarily due to nondeductible amortization of excess purchase price over net
assets acquired. Such excess purchase price results from the increase in
carrying values of Wells Fargo Armored's assets in connection with the 1987
acquisition of Borg-Warner and its subsidiaries (including Wells Fargo
Armored).
Fiscal year ended December 31, 1994 compared with fiscal year ended December
31, 1995
The following table sets forth information concerning the revenue
contributed by each sector of Wells Fargo Armored:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------
1994 1995 CHANGE PERCENT
------ ------ ------ -------
<S> <C> <C> <C> <C>
Traditional armored transport.................. $121.5 $133.5 $12.0 9.9%
ATM services................................... 73.0 81.2 8.2 11.2
Cash vault and related services................ 16.7 16.3 (0.4) (2.4)
------ ------ -----
Total........................................ $211.2 $231.0 $19.8 9.4%
====== ====== =====
</TABLE>
Consolidated net service revenue increased 9.4% in 1995 compared with 1994.
Wells Fargo Armored instituted a pricing effort to better align prices with
the increasing cost of risk of providing armored transport
47
<PAGE>
services. In addition, Wells Fargo Armored increased its volume of armored
transport and ATM Services business in 1995. Wells Fargo Armored's traditional
armored transport unit has expanded its operations to provide deposit pick up
services in small to medium-sized markets for retailers that have not
traditionally used armored transport services.
Gross profit margins improved to 18.3% in 1995 compared to 16.2% in 1994
primarily due to improved pricing and programs to improve profitability and
control losses. During 1994 an increased amount of cargo losses relative to
historic levels resulted in increased security costs and insurance premiums.
Pricing efforts in 1995 focused on recovering these cost increases. Cost
reduction programs implemented in late 1994 were effective in reducing general
and administrative expenses. Such programs included consolidation of certain
regions, administrative consolidation of certain traditional armored transport
and ATM Services offices and consolidation of certain back office functions at
the corporate and branch office levels. As a result, earnings from operations
increased from 0.6% of revenues in 1994 to 5.1% of revenues in 1995.
Beginning in 1995, Wells Fargo Armored increased its use of operating leases
relative to capital leases for capital investments. As a result, cost of
services will increase while depreciation expense will decrease as a
percentage of revenues.
FINANCIAL CONDITION AND LIQUIDITY
Wells Fargo Armored's operations overall generate sufficient cash flow to
meet its operating capital needs. Wells Fargo Armored is part of Borg-Warner's
central cash management system, wherein excess cash is transferred to Borg-
Warner and short-term working capital needs are funded by Borg-Warner.
Financing decisions and allocations made by Borg-Warner affect Borg-Warner's
net investment in Wells Fargo Armored.
Wells Fargo Armored is involved in several legal actions arising in the
ordinary course of business. Wells Fargo Armored believes that the various
asserted claims and litigation in which it is involved will not materially
affect its financial position or future operating results, although no
assurance can be given with respect to the ultimate outcome of any such claim
or litigation.
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<PAGE>
BUSINESS
GENERAL
Loomis, Fargo & Co., created through the combination of Loomis Armored and
Wells Fargo Armored, is one of the largest armored transport companies in the
United States. Loomis, Fargo & Co. operates over 150 branches, employs
approximately 8,700 persons, and utilizes a fleet of approximately 2,700
armored vehicles nationwide to provide armored ground transport services,
automated teller machine ("ATM") services, and cash vault and related services
to financial institutions and other commercial customers. Serving all 50
states and Puerto Rico, the Company is one of only two armored transport
companies in the United States which provides these services on a national
basis. Management believes that large financial and retail institutions are
increasingly seeking vendors capable of providing an array of services on a
national basis and that the combination of Loomis Armored and Wells Fargo
Armored favorably positions the Company for additional revenue opportunities.
In addition, management believes the proliferation of ATMs and the trend of
banks and other financial and retail institutions towards outsourcing cash
vault and related services should contribute to the Company's growth
prospects. For the twelve months ended December 31, 1996, the Company would
have had revenues of $373.7 million and EBITDA of $35.2 million.
The Company is implementing the management principles and decentralized
structure utilized by the Loomis Armored management team, which have proven to
be highly effective in reducing employee turnover, increasing customer
satisfaction and decreasing "cost of risk," which consists of the cost of
cargo and casualty losses, related insurance costs and claims administration
expenses. Since implementing this strategy at Loomis Armored in 1991, Loomis
Armored's total cost of risk decreased from 10.9% of revenues for the year
ended June 30, 1992 to 7.4% of revenues for the twelve months ended December
31, 1996, and EBITDA as a percent of revenues increased from 2.4% to 7.5% over
the same period. Management believes that by combining the management strategy
and risk management skills of Loomis Armored with the larger customer base and
leading ATM services position of Wells Fargo Armored, the Company is well-
positioned to capitalize on the numerous opportunities developing in the
armored transport industry.
THE INDUSTRY
The U.S. armored transport industry consists of two national companies and
over 100 regional and local companies. Management estimates that the ten
largest of these companies have aggregate annual revenues of approximately
$1.0 billion. The industry provides a variety of services which can be
categorized as (i) traditional armored ground transportation of cash and other
valuables, (ii) ATM services and (iii) cash vault and related services.
Traditional Armored Ground Transportation. Traditional armored ground
transportation is the largest sector of the armored transport industry and
represents the core service provided by the industry. Armored vehicles
transport currency and other valuables between commercial enterprises and
banks, between banks, and from the Federal Reserve Banks to commercial banks.
Approximately one-half of ground transportation revenues in the industry were
generated from financial institutions. Other customers of ground
transportation services include a wide range of commercial establishments as
well as governmental entities.
Typically, ground transportation services have been provided by a two-person
crew, comprised of a driver and a guard, operating in an armored vehicle. At
each stop, the guard exits the vehicle to pick up or deliver cargo, usually
currency and/or coin, while the driver normally remains inside the vehicle.
The cargo typically is received by the guard in a sealed bag bearing a tag
indicating the amount of cash the bag is said to contain. The sealed bag is
ultimately delivered to its destination without being opened while in the
custody of the armored carrier.
In effect, the armored transport industry provides customers a logistical
service in transporting valuables as well as a form of insurance by accepting
the risk of cargo losses. Until recently, cash-in-transit insurance for
armored transport service providers was relatively easy to obtain, in part
because armored carriers were not
49
<PAGE>
frequently targeted by criminals, and carriers were able to pass most of the
risk to insurance companies. Accordingly, the economics of the industry were
based largely on routing efficiency or density and effective cost control.
Quality of service was measured primarily by timeliness of pick-up and
delivery. Generally, risk management, while important, was not a crucial
service differentiator as long as the carrier maintained adequate insurance.
By the early 1990s, however, armored vehicles had increasingly become targets
of armed robbery, particularly on the east and west coasts. As a result, cargo
loss insurers suffered substantial losses and the cost of cash-in-transit
insurance increased significantly for large carriers, forcing them to retain
greater risk and pay higher premiums.
Due to these changes, quality risk management has become increasingly
important from both a cost and marketing perspective. While the cost reduction
benefits of an effective risk management program are clear for the armored
carrier, they are even more significant to the customer, particularly banking
customers. In the event of an armed robbery at the customer's place of
business, the customer will suffer a business disruption and may be liable
should one of its employees or customers or a bystander become injured. An
armored carrier that can prevent or avoid an incident saves its customer from
the prospect of a multi-million dollar liability. Consequently, the strategy
of establishing a risk management partnership between the armored service
provider and the customer becomes more appealing to the customer once the
customer recognizes the benefits of a comprehensive risk management program.
ATM Services. ATM services represent the most dynamic growth sector of the
armored transport industry and are expected by the Company to grow
significantly over the next five years. This expected growth results from a
fundamental change in the retail delivery channel strategy of banks in the
United States as traditional, full service bank branches are being replaced by
ATMs, drive-through service centers and banks located in supermarkets and
other non-traditional locations. Each individual point of distribution
represents a potential service location and new revenue opportunity to the
armored transport industry. Additionally, many ATM owners have begun
outsourcing the servicing and maintenance of ATM locations formerly serviced
and maintained internally, resulting in further growth prospects for this
portion of the armored transport industry.
ATM services consist of cash replenishment, deposit pick-up and first-line
and second-line maintenance services. Cash replenishment and deposit pick-up
at ATM locations is substantially similar to normal ground transportation
services with respect to the transport of cash. However, the servicing of ATM
locations involves a greater degree of mechanical proficiency in that guards
are required to disarm and reset alarms, change bill cassettes and perform
various other administrative and mechanical tasks. First-line maintenance
services involve correction of simple non-technical problems such as
dislodging jammed bills and cards and refilling receipt paper and are
frequently provided by armored transport carriers. Second-line maintenance
services consist of more complex technical ATM repairs and often require
specialized training, diagnostic equipment and an inventory of parts.
Cash Vault and Related Services. Cash vault and related services cover a
wide array of activities from passive, secured storage of valuables such as
currency, securities and computer chips to active services such as deposit
processing and consolidation, change order preparation, coin wrapping and
storage and food stamp processing. While cash vault and related services
currently represent only a small portion of the total industry's revenues,
this market is expected to expand over the next several years as banks and
other financial institutions continue the trend toward outsourcing such
services.
BUSINESS STRATEGY
Management believes that Loomis, Fargo & Co. has several distinct
competitive strengths within the armored transport industry, including a
strong national presence, the leading ATM Services operation, and a management
team experienced in reducing cost of risk and improving cash flow and
profitability. The Company's business strategy is to capitalize on its
competitive strengths by implementing the following initiatives:
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<PAGE>
Promote the National Presence of Loomis, Fargo & Co. The Company provides
its services to a much larger geographic area than either Loomis Armored or
Wells Fargo Armored serviced on a stand-alone basis. With services in all
50 states and Puerto Rico, the Company will be able to expand its business
with national financial institutions and retail customers which require
armored ground transport, ATM Services and/or cash vault and related
services in numerous locations across the country. Management believes that
the ability to provide nationwide service is becoming more important in the
armored transport industry as banks are expanding geographically through
the continuing consolidation of the banking industry and as many other
institutions are shifting toward centralized purchasing of goods and
services. As one of only two armored transport providers in the United
States with nationwide service, the Company is well-positioned to augment
its base of customers requiring broad geographic coverage. The Company
intends to dedicate a segment of its sales force to exclusively manage
national account relationships.
Focus on Growing ATM Services Market. The Company provides ATM Services
to over 28,000 ATM locations nationwide, making it the leading provider of
ATM Services in the United States. Both the number of ATM locations and the
types of items being dispensed through ATMs, including travelers checks,
lottery tickets, coupons, postage stamps and other valuables, continue to
grow. Additionally, many ATM owners have begun outsourcing the servicing
and maintenance of ATM locations formerly serviced and maintained
internally. The Company uses its proprietary automated national dispatching
system to coordinate customer requests, provide service data to customers
and dispatch service technicians nationwide. To complement the national
dispatching system, the Company has developed an automated network cash
management system that optimizes ATM cash loads and provides ATM balance
reporting. With its broad range of services and automated systems, the
Company intends to build upon its leading position in the ATM services
market.
Reduce Cost of Risk and Emphasize Risk Management Partnership with
Customers. Management intends to increase profitability not only by
reducing the Company's overall cost of risk but also by using a risk
management partnership approach with its customers as a means of
differentiating the Company from its competitors. A comprehensive risk
management program which emphasizes incident avoidance and loss
minimization per incident is being implemented throughout all of the
Company's operations. The program focuses on (i) employee culture and
attitude, (ii) selectivity in hiring, (iii) operating procedures designed
to recognize and avoid potential danger or accidents, (iv) safety and
security procedures, including training in the proper use of firearms and
the operation of the Company's vehicles, (v) limits on the amounts of cash
or other valuables contained in a branch or vehicle or under the control of
an employee, (vi) utilization of three-person crews and surveillance or
chase cars in high-risk areas, and (vii) an extensive security oversight
program, including surveillance and evaluation by AMSEC, an independent,
international security firm. This risk management program produced
significant cost savings with respect to cargo loss and casualty liability
claims for Loomis Armored over the five years prior to the consummation of
the Transactions.
To provide the quality of service necessary to enhance customer loyalty in
support of this business strategy, the Company emphasizes an operating
philosophy dedicated to:
Attracting and Retaining Quality, Loyal Employees. Management believes
that a loyal employee base directly contributes to reducing cost of risk
and improving customer service and that the combination of selectivity in
hiring, a commitment to employee training, responsibility and safety, and
competitive wage and benefit packages will enable the Company to attract
and retain quality, loyal employees. As a result of Loomis Armored's
commitment to these principles, employee turnover at Loomis Armored
decreased from 41% for the twelve months ended December 31, 1992 to 29% for
the twelve months ended December 31, 1996. Wells Fargo Armored has also
embraced many of these same principles; its employee turnover rate for the
fiscal year ended December 31, 1996 was approximately 62%.
Encouraging Employee Initiative through Decentralized Management
Structure. The Company operates on a decentralized basis so that many of
the daily operational decisions such as local sales, routing, hiring, and
fleet maintenance are made at the branch level while the Company's
corporate and five regional management teams support the branches,
particularly with respect to pricing and risk management. This delegation
of responsibility is expected to improve efficiency and responsiveness to
customer needs, while
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<PAGE>
maintaining strict compliance with Company-wide security and safety
standards. Management believes that this decentralized structure, together
with an incentive program that links a branch manager's compensation to
branch profitability, gives branch managers and other employees a sense of
empowerment and accountability. This decentralized structure was
successfully implemented at Loomis Armored's operations and is currently
being implemented at all of the Company's locations.
SERVICES
The Company provides services in three business areas: traditional armored
transport; ATM Services; and cash vault and related services.
Traditional Armored Transport. Traditional armored transport constitutes the
largest part of the Company's business and the overall armored transport
industry, representing approximately 62.9% of the Company's gross revenues for
the twelve months ended December 31, 1996. The Company's ground transportation
services primarily involve the secured transport of currency, securities and
other items of value between commercial enterprises and banks, between banks,
and from the Federal Reserve Banks to commercial banks.
The Company provides traditional armored transport services seven days per
week, 365 days per year. Most of the Company's armored vehicles use two-person
crews, with the driver remaining in the vehicle and the guard making the pick-
up or delivery. In higher risk areas, the Company utilizes several additional
security measures, including three-person or four-person crews and
surveillance vehicles. In addition, the Company strives to work closely with
its customers to develop safe procedures for transferring and transporting
cargo. Typically, armored vehicle routes are scheduled to provide for pick-up
and delivery within prescribed time periods which are most convenient for the
customer, usually during normal business hours. The Company schedules routes
for each armored vehicle to maximize efficiency, with armored vehicles
generally leaving the branch in the morning and not returning until the
evening, making approximately 40 to 50 service stops on average per day.
ATM Services. The ATM Services business represents the Company's second
largest revenue generating division and is the most rapidly growing area of
the armored transport industry. As ATMs and other remote banking services
expand, the Company is positioned to capitalize on business opportunities in
this field. As the leading provider of ATM Services in the United States, the
Company believes that its experience, customer relationships, infrastructure,
and dominant position in this market will enable the Company to increase its
revenues.
The Company offers a wide range of ATM Services to customers including cash
replenishment, deposit pick-up, and first-line maintenance. The Company
utilizes a proprietary centralized automated dispatch system to coordinate ATM
servicing nationwide. The dispatch center coordinates customer requests and
directs field technicians throughout the country. The automated system
provides detailed service confirmation data both internally and directly to
the customer. In addition, the automated system controls the ATM security
access codes and provides such codes to technicians upon receipt of proper
identification.
The frequency of cash replenishment of ATMs varies depending upon consumer
use of an ATM location. High traffic ATM locations may require cash
replenishment on a daily basis whereas low traffic locations may require
service once or twice per month. Deposit pick-ups at ATM locations that
process banking deposits are typically executed on a daily basis. First-line
maintenance calls are less predictable than cash replenishment and deposit
pick-ups, but require the same level of prompt attention as scheduled ATM
services.
Cash Vault and Related Services. Cash vault and related services cover a
wide array of activities from passive, secured storage of valuables such as
currency, securities and computer chips to active services such as deposit
processing and consolidation, change order preparation, coin wrapping and
storage and food stamp processing. While cash vault and related services
represent a relatively small portion of the Company's revenues and the armored
transport industry's revenues, this market is expected to expand over the next
several years as
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<PAGE>
banks and other financial institutions continue the trend toward outsourcing
such services. The Company also provides contract security officers to patrol
and control access to customer facilities in Puerto Rico.
RISK MANAGEMENT
Management views the Company as a risk management partner rather than a
transportation company. Cost of risk, in the form of armed robberies, other
cargo losses, vehicular accidents or worker's compensation claims, represents
a key component of the Company's overall cost structure. The Company attempts
to control its cost of risk by integrating risk management into all phases of
its operations: corporate culture; hiring and training; customer and revenue
management; operating procedures; and insurance, administration and claims
management. This risk management program is an extension of the program
utilized by Loomis Armored over the five years prior to the consummation of
the Transactions in reducing Loomis Armored's cost of risk from 10.9% of
revenues for the year ended June 30, 1992 to 7.4% of revenues for the twelve
months ended December 31, 1996.
Corporate Culture. Management believes that the most important factor to
effective risk management for an armored transport company is that its
employees understand their safety is the primary concern of the Company. This
belief has been encouraged and consistently reinforced through all programs
and procedures of the Company and will be a fundamental building block of the
Company going forward.
Hiring and Training. The Company maintains an employee selection and
screening program which includes a series of tests and a detailed background
check. The Company emphasizes training and development at all levels. All
safety training stresses the importance of risk avoidance rather than
confrontation. The Company has implemented specialized training programs in
employee orientation, weapons safety, driving safety, back injury prevention
and virtually all other elements of operations. All training is reinforced
through a coordinated communications effort featuring posters, videotape
presentations, weekly security updates, payroll stuffers and other news
bulletins. The programs are further supported through incentive and other
employee recognition programs.
Customer and Revenue Management. Management believes that it can charge a
premium for the quality of service provided by Loomis, Fargo & Co. The Company
emphasizes its role as a risk management partner with its customers and works
closely with them to develop safe procedures for transferring and transporting
cargo. Customers in higher risk locations or those that ship higher valued
cargo pay premium prices to support additional security costs necessary to
safely provide the service and minimize risk of loss. If the Company
determines that the risk of providing armored transport services in a given
situation is too great, the Company will decline the business.
Operating Procedures. The Company's operating procedures are designed to
avoid robberies or, in the event of a robbery, to minimize cargo losses and
worker's compensation claims. The Company has instituted many safety and
security procedures such as (i) use of three-person crews at locations
considered high risk, (ii) utilization of chase cars and roving guards to
scout high risk locations in advance of servicing and to provide unmarked
surveillance, and (iii) adoption of "over the pavement" limits representing
the maximum cargo a guard may carry while out of the armored vehicle,
effectively limiting the amount of cargo which could be lost in the event of
robbery.
To ensure compliance with its operating procedures, the Company utilizes
AMSEC, an international security consulting firm, to evaluate the operating
security of branches. The AMSEC team will review or audit the operations of
each branch at least once per year. AMSEC reports each month to a committee of
the Company comprised of executive officers and senior level operations
personnel, providing an effective third party quality control function.
Insurance, Administration and Claims Management. The two primary risks for
which the Company carries insurance are cargo loss and casualty claims.
Insurance coverage underlies the Company's comprehensive risk management
program. The Company has an A-rated primary cash-in-transit insurance policy
which provides the
53
<PAGE>
Company with coverage up to $200 million per occurrence. The insurance program
allows the Company to participate in potential savings by actively managing
claims with reduced fixed premiums and collateral costs, but affords the
Company protection for catastrophic claims.
On March 29, 1997 and on May 13, 1997 the Company experienced material cargo
losses from its Jacksonville, Florida and Ponce, Puerto Rico branches,
respectively. Both cargo losses are under active investigation. The Company
believes that the cargo losses will not have a material adverse effect on the
Company's liquidity or earnings in 1997, but that such losses could have
negative consequences on the Company's insurance coverage and/or costs at some
future time. Due to the fact that the Company's premiums on insurance relating
to its cargo losses are influenced by various factors, including general
market conditions and the Company's risk management performance in future
periods, management for the Company is unable to predict the effect or
magnitude such cargo losses will have on the Company's insurance coverage or
costs when its current policies expire.
SALES AND MARKETING
The Company markets its services to a broad cross section of customer types
which can be classified as either depository or commercial institutions. The
Company further classifies these two categories into national and local
subgroups. Typically, national customers make decisions on the use of armored
transport carriers at the corporate office level. Conversely, local customers
function at an individual market level or within a fairly limited geographic
area. To optimize penetration of these customer groups, the Company has
organized its marketing effort and sales force around these general customer
profiles.
National Accounts. To promote revenue growth from and maintain strong
customer relationships with national customers, the Company has a dedicated
staff of senior-level salespersons, each of whom individually manages a very
limited number of customers and prospects in this group. These sales personnel
promote a full range of ATM Services, traditional armored transport services
and cash vault and related services. They work with senior-level officers of
the customers to ensure that the Company is maximizing revenue opportunities
with these customers by cross-selling the Company's many services, maintaining
the quality of customer service, and identifying changes in customer needs,
priorities and business strategies.
The Company markets itself to financial institutions as the premier service
provider in the armored transport industry capable of providing a wide array
of services on a national basis. The rapid expansion of ATMs across the nation
as well as bank consolidation has compelled armored transport companies to be
increasingly flexible, dependable and consistent in the delivery of services.
Management believes that customers are placing greater emphasis on quality of
service when making their purchase decisions than they have in the past. The
Company views this development as a significant opportunity to expand and
enhance the Company's business relationships with financial institutions.
Local Customers. The local customer subgroups include community and regional
depository institutions as well as regional and local retail stores, hotels
and restaurants. The sale of the Company's services at the local market level
is primarily linked to the relationship established between the Company's
salesperson and the customer's local decision maker. The field sales force
includes sales representatives located in all of the Company's major markets
who are responsible for an integral part of the Company's growth plan. Such
sales representatives are accountable for meeting specific new revenue
objectives, as established by individual markets, as well as building
relationships with key customers in the marketplace to maintain a high degree
of customer retention.
The Company's sales representatives receive extensive training both in basic
selling skills and product knowledge of all of the Company's services. The
Company's sales force positions the Company not only as an armored car service
provider, but more broadly as a provider of risk management services. Trust,
dependability and expertise are the main components in securing the customer
relationship. Senior management of the Company provides overall guidelines for
pricing, prioritizing sales calls and growth targets for the field sales
force; however, specific strategic plans are developed by the branch managers.
54
<PAGE>
COMPETITION
The armored transport industry in the United States consists of two national
companies (Loomis, Fargo & Co. and Pittston Brink's) and numerous regional and
local companies. The Company competes with all of the above types of companies
in the markets it serves. However, because of the national presence and
substantial resources of Pittston Brink's, the Company believes that Pittston
Brink's is the Company's primary competitor for many national accounts. While
the Company believes its pricing of services is generally competitive, certain
of its competitors offer lower prices in certain markets primarily as a result
of lower employee wages and benefits and/or more limited services. See "Risk
Factors--Competition."
GOVERNMENT REGULATION
Federal legislation became effective in 1995 that abolished all interstate
regulatory control over prices, routes and service to which the Company's
business had been previously subject. The Company's operations continue to be
subject to regulation by federal and state agencies with respect to safety of
employees, operations and equipment, vehicle emissions, and underground fuel
storage tanks. See "Risk Factors--Regulation and Legal Proceedings."
ENVIRONMENTAL MATTERS
The Company is subject to numerous and increasingly stringent federal, state
and local laws and regulations relating to the protection of the environment
as well as the storage, handling, use, emission, discharge, release or
disposal of hazardous materials and solid wastes into the environment and the
investigation and remediation of contamination associated with such materials.
These laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, the Water Pollution Control Act, the
Clean Air Act and the Resource Conservation and Recovery Act, as those laws
have been amended and supplemented, the regulations promulgated thereunder,
and any applicable state analogs. The Company's operations also are governed
by laws and regulations relating to employee health and safety. The Company
believes that it is in material compliance with such applicable laws and
regulations and that its current environmental controls are adequate to
address existing regulatory requirements.
As is the case with other companies engaged in similar businesses, the
Company could incur costs relating to environmental compliance, including
remediation costs related to historical hazardous materials handling and
disposal practices at certain facilities. In the past the Company has
undertaken remedial activities to address on-site soil contamination caused by
historic operations. None of these cleanups has resulted in any material
liability. Currently, the Company is involved with remedial/closure activities
at various locations, none of which is expected to have a material adverse
effect on the Company's operations, financial condition or competitive
position. As mentioned above, however, the risk of environmental liability and
remediation costs is present in the Company's business and, therefore, there
can be no assurance that material environmental costs, including remediation
costs, will not arise in the future. In addition, it is possible that future
developments (e.g., new regulations or stricter regulatory requirements) could
result in the Company incurring material costs to comply with applicable
environmental laws and regulations. In addition, the Company has not
undertaken an independent investigation of each facility; accordingly, there
can be no assurance that in the future additional conditions requiring
remediation will not be identified. See "Risk Factors--Environmental Matters."
The Company has identified 41 underground fuel storage tanks on the
properties owned or operated by it. Federal governmental regulations require
that by the end of 1998 all underground storage tanks located within the
United States must satisfy stricter safety standards or be removed. If the
Company fails to comply with these regulations, it could be subject to fines,
penalties or other governmental actions, the imposition of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors--Environmental Matters."
Pursuant to the Contribution Agreement, the Company will be indemnified by
Borg-Warner and the Business Trust for environmental liabilities associated
with existing underground storage tanks and other known
55
<PAGE>
and identified environmental liabilities. The indemnification obligations will
survive until the earlier of December 31, 1998 or the first anniversary of an
initial public offering of Common Stock. To the extent that there are remedial
activities in process as of the date of termination of such indemnification
obligations, the Company will provide Borg-Warner and the Business Trust, as
applicable, with a written estimate describing in reasonable detail the
remaining costs and expenses expected to be incurred by the Company which
would otherwise have been covered by such indemnification. Such estimated
costs and expenses may be satisfied in cash (subject to a present value
discount rate) or pursuant to an irrevocable letter of credit issued in the
full amount of such estimated costs and expenses.
EMPLOYEES
As of May 30, 1997, the Company employed approximately 8,700 full-time and
part-time employees, most of whom are drivers and/or guards. Of these
employees, approximately 2,800 are represented by labor unions. The contracts
covering the Company's unionized work force will expire at varying times over
the next three years. The Company believes that its relations with its
employees are good.
PROPERTIES
The Company's corporate headquarters, which consist of approximately 15,000
square feet of leased office space, are located in Houston, Texas. The Company
recently completed negotiating an agreement to lease a new corporate
headquarters consisting of approximately 29,000 square feet of office space in
Houston, Texas and anticipates that it will begin to move into such new office
space in June 1997. The Company's fleet of approximately 2,700 armored
vehicles operates out of 150 branches which provide service to all 50 states
and Puerto Rico. Of these branch locations, 123 are leased and 27 are owned.
Management expects to close six of the branches within the next 12 months in
connection with the consolidation. All of the Company's owned properties have
been pledged to secure the Company's indebtedness under the New Credit
Facility. The Company believes that its properties are suitable and adequate
for their intended uses.
LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations or financial
condition.
56
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Stockholders' Agreement, seven directors serve on the
Company's board: three nominees designated by the Business Trust, three
nominees designated by Borg-Warner, and the Chief Executive Officer of the
Company. See "Certain Relationships and Related Transactions--Stockholders
Agreement."
Set forth below is certain information with respect to those individuals who
serve as members of the Board of Directors and as executive officers of the
Company. Each of the persons named below holds the positions set forth
opposite his name with each of the Co-Registrants, except that Messrs.
Adorjan, Mattly and Hegi are the only directors constituting the boards of
directors of LFC Armored of Texas Inc. and Loomis, Fargo & Co. of Puerto Rico.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
J. Joe Adorjan.......... 58 Chairman of the Board of Directors
James B. Mattly......... 55 Director, President and Chief Executive Officer
James T. Callier, Jr.... 61 Director
Frederick B. Hegi, Jr... 53 Director
John D. O'Brien......... 54 Director
Jay I. Applebaum........ 34 Director
Timothy M. Wood......... 49 Director
James K. Jennings, Jr... 54 Executive Vice President, Chief Financial
Officer and Secretary
Edward H. Hamlett....... 46 Executive Vice President--Sales and Marketing
</TABLE>
There is no family relationship between any director or executive officer of
the Company. Officers of the Company are elected by the Board of Directors and
hold office until their respective successors are duly elected and qualified.
J. Joe Adorjan has served as a director of Borg-Warner since 1993, Chairman
of the Board of Borg-Warner since January 1996, Chief Executive Officer of
Borg-Warner since October 1995, and President of Borg-Warner since April 1995,
and was elected to the Board of Directors of the Company as of the Closing.
Mr. Adorjan was President of Emerson Electric Co. from 1992 to 1995 and
Chairman and Chief Executive Officer of ESCO Electronics Corporation from 1990
to 1992. Mr. Adorjan also currently serves as a director of California
Microwave, Inc., The Earthgrains Company, ESCO Electronics Corporation and
Goss Graphic Systems, Inc.
James B. Mattly served as a director and as President and Chief Executive
Officer of Loomis Armored from November 1991 to January 1997 and as a director
of Loomis from May 1991 to January 1997, and was elected to the Board of
Directors of the Company in January 1997. From 1979 to 1990, Mr. Mattly served
as Regional Vice President of Browning-Ferris Industries ("BFI") and as Chief
Operating Officer of its southwest region. Mr. Mattly has also served as Vice
President--Operations for Butler Aviation (1977-79) and Regional Vice
President of Wells Fargo Armored (1973-77).
James T. Callier, Jr. served as a director of Loomis and Loomis Armored from
May 1991 to January 1997, and was elected to the Board of Directors of the
Company as of the Closing. Mr. Callier is an indirect general partner of
Wingate Partners and a general partner of Wingate Affiliates, L.P., and has
served as President of Callier Consulting, Inc. (an operating management firm)
since 1985. From January 1992 through March 1995, Mr. Callier served as a
director of Associated Stationers, Inc. (an office products wholesaler) and
has served as a director of United Stationers Inc., the successor to
Associated Stationers, Inc., since March 1995. Mr. Callier also currently
serves as Chairman of the Board of Century Products Company (a manufacturer of
baby seats and other juvenile products), and as a director of RBPI Holding
Corporation ("RBPI") (a manufacturer and distributor of aluminum and vinyl
windows).
57
<PAGE>
Frederick B. Hegi, Jr. served as Chairman of the Board of Loomis and Loomis
Armored from May 1991 to January 1997, and was elected to the Board of
Directors of the Company in August 1996. Mr. Hegi is an indirect general
partner of Wingate Partners and a general partner of Wingate Affiliates, L.P.
Since May 1982, Mr. Hegi has served as President of Valley View Capital
Corporation (a private investment firm). Mr. Hegi served as a director of
Associated Holdings, Inc. from January 1992 through March 1995, a director of
United Stationers Inc. since March 1995 and Chairman of the Board, President
and Chief Executive Officer of United Stationers Inc. since November 1996. Mr.
Hegi also currently serves as Chairman of the Board of ITCO Holding Company,
Inc. (the parent corporation of ITCO Tire Company), Tahoka First Bancorp, Inc.
(a bank holding company), and Cedar Creek Bancshares, Inc. (a bank holding
company), and as a director of RBPI, Century Products Company, Lone Star
Technologies, Inc. (a diversified company engaged in the manufacturing of
steel pipe), Cattle Resources, Inc. (a manufacturer of animal feeds and
operator of commercial cattle feedlots), and various funds managed by
InterWest Partners.
John D. O'Brien has served as Senior Vice President of Borg-Warner since
1993 and was Vice President of Borg-Warner from 1987 to 1993, and was elected
to the Board of Directors of the Company as of the Closing.
Timothy M. Wood has served as Vice President, Finance of Borg-Warner since
1994 and was Vice President and Controller of Borg-Warner from 1987 to 1994,
and was elected to the Board of Directors of the Company in January 1997.
Jay I. Applebaum was elected to the board of directors of the Company in
February 1997. Mr. Applebaum served as Secretary for Loomis and Loomis Armored
from May 1991 to January 1997. Since June 1989, Mr. Applebaum has been
associated with Wingate Partners.
James K. Jennings, Jr. served as Chief Financial Officer of Loomis from
March 1994 to January 1997, and was elected to the offices of Executive Vice
President, Chief Financial Officer and Secretary of the Company in January
1997. Prior to joining Loomis, Mr. Jennings held various management positions
at HWC Distribution Corporation (a distributor of electrical and electronic
wire and cable), including as President and as a director from February 1990
to September 1993 and as Executive Vice President and Chief Financial Officer
from 1980 to February 1990.
Edward H. Hamlett served as a director of Loomis from February 1992 to
January 1997 and as Vice President of Sales and Marketing from February 1996
to January 1997, and was elected to the office of Executive Vice President of
the Company in January 1997. From May 1979 to May 1995, Mr. Hamlett served as
Vice President, Sales and Marketing of BFI. Prior to joining BFI, Mr. Hamlett
held regional sales and branch management positions with Wells Fargo Armored
from 1973 to 1977.
COMPENSATION OF DIRECTORS
Directors who are officers, employees or otherwise an affiliate of the
Company do not presently receive compensation for their services as directors.
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the board of directors or committees thereof. No determination has
yet been made whether annual fees or board attendance fees, if any, will be
paid to future directors who are not also officers, employees, or otherwise an
affiliate of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There is currently no compensation committee of the Board of Directors of
the Company. Compensation decisions in 1996 were made by (i) the entire board
of directors of Loomis, the members of which were Messrs. Hegi, Callier,
Mattly, Hamlett, Thomas W. Sturgess and David S. Teed, in the case of Loomis
Armored, and (ii) the compensation committee of the board of directors of
Borg-Warner, in the case of Wells Fargo Armored.
58
<PAGE>
EXECUTIVE COMPENSATION
The executive officers of the Company did not receive any compensation from
the Company during the period prior to the consummation of the Transactions.
The compensation to be paid to the executive officers of the Company will be
determined by the Board of Directors of the Company or any compensation
committee thereof and, for Mr. Mattly, subject to the terms of his existing
employment agreement with Loomis.
BENEFIT PLANS
Stock Option Plan. It is anticipated that the Company will adopt a stock
option plan for the Company's management and employees and grant options to
purchase shares of Common Stock pursuant to such plan. Such option plan may
provide for approximately 5% to 10% of the fully diluted Common Stock of the
Company to be reserved for issuance under such plan.
Management Equity Growth and Appreciation Plan. Effective as of May 1, 1991,
Loomis and Loomis Armored established a Management Equity Growth and
Appreciation Plan (the "Old MEGA Plan") to reward certain of the key employees
of Loomis and Loomis Armored. As of the Closing Date, Loomis and Loomis
Armored had issued or had contractual obligations which may have required the
issuance of an aggregate of 349,827 participation units ("Units") pursuant to
the Old MEGA Plan. Each Unit issued pursuant to the Old MEGA Plan was subject
to a five-year vesting schedule and represented an unfunded, unsecured,
potential right to receive deferred compensation.
Upon consummation of the Transactions, the Old MEGA Plan was terminated and
each Unit was cancelled. Holders of Units received options ("Options") to
purchase a number of shares of Common Stock of the Company that were
substantially equivalent in value pursuant to a New MEGA Units Holder Option
Plan (the "New MEGA Plan") established by the Company. The Options are subject
to the same vesting schedule and other limitations on exercise and transfer as
existed under the Old MEGA Plan, including without limitation, the requirement
that a Triggering Event (as defined) occur before the Options become
exercisable.
Upon exercising any Options, pursuant to a stock contribution agreement, the
Business Trust will be required to contribute to the Company that number of
shares of Common Stock which is delivered to such Option holder, and the
Company will be required to deliver to the Business Trust the exercise price
paid by the Option holder in connection with the exercise of such Options.
A Triggering Event under the New MEGA Plan means the first to occur of (i)
any sale, disposition, exchange, consolidation, merger or other transaction,
as a result of which Wingate Partners, either directly or indirectly through
its ownership interest through the Business Trust or otherwise, sells,
transfers or otherwise disposes of for value, in the aggregate through one or
more transactions, more than 1,250,000 shares of Common Stock to any other
person or entity that is not an affiliate of the Company, a successor entity
or Wingate Partners, (ii) any sale, exchange or other disposition either
directly or indirectly, of all or substantially all of the assets of the
Company or a successor entity (in a single transaction or a series of related
transactions) to a person or entity which is not an affiliate of the Company,
a successor entity or Wingate Partners, (iii) a merger or consolidation of the
Company or a successor entity with or into another entity which is not an
affiliate of the Company, a successor entity or Wingate Partners (whether or
not the Company or such successor entity is the survivor) with respect of
which more than 50% of the fully diluted Common Stock or common stock of such
successor entity, as the case may be, is converted into cash or other
property, or (iv) the consummation of an underwritten public offering or
series of offerings of Common Stock by the Company or a successor entity
pursuant to a registration statement filed under the Securities Act producing
aggregate gross proceeds to the Company or any successor entity and any
selling stockholders of at least $100 million; provided, however, that
notwithstanding the occurrence of one of the events described in (i) through
(iv) of this paragraph, a Triggering Event may be deferred in certain
circumstances by the board of directors of the Company for a period of up to
two years.
Compensation Paid by Loomis Armored. The following table sets forth for the
last fiscal year the compensation awarded to or earned by the Chief Executive
Officer of the Company and the other most highly
59
<PAGE>
compensated executive officers (the "Named Executive Officers") of the
Company, which compensation was paid to such Named Executive Officers by or on
behalf of Loomis Armored.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM COMPENSATION
COMPENSATION AWARDS
------------------- ----------------------
NAME AND PRINCIPAL ALL OTHER SECURITIES UNDERLYING
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) UNITS (#) (3)
------------------ ---- --------- -------- --------------- ----------------------
<S> <C> <C> <C> <C> <C>
James B. Mattly......... 1996(1) 362,500 138 -- 29,476(4)
Director, President and
Chief Executive
Officer
James K. Jennings, Jr... 1996(1) 150,000 2,938 6,864(5) --
Executive Vice
President,
Chief Financial Officer
and Secretary
Edward H. Hamlett....... 1996(1)(2) 66,667 -- 2,860(5) 10,000
Executive Vice
President-- Sales and
Marketing
</TABLE>
- --------
(1) Reflects compensation paid by Loomis Armored for the fiscal year ended
June 30, 1996.
(2) Represents compensation for the period of February 2, 1996, when Mr.
Hamlett became employed by the Company, to June 30, 1996.
(3) Reflects Units granted under the Old MEGA Plan. The number of securities
underlying Units is shown based on the shares of Loomis common stock
outstanding on June 30, 1996, and does not give effect to the
Transactions.
(4) Units shown were issuable to Mr. Mattly only upon the occurrence of
certain contingencies on or prior to June 30, 1998.
(5) Reflects automobile allowance paid to Messrs. Jennings and Hamlett in the
fiscal year ended June 30, 1996.
Mattly Employment Agreement. Mr. Mattly is a party to an employment
agreement with the Company pursuant to which he serves as President and Chief
Executive Officer. Mr. Mattly's employment agreement is subject to automatic
successive one-year renewal terms. Mr. Mattly's current base salary is
$350,000, subject to increase from time to time at the sole discretion of the
board of directors of Loomis. In addition, Mr. Mattly may receive a bonus
generally recognizable following the end of the Company's fiscal year in an
amount up to 100% of his then current base salary at the sole discretion of
the board of directors of the Company. The employment agreement also provides
for participation by Mr. Mattly in the Company's general life, health and
disability plans generally applicable to senior executives of the Company, as
well as reimbursement of reasonable business expenses. Mr. Mattly's employment
agreement includes certain noncompetition and confidentiality provisions.
In May 1996 and January 1997, the provisions of Mr. Mattly's employment
agreement were amended to provide for the issuance of 166,543 Options under
the New MEGA Plan upon the occurrence of certain contingencies on or prior to
December 31, 1999.
60
<PAGE>
Old MEGA Plan Units. The following table shows individual grants of Units
issued pursuant to the Old MEGA Plan to the Chief Executive Officer of the
Company and the Named Executive Officers for the fiscal year ended June 30,
1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
POTENTIAL VALUE
AT ASSUMED
NUMBER OF ANNUAL RATE
SECURITIES PERCENT OF OF STOCK PRICE
UNDERLYING TOTAL UNITS APPRECIATION
UNITS GRANTED TO EXERCISE OR FOR UNIT TERM (6)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME (#) (1) FISCAL YEAR (%) ($/SH) DATE 5% ($) 10% ($)
---- ---------- --------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
James B. Mattly......... 29,476(2)(3) 74.7 $3.33(4) (5) 242,293 338,384
Edward H. Hamlett....... 10,000(2) 25.3 $3.33(4) (5) 82,200 114,800
</TABLE>
- --------
(1) The number of securities underlying Units is shown based on the shares of
Loomis common stock outstanding on June 30, 1996, and does not give effect
to the Transactions.
(2) All Units reflected vest in five equal annual installments commencing on
the Award Date (as defined). The Units vest immediately for employees of
Loomis or Loomis Armored on a Payment Event (as defined).
(3) Pursuant to Mr. Mattly's employment agreement, as amended, 29,476 Units
would have been issuable if certain contingent events occur on or prior to
June 30, 1998.
(4) Reflects the base price per share of the common stock of Loomis used to
calculate the value per Unit. The base price of Units as of the date of
grant was determined based upon the amount invested in the equity of
Loomis since its acquisition of Loomis Armored in May 1991.
(5) The Units issued under the Old MEGA Plan had no established expiration
date. The Old MEGA Plan and all Units thereunder terminated upon certain
conditions specified in the Old MEGA Plan.
(6) Assumes a Payment Event (as defined in the Old MEGA Plan) occurs five
years from June 30, 1996.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AND UNITS AT OPTIONS AND UNITS
FISCAL YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
James B. Mattly............ 6,265/127,730(2) 35,523/724,229
Edward H. Hamlett.......... 6,265/10,000 35,523/56,700
</TABLE>
- --------
(1) The number of securities underlying options and Units is shown based on
the shares of Loomis common stock outstanding on June 30, 1996, and does
not give effect to the Transactions.
(2) Assumes a fair market value of Loomis common stock as of June 30, 1996 of
$9.00 per share.
(3) Includes 29,476 Units that would have been issuable to Mr. Mattly pursuant
to an employment agreement if certain contingencies occurred on or prior
to June 30, 1998.
61
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of the Date of this Prospectus by (i) each person known to the Company to
beneficially own more than 5% of the Common Stock, (ii) each of the directors
of the Company, (iii) each of the Named Executive Officers, and (iv) all
directors and Named Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
NAME AND ADDRESS NUMBER PERCENT OF
OF BENEFICIAL OWNER OF SHARES CLASS
------------------- --------- ----------
<S> <C> <C>
Loomis Stockholders Trust................................ 5,100,000 51.0%
c/o Wingate Partners, L.P.
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
Wingate Partners, L.P.(1)(2)............................. 4,120,208 41.2%
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Key Capital Corporation(1)............................... 516,774 5.2%
127 Public Square, Fourth Floor
Cleveland, Ohio 44114
Wells Fargo Armored Service Corporation.................. 4,900,000 49.0%
200 South Michigan Avenue
Chicago, Illinois 60604
Borg-Warner Security Corporation(3)...................... 4,900,000 49.0%
200 South Michigan Avenue
Chicago, Illinois 60604
J. Joe Adorjan(4)........................................ -- *
James B. Mattly(1)....................................... 88,370 *
James T. Callier, Jr.(5)................................. -- *
Frederick B. Hegi, Jr.(5)(6)............................. -- *
John D. O'Brien(4)....................................... -- *
Jay I. Applebaum(1)...................................... 10,703 *
Timothy M. Wood(4)....................................... -- *
James K. Jennings, Jr.................................... -- *
Edward H. Hamlett(7)..................................... 10,978 *
All directors and executive officers as a group (9 *
persons)(8)............................................. 99,159
</TABLE>
- --------
* Represents less than 1%.
(1) Reflects such holder's beneficial ownership of Common Stock in accordance
with its percentage interest of trust units in the Business Trust. All of
such shares of Common Stock are held of record by the Business Trust
pursuant to the Business Trust Agreement and, therefore, the number of
shares and percentage of beneficial ownership of the Company attributable
to such holder is subject to change upon the acquisition or disposition of
shares of Common Stock held of record by the Business Trust.
(2) Includes the beneficial ownership of 4,051,150 shares by Wingate Partners
and 69,058 shares by Wingate Affiliates, L.P.
(3) Borg-Warner is the sole stockholder of Wells Fargo Armored and, therefore,
may be deemed to beneficially own all shares of Common Stock owned of
record by Wells Fargo Armored.
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(4) Does not include 4,900,000 shares of Common Stock held of record by Wells
Fargo Armored, a wholly-owned subsidiary of Borg-Warner. Mr. Adorjan is a
director and each of Messrs. Adorjan, O'Brien and Wood are executive
officers of Borg-Warner and, therefore, may be deemed to be a beneficial
owner of some or all of such shares. Each of Messrs. Adorjan, O'Brien and
Wood disclaims beneficial ownership of all shares of Common Stock not held
of record by him.
(5) Does not include an aggregate of 4,120,208 shares of Common Stock
beneficially owned by Wingate Partners and Wingate Affiliates, L.P. Each
of Messrs. Callier and Hegi are indirect general partners of Wingate
Partners and general partners of Wingate Affiliates, L.P. and, therefore,
may be deemed to beneficially own some or all of the shares of Common
Stock owned by such entities. Each of Messrs. Callier and Hegi disclaims
beneficial ownership of all shares of Common Stock not held of record by
him.
(6) Does not include 5,100,000 shares of Common Stock held by the Business
Trust. Mr. Hegi is the manager of the Business Trust and, therefore, may
be deemed to beneficially own the shares of Common Stock held by the
Business Trust. Mr. Hegi disclaims beneficial ownership of all shares of
Common Stock not held of record by him.
(7) Includes options exercisable within 60 days of the date of this Prospectus
to purchase up to 10,978 shares of Common Stock.
(8) Includes (i) 10,978 shares of Common Stock issuable to Mr. Hamlett
pursuant to an option exercisable within 60 days of the date of this
Prospectus and (ii) 88,181 shares of Common Stock beneficially owned by
Mr. Mattly through the Business Trust following the delivery to the
Company of 10,978 shares of Common Stock by the Business Trust pursuant to
a stock contribution agreement upon the exercise of Mr. Hamlett's stock
option.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS AGREEMENT
At the Closing, the Company, Wells Fargo Armored, the Business Trust and
Wingate Partners entered into a stockholders agreement (the "Stockholders
Agreement"). The Stockholders Agreement provides that the Board of Directors
initially will consist of seven directors: the Chief Executive Officer of the
Company, three directors nominated by the Business Trust, and three directors
nominated by Wells Fargo Armored. The right to designate directors pursuant to
the Stockholders Agreement shall be adjusted as to Wells Fargo Armored or the
Business Trust (each a "Designating Party"), as the case may be, as follows:
(i) if a Designating Party shall own beneficially less than 35% but at least
15% of the fully diluted Common Stock, such Designating Party shall be
entitled to designate only two directors pursuant to the Stockholders
Agreement, (ii) if such Designating Party shall own beneficially less than 15%
but at least 10% of the fully diluted Common Stock, such Designating Party
shall be entitled to designate only one director and (iii) if such Designating
Party shall cease to own beneficially at least 10% of the fully diluted Common
Stock, the right of such Designating Party to designate directors pursuant to
the Stockholders Agreement shall terminate. The Board of Directors shall be
empowered to create an Executive Committee to act on behalf of the Board of
Directors, subject to any limitations under applicable law. The Executive
Committee shall consist of three directors, such committee to be comprised of
the Chief Executive Officer of the Company, one director designated by Wells
Fargo Armored and one director designated by the Business Trust. Pursuant to
the Stockholders Agreement, the affirmative vote of at least five of the seven
directors, or the unanimous consent of the Executive Committee, is required
for the Company to engage in certain specified activities.
The Stockholders Agreement prohibits the sale, transfer or disposition of
any shares of Common Stock by Wells Fargo Armored or the Business Trust for a
period of three years following the Closing Date without the prior written
consent of the other. After such three year period, shares of Common Stock may
be sold, transferred or disposed of only in accordance with the provisions of
the Stockholders Agreement, which include rights of first refusal and co-sale
rights. The issuance by the Company of Common Stock or securities exchangeable
or convertible into Common Stock will also be subject to certain preemptive
rights of the stockholders.
Each time the Company proposes to register any Common Stock pursuant to the
Securities Act, the stockholders shall be entitled to include their shares of
Common Stock in such registered offering; provided, however, that the Company
may at any time withdraw or cease proceeding with such registration if it
shall at the same time withdraw or cease proceeding with the registration of
all other shares of Common Stock originally proposed to be registered;
provided, further, that if the managing underwriter in any such proposed
offering advises the Company in writing that the number of shares of Common
Stock requested to be included in the registration by all persons (including
the Company) exceeds the number of shares of Common Stock which can be sold in
such offering without having an adverse effect on such offering, including
without limitation, the price at which such shares can be sold (the "Maximum
Offering Size"), the Company will be obligated to include in such registration
only (i) first, any and all shares of Common Stock for sale by the Company,
(ii) second, to the extent the Maximum Offering Size exceeds the number of
shares to be offered by the Company, each of the Business Trust, on the one
hand, and Wells Fargo Armored, on the other hand, shall be entitled to include
one-half of such available shares in the registration and (iii) third, to the
extent any remaining shares which may be sold in such offering, pro rata among
any other shares of Common Stock requested to be included pursuant to any
other registration rights that may have been, or may hereafter be, granted by
the Company (on the basis of the total number of shares of Common Stock that
each holder has requested to be registered). Pursuant to the terms of the
Stockholders Agreement, the Company has agreed to indemnify participating
stockholders against certain liabilities arising from a registration statement
filed in connection with such offering.
The Stockholders Agreement (except for certain limited provisions including
the registration rights described above, which survive indefinitely) shall
terminate upon the earliest to occur of (i) the consummation of an
underwritten public offering or series of offerings pursuant to an effective
registration statement under the Securities Act for cash of Common Stock
producing aggregate gross proceeds to the Company and any holders
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selling shares of Common Stock thereunder of at least $100.0 million, (ii) the
sale of all or substantially all of the assets of the Company, or the merger
or consolidation of the Company with any person as a result of which the
holders hold less than 35% of the Common Stock, (iii) the date one year after
the date of a Change of Control (as defined in the Stockholders Agreement) of
Borg-Warner, (iv) the foreclosure on or forced sale of at least 50% of the
Common Stock held by Wells Fargo Armored on the Closing Date by any lender of
Borg-Warner or Wells Fargo Armored, and (v) the date any holder and its
affiliates become the beneficial owners of all of the outstanding Common
Stock.
PAYMENTS TO AFFILIATES
At the Closing, the Company made certain payments to the Business Trust and
related entities and to Wells Fargo Armored and related entities pursuant to
the terms of the Contribution Agreement. See "The Transactions--The Business
Combination." In addition, at the Closing Loomis redeemed $3.5 million
aggregate principal amount of Loomis Preferred Stock. All issued and
outstanding shares of Loomis Preferred Stock were owned of record and
beneficially by Wingate Partners and its affiliates. Additionally, at the
Closing Loomis Armored repaid all of its outstanding 14% senior subordinated
notes due September 30, 1999, of which approximately $7.5 million was paid to
Wingate Partners and its affiliates, approximately $2.7 million was paid to
Key Capital Corporation and approximately $175,000 was paid to James B.
Mattly, President and Chief Executive Officer of the Company.
In the ordinary course of business, Wells Fargo Armored purchases security
services from various other subsidiaries of Borg-Warner. During 1995, Wells
Fargo Armored paid approximately $1.65 million for such services, including
electronic security installation, maintenance and monitoring, physical
security, investigative services and courier services.
FINANCIAL ADVISORY AGREEMENT
Pursuant to a Financial Advisory Agreement (the "Financial Advisory
Agreement") dated as of May 6, 1991 among Loomis, Loomis Armored and Wingate
Partners, Wingate Partners (i) provided certain financial advisory services to
Loomis and Loomis Armored in connection with the merger (the "Merger") of
Loomis Acquisition Corporation, a wholly-owned subsidiary of Loomis, with and
into Loomis Armored, in exchange for a one-time fee of $750,000 (which was
paid in May 1991 upon consummation of the Merger), and (ii) agreed to provide
additional financial advisory services to Loomis and Loomis Armored in
exchange for a fee of $350,000 per year. Loomis Armored is also obligated to
reimburse Wingate Partners for its out-of-pocket expenses and indemnify
Wingate Partners and its affiliates from losses incurred in connection with
the provision of these services. The Financial Advisory Agreement was
scheduled to expire on May 6, 2001 (the "Primary Term"), provided that it
would have continued in effect on a year to year basis thereafter unless
terminated in writing by one of the parties on or before the thirtieth day
prior to the expiration of the Primary Term or prior to the expiration of any
subsequent annual term. At the Closing, all accrued management fees and
expenses pursuant to the Financial Advisory Agreement were paid to Wingate
Partners for the period up to and including the Closing Date and the Financial
Advisory Agreement terminated. See "The Transactions--The Business
Combination" and "Use of Proceeds."
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DESCRIPTION OF NEW CREDIT FACILITY
At the Closing, the Company, Lehman Commercial Paper Inc. ("LCPI") and
NationsBank of Texas, N.A. ("NationsBank" and, together with LCPI, and the
other lenders parties thereto the "Lenders") entered into a credit agreement
(the "Credit Agreement") to provide the Company's new credit facility (the
"Credit Facility"), which provides initial aggregate borrowings of up to
$115.0 million.
Term. The New Credit Facility is a five-year step-down revolving facility
providing for initial aggregate borrowings of up to $115.0 million. The
commitment (the "Commitment") under the New Credit Facility will be reduced
beginning in January 1999 to $105.0 million, reduces further in January 2000
to $90.0 million, in January 2001 to $72.5 million, and matures in January
2002. In addition, the Company is obligated to make mandatory prepayments on
the New Credit Facility under certain circumstances with the proceeds of
certain asset sales and incurrence of indebtedness and from excess cash flow.
Letters of Credit. A portion of the New Credit Facility, not to exceed $40.0
million in the first year following the Closing Date, $45.0 million in the
second year following the Closing Date and $50.0 million thereafter, is
available for the issuance of letters of credit ("Letters of Credit").
Interest Rate. Amounts outstanding under the New Credit Facility bear
interest at a rate equal to, at the Company's option, (i) the Base Rate (as
defined) plus the Base Rate Applicable Margin (as defined) ("Base Rate Loans")
or (ii) the Eurodollar Rate (as defined) plus the Eurodollar Applicable Margin
(as defined) ("Eurodollar Rate Loans"). "Base Rate" means the highest of (i)
the rate of interest publicly announced by the administration agent for the
New Credit Facility as its prime rate in effect at its principal office and
(ii) the federal funds effective rate from time to time plus 0.5%, and "Base
Rate Applicable Margin" means an amount per annum ranging from 0.125% to 1.25%
based upon the Company's ratio of total debt to EBITDA. "Eurodollar Rate"
means the average of the rates (adjusted for statutory reserve requirements
for eurocurrency liabilities) at which eurodollar deposits for one, two, three
or six months (as selected by the Company) are offered to reference Lenders to
be selected in the interbank eurodollar market, and "Eurodollar Applicable
Margin" means an amount per annum ranging from 1.125% to 2.25% based upon the
Company's ratio of total debt to EBITDA. Interest on Base Rate Loans are
payable quarterly in arrears. Interest on Eurodollar Loans are payable on the
last day of each relevant interest period and, in the case of any interest
period longer than three months, on each successive date three months after
the first day of such interest period.
Security and Guarantees. The New Credit Facility is secured by a perfected
first priority security interest in substantially all of the Company's and its
direct and indirect subsidiaries' tangible and intangible assets, including
without limitation, intellectual property, fee owned real property and all of
the capital stock of the Company's direct and indirect subsidiaries. The New
Credit Facility is also guaranteed by each of the Company's subsidiaries.
Fees. The Company is required to pay a commitment fee, calculated at a rate
per annum ranging from 0.375% to 0.5% based upon the Company's ratio of total
debt to EBITDA, on the average daily unused portion of the New Credit
Facility, payable quarterly in arrears. Fees to be paid on outstanding Letters
of Credit are at a per annum rate equal to the Eurodollar Applicable Margin.
In addition, a fronting fee on the face amount of each Letter of Credit is
payable by the Company quarterly in arrears to the issuing Lender in an amount
per annum of 0.125% or 0.1875% based upon whether the Company's ratio of total
debt to EBITDA exceeds certain thresholds.
Covenants. The Credit Agreement contains customary affirmative and negative
covenants which, among other things and with certain exceptions, require the
Company and its subsidiaries to: (i) periodically deliver certain financial
and other information; (ii) not merge or consolidate with another entity;
(iii) not incur indebtedness or guarantees of indebtedness; (iv) not incur
liens on property; (v) not engage in certain sales or other dispositions or
sale-leaseback transactions; (vi) not engage in certain acquisitions or other
investments; (vii) not pay dividends, repurchase stock or make certain other
restricted payments; and (viii) not engage in
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transactions with affiliates. Under the Credit Agreement, the Company is
required to satisfy certain financial covenants, which require the Company to
maintain specified financial ratios and comply with certain financial tests.
Events of Default. The Credit Agreement contains certain customary events of
default, including without limitation, a change of control (to be defined in
the Credit Agreement) of the Company.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on January 24, 1997, in a private
placement. In connection with that placement, the Company entered into the
Registration Rights Agreement, which requires that the Company file a
registration statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of that registration statement, offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a
like principal amount of New Notes, which will be issued without a restrictive
legend and may be reoffered and resold by the holder without registration
under the Securities Act. The Registration Rights Agreement further provides
that the Company must use its best efforts to cause the Registration Statement
with respect to the Exchange Offer to be declared effective on or before
, 1997. Except as provided below, upon the completion of the Exchange
Offer, the Company's obligations with respect to the registration of the Old
Notes and the New Notes will terminate. A copy of the Registration Rights
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part and although the Company believes that the summary
herein of certain provisions thereof describes all material elements of the
Registration Rights Agreement, such summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference thereto. As a
result of the filing and the effectiveness of the Registration Statement,
certain liquidated damages ("Liquidated Damages") provided for in the
Registration Rights Agreement will not become payable by the Company.
Following the completion of the Exchange Offer (except as set forth in the
paragraph immediately below), holders of Old Notes not tendered will not have
any further registration rights and those Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected upon completion of the
Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of
the person receiving the New Notes, whether or not such person is the holder
of the Old Notes, (ii) neither the holder nor any such other person is
engaging in or intends to engage in a distribution of the New Notes, (iii)
neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes, and (iv) neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated under the Securities Act,
of the Company. In the event that (i) the Company is not required to file an
Exchange Offer Registration Statement (as defined in the Registration Rights
Agreement) because the Exchange Offer is not permitted by applicable law of
Commission policy, or (ii) any holder of Old Notes is prohibited from
participating in the Exchange Offer by applicable law or Commission policy, or
such holder would be required to deliver a prospectus in connection with any
resale of New Notes acquired in the Exchange Offer and the prospectus
contained in the Exchange Offer Registration Statement would not be
appropriate or available for such resales, or such holder is a broker-dealer
that holds Old Notes acquired directly from the Company or its affiliates.
Such holders can elect, by so indicating on the Letter of Transmittal and
providing certain additional necessary information, to have such holder's Old
Notes registered in a "shelf" registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act. In the event that the Company
is obligated to file a "shelf" registration statement, it may be required to
keep such "shelf" registration statement effective for at least three years.
Other than as set forth in this paragraph, no holder will have the right to
participate in the "shelf" registration statement nor otherwise to require
that the Company register such holder's Old Notes under the Securities Act.
See"--Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any person receiving such New Notes, whether or not
such person is the holder (other than any such holder or such other person
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 the New Notes are
acquired in the ordinary course of business of the holder or such other person
and neither the holder nor such other person has an arrangement or
understanding with any person to
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participate in the distribution of such New Notes. Any holder who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
New Notes cannot rely on this interpretation by the Commission's staff and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Each broker-
dealer that receives New Notes for its own account in exchange for Old Notes,
where the Old Notes were acquired by that broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "--Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for a holder's Old Notes could be adversely
affected upon completion of the Exchange Offer if the holder does not
participate in the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of New Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered
only in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form,
and terms of the Old Notes except that (i) interest on the New Notes shall
accrue from the date of issuance of the Old Notes and (ii) the New Notes have
been registered under the Securities Act and will not bear legends restricting
their transfer. The New Notes will evidence the same debt as the Old Notes and
will be issued pursuant to, and entitled to the benefits of, the Indenture
pursuant to which the Old Notes were issued.
As of May 30, 1997, Old Notes representing $85,000,000 aggregate principal
amount were outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to such registered Holder and to others believed to
have beneficial interests in the Old Notes. Holders of Old Notes do not have
any appraisal or dissenters' rights under the General Corporation Law of the
State of Delaware or the indenture in connection with the Exchange Offer. The
Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. the Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company. If any tendered
Old Notes are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, certificates
for any such unaccepted Old Notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "The Exchange Offer--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
1997, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall
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mean the latest date and time to which the Exchange Offer is extended. In
order to extend the Exchange Offer, the Company will notify the Exchange Agent
and each registered holder of any extension by oral or written notice prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. The Company reserves the right, in its sole
discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer
or, if any of the conditions set forth under "The Exchange Offer--Certain
Conditions to Exchange Offer" shall not have been satisfied, to terminate the
Exchange Offer, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "The Exchange Offer--Book Entry Transfer," to tender
in the Exchange Offer a holder must complete, sign, and date the Letter of
Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the
Letter of Transmittal or copy to the Exchange Agent prior to the Expiration
Date. In addition, either (i) certificates for such Old Notes must be received
by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Old Notes, if that procedure is available, into the Exchange Agent's account
at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date, or (iii) the Holder must comply with the
guaranteed delivery procedures described below. To be tendered effectively,
the Letter of Transmittal and other required documents must be received by the
Exchange Agent at the address set forth under "The Exchange Offer--Exchange
Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date will
constitute an agreement between that holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS
MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the
beneficial owner wishes to tender on the owner's own behalf, the owner must,
prior to completing and executing the Letter of Transmittal and delivering the
owner's Old Notes, either make appropriate arrangements to register ownership
of the Old Notes in the beneficial owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership
may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of transmittal
or (ii) for the account of an Eligible Institution. If signatures on a Letter
of Transmittal or a notice of withdrawal, as the case may be, are required to
be guaranteed, the guarantee must be by any eligible guarantor institution
that is a member of or participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program, the Stock
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Exchange Medallion Program, or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, the Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by the registered
holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so at must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent, nor any other person
shall incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly as to which the defects or irregularities
have not been cured or waived will be returned by the Exchange Agent to the
tendering holders, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer--Conditions to the
Exchange Offer," to terminate the Exchange Offer and, to the extent permitted
by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions, or otherwise. The terms of any such purchases or
offers could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, ( ii ) neither the holder nor
any such other person is engaging in or intends to engage in a distribution of
such New Notes, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate" as defined under Rule 405 of the Securities Act, of
the Company or any ~Guarantor.
In the event that (i) the Company is not required to file an Exchange Offer
Registration Statement because the Exchange Offer is not permitted by
applicable law or Commission policy, or (ii) any holder of Old Notes is
prohibited from participating in the Exchange Offer by applicable law or
Commission policy, or such holder would be required to deliver a prospectus in
connection with any resale of New Notes acquired in the Exchange Offer and the
prospectus contained in the Exchange Offer Registration Statement would not be
appropriate or available for such resales, or such holder is a broker-dealer
that holds Old Notes acquired directly from the Company or its affiliates.
Such holders can elect, by so indicating on the Letter of Transmittal and
providing certain additional necessary Information, to have such holder's Old
Notes registered in a "shelf" registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act Such election must be made by
the Expiration Date in order for such holder to participate in the "shelf"
registration.
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In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-
Entry Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal) and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are
submitted for a greater principal amount than the holder desires to exchange,
such unaccepted or non-exchanged Old Notes will be returned without expense to
the tendering Holder thereof (or, in the case of Old Notes tendered by book-
entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry transfer procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration
or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for transfer. However,
although delivery of Old Notes may be effected through book-entry transfer at
the Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof,
with any required signature guarantees and any other required documents, must,
in any case other than as set forth in the following paragraph, be transmitted
to and received by the Exchange Agent at the address set forth under "The
Exchange Offer-Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through
DTC's communication system in place of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three NYSE trading days after the date
of execution of the Notice of Delivery.
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WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or (for
DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth in this Prospectus
prior to 5:00 p.m., New York City time, on the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Old Notes to be withdrawn (the ~'Depositor"), (ii) identify the Old Notes
to be withdrawn (including the certificate number or numbers and principal
amount of such Old Notes),
(iii) be signed by the holder in the same manner as the original signature
on the Letter of Transmittal by which such Old Notes were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee register the transfer of such Old Notes into
the name of the person withdrawing the tender, and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form, and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender, or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures under "The Exchange Offer-Procedures for Tendering" at any time on
or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the
New Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental age~ncy or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company and the Guarantors in whole or
in part at any time and from time to time in its sole discretion. The failure
by the Company at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect
to the Registration Statement of which this Prospectus constitutes a part or
the qualification of the indenture under the Trust Indenture Act of 1939, as
amended (the "TIA" ). In any such event the Company is required to use every
reasonable effort to obtain the withdrawal of any stop order at the earliest
possible time.
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EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange Agent.
Marine Midland Bank has been appointed as Exchange Agent for the Exchange
Offer. Questions, requests for assistance and requests for additional copies of
this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
MARINE MIDLAND BANK
By Facsimile Transmission By Hand, Mail orOvernight Delivery:
(for Eligible Institutions only): Marine Midland Bank
(212) 658-2292 140 Broadway, Level A
New York, New York 10005-1180
Attn: Corporate Trust Operations
For information or
Confirmation by Telephone:
(212) 658-5931
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be $ ,
which includes fees and expenses of the Trustee, accounting, legal, printing,
and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection except that holders who instruct the Company
to register New Notes in the name of, or request that Old Notes not tendered or
not accepted in the Exchange Offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does
not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements, and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a holder of the
New Notes. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer should
not constitute a material modification of the terms of the Old Notes and,
therefore, such exchange should not constitute an exchange for federal income
tax purposes. Accordingly, such exchange should have no federal income tax
consequences to holders of Old Notes.
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<PAGE>
DESCRIPTION OF NEW NOTES
GENERAL
The New Notes will be issued pursuant to an Indenture (the "Indenture"),
dated as of January 24, 1997, among the Company, the Guarantors and Marine
Midland Bank, as trustee (the "Trustee"). Upon the issuance of the New Notes,
the Indenture will be subject to and governed by the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The New Notes are subject to all such terms,
and Holders of New Notes are referred to the Indenture and the Trust Indenture
Act for a statement thereof. The following summary of certain provisions of
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to all the provisions of the New Notes,
the Indenture including the definitions therein of certain terms used below. A
copy of the Indenture is available as set forth under "Additional
Information." The definitions of certain terms used in the following summary
are set forth below under "Certain Definitions."
The New Notes will rank junior in right of payment to all Senior Debt,
including borrowings under the New Credit Facility. The New Notes will rank
pari passu in right of payment with the Old Notes, if any, and all senior
subordinated Indebtedness of the Company issued in the future, if any, and
senior in right of payment to all other subordinated Indebtedness of the
Company issued in the future, if any. As of March 31, 1997, the total amount
of Senior Debt outstanding was approximately $73.5 million.
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. Except to the
extent of the Subsidiary Guarantees, the Notes will be effectively
subordinated to all Indebtedness and other liabilities and commitments
(including trade payables and lease obligations) of the Company's
Subsidiaries. Any right of the Company to receive assets of any of its
Subsidiaries upon the latter's liquidation or reorganization (and the
consequent right of the Holders of the Notes to participate in those assets)
will be effectively subordinated to the claims of that Subsidiary's creditors,
except to the extent that the Company is itself recognized as a creditor of
such Subsidiary, in which case the claims of the Company would still be
subordinate to any security in the assets of such Subsidiary and any
Indebtedness of such Subsidiary senior to that held by the Company. See "--
Subsidiary Guarantees" and "--Subordination."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $85.0 million and
will mature on January 15, 2004. Interest on the Notes will accrue at the rate
of 10% per annum and will be payable semi-annually in arrears on January 15
and July 15, commencing on July 15, 1997, to Holders of record at the close of
business on the January 1 and July 1 immediately preceding such 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 original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, Redemption Price and Purchase
Price of, and interest and Liquidated Damages, if any, on the Notes will be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check
mailed to the Holders of the Notes at their respective addresses set forth in
the register of Holders of Notes; provided that all payments with respect to
Global Notes or Notes where the Holders thereof have given wire transfer
instructions to the Trustee or the Paying Agent will be required to be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's
office or agency in New York will be the office of the Trustee maintained for
such purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to January
15, 2001. Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the Redemption Prices (expressed as percentages of principal
amount) set forth below,
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plus accrued and unpaid interest and Liquidated Damages, if any, thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on January 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2001.................................................... 105.000%
2002.................................................... 102.500%
2003 and thereafter..................................... 100.000%
</TABLE>
Notwithstanding the foregoing, prior to January 15, 2000, the Company may in
its discretion redeem up to an aggregate of $25.0 million in principal amount
of Notes at a redemption price of 110% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more public offerings of
common stock of the Company; provided that at least $60.0 million in aggregate
principal amount of Notes remain outstanding immediately after the occurrence
of such redemption; and provided, further, that such redemption shall occur
within 90 days after the date of the closing of such public offering of common
stock of the Company.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee by lot, pro rata or by such
other method as the Trustee shall deem fair and appropriate; provided that no
Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall
be mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on the Notes or portions of them called for redemption.
SUBSIDIARY GUARANTEES
The Company's obligations under the Notes will be jointly and severally
Guaranteed (the "Subsidiary Guarantees") by the Guarantors. The Subsidiary
Guarantees of the Guarantors will be unsecured and subordinated to the prior
payment in full of all senior debt of the Guarantors (including such
Guarantor's Guarantee of the New Credit Facility), approximately $2.0 million
of other Indebtedness of the Guarantors and the amounts for which the
Guarantors will be liable under Guarantees issued from time to time with
respect to Senior Debt of the Company, which would include approximately $70.8
million of Senior Debt outstanding as of December 31, 1996, after giving pro
forma effect to the Original Offering, the Transactions and the initial
borrowings under the New Credit Facility. The subordination of the Subsidiary
Guarantees will be substantially similar to the subordination provided for in
the Indenture with respect to the Notes. See "Subordination." The obligations
of each Guarantor under its Subsidiary Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable law. See, however, "Risk
Factors--Fraudulent Conveyance."
The Indenture provides that, subject to the provisions of the following
paragraph, no Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another corporation, Person or
entity (except the Company or another Guarantor) whether or not affiliated
with such Guarantor, unless (i) the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor under its Subsidiary Guarantee in form and
substance reasonably satisfactory to the Trustee; (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists; and
(iii) immediately after giving pro forma effect to such transaction, the
Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant
described below under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
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The Indenture provides that in the event of a sale or other disposition of
all or substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor, then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor to any Person other than the Company or
a Wholly Owned Subsidiary thereof) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "Repurchase at the Option of Holders."
"Guarantors" means each of (i) the Operating Subsidiary, (ii) the
Intermediate Holding Company, (iii) LFC Armored of Texas Inc., a Texas
corporation ("LFC of Texas"), (iv) Loomis, Fargo & Co. of Puerto Rico, a
Tennessee corporation ("LFC of Puerto Rico") and (v) any other Subsidiary that
(a) Guarantees any Senior Debt of the Company or any Indebtedness of the
Company that is pari passu in right of payment with the Notes or (b) is or
becomes a Significant Subsidiary (whether as a result of creation,
acquisition, additional investment, internal growth, or otherwise), and their
respective successors and assigns.
The Intermediate Holding Company is a holding company whose only significant
asset is all of the capital stock of the Operating Subsidiary. All of the
Company's business is conducted through the Operating Subsidiary and its two
wholly-owned subsidiaries, LFC of Texas and LFC of Puerto Rico. Separate
financial statements of the Guarantors are not included herein because the
Guarantors are jointly and severally liable with respect to the Company's
obligations pursuant to the New Notes, the Subsidiary Guarantees are full and
unconditional, and the Guarantors have no operations independent of the
Company.
SUBORDINATION
The payment of principal, Redemption Price and Purchase Price of, and
interest and Liquidated Damages, if any, on the Notes will be expressly
subordinate and subject in right of payment, as set forth in the Indenture, to
the prior payment in full of all Senior Debt, whether outstanding on the date
of the Indenture or thereafter incurred.
The Notes will rank junior in right of payment to all Senior Debt, including
borrowings under the New Credit Facility. Borrowings under the New Credit
Facility will be secured by substantially all the Company's assets, including
the capital stock of the Company's existing and future Subsidiaries, and will
be guaranteed by all such Subsidiaries, which guarantees will be secured by
substantially all of such Subsidiaries' assets. The Notes will rank pari passu
in right of payment with all senior subordinated Indebtedness of the Company
issued in the future, if any, and senior in right of payment to all other
subordinated Indebtedness of the Company issued in the future, if any.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt whether or not such interest
constitutes an allowable claim in such proceeding) before the Holders of Notes
will be entitled to receive any payment with respect to the Notes, and until
all Obligations with respect to Senior Debt are paid in full, any distribution
to which the Holders of Notes would be entitled shall be made to the holders
of Senior Debt (except that Holders of Notes may receive securities that are
subordinated at least to the same extent as the Notes to Senior Debt and any
securities issued in exchange for Senior Debt and payments made from the trust
described under "Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the Notes
(except in such subordinated securities or from the trust described under
"Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of
the principal of, premium, if any, or interest on Designated Senior Debt
occurs and is continuing beyond any applicable period of grace or (ii) any
default occurs (other than a payment default) and is continuing
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<PAGE>
with respect to Designated Senior Debt that permits holders of the Designated
Senior Debt as to which such default relates to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage Notice")
from the Company or the representative of the Designated Senior Debt. Payments
on the Notes may and shall be resumed (a) in the case of a payment default,
upon the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of (i) the date on which such nonpayment
default is cured or waived, (ii) 179 days after the date on which the
applicable Payment Blockage Notice is received unless the maturity of any
Designated Senior Debt has been accelerated and (iii) the date on which such
payment blockage period shall have been terminated by written notice to the
Company and the Trustee from the representative of the Designated Senior Debt
who shall have previously delivered the Payment Blockage Notice. No new period
of payment blockage may be commenced unless and until (i) 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice and (ii) all scheduled payments of principal, Redemption Price and
Purchase Price of, and interest and Liquidated Damages, if any, on the Notes
that have become due have been paid in full in cash or Cash Equivalents. No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice. The Company shall deliver a notice to
the Trustee promptly after the date on which any nonpayment default is cured
or waived or ceases to exist or on which the Designated Senior Debt related
thereto is discharged or paid in full.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the Holders of Notes to
accelerate the maturity thereof in accordance with the Indenture. See "--
Events of Default." The Indenture will further require that the Company
promptly notify the holders of Senior Debt if payment of the Notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. As of March 31, 1997,
the total amount of Senior Debt outstanding was $73.5 million. Although the
Indenture will limit, subject to certain financial tests, the amount of
additional Indebtedness, including Senior Debt, that the Company and its
Subsidiaries can incur, under certain circumstances, the amount of such
Indebtedness could be substantial and, in any case, said Indebtedness may be
Senior Debt. See " Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock."
"Designated Senior Debt" means (i) Indebtedness of the Company under the New
Credit Facility and (ii) any other Senior Debt permitted under the Indenture,
which, at the date of creation thereof or determination, has an aggregate
principal amount outstanding of, or under which at the date of creation
thereof or determination, the holders thereof are committed to lend, at least
$20.0 million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Debt as "Designated Senior Debt" for
purposes of the Indenture.
"Senior Debt" means Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred or assumed, unless the
instrument under which such Indebtedness is incurred expressly provides that
such Indebtedness shall not be senior in right of payment to the Notes.
Notwithstanding the foregoing, Senior Debt will not include (i) Indebtedness
evidenced by the Notes, (ii) Indebtedness that is by its terms subordinate or
junior in right of payment to any other Indebtedness of the Company, (iii) any
liability for federal, state, local or other taxes owed or owing by the
Company, (iv) Indebtedness of the Company to any of its Subsidiaries, (v)
Indebtedness for the purchase of goods or materials in the ordinary course of
business except purchase money Indebtedness secured by a security interest in
or a Lien upon the goods or materials purchased, (vi) that portion of any
Indebtedness that is incurred in violation of the Indenture, (vii)
Indebtedness which is represented by Disqualified Stock, (viii) Indebtedness
of or amounts owing by the Company for compensation to employees, (ix) amounts
owing under leases (other than Capital Lease Obligations), and (x) the NOL
Note.
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MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control. Upon the occurrence of a Change of Control, each Holder
of Notes will have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at a
Purchase Price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to
the Purchase Date). Within 30 days following any Change of Control, the
Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
On the related Purchase Date, which is at least 30 but no more than 60 days
from the date on which the Company mails notice of the Change of Control, the
Company will, to the extent permitted under applicable law, (1) accept for
payment all Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, (2) deposit with the Paying Agent an amount equal to the
Purchase Price, together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Purchase Date in respect of all Notes or
portions thereof so tendered and accepted for repurchase and (3) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent will
promptly mail to each Holder of Notes so repurchased the amount due in
connection with such Notes, and the Company will promptly issue a new Note,
and the Trustee, upon written request from the Company will authenticate and
mail or deliver (or cause to be transferred by book entry) to each relevant
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Purchase Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Principals or their Related Parties (as defined
below), (ii) the approval by the requisite vote of the stockholders of the
Company of a plan of liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Wingate Principals, Borg-Warner Principals, and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than
40% of the voting stock of the Company and at such time neither the Wingate
Principals and their Related Parties nor the Borg-Warner Principals and their
Related Parties beneficially own, directly or indirectly (including through
the
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Business Trust), more voting stock of the Company than such "person", (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors or (v) the first day on which the Company
ceases for any reason to own, beneficially and legally, 100% of the
outstanding Capital Stock of the Operating Subsidiary.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under
applicable law. Accordingly, the ability of a Holder of Notes to require the
Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
"Borg-Warner Principals" means Borg-Warner Security Corporation and the
Management Group.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) (x) was a member of such Board
of Directors on the date of the Indenture or (y) was identified to become a
Director on Exhibit B to the Contribution Agreement or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Management Group" means the individuals listed as such in the Indenture.
"Principals" means either the Borg-Warner Principals or the Wingate
Principals, as the case may be.
"Related Party" with respect to either the Wingate Principals or the Borg-
Warner Principals means (A) any controlling stockholder, 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an
individual) of such Principals or (B) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
the Borg-Warner Principals, the Wingate Principals and/or such other Persons
referred to in the immediately preceding clause (A).
"Wingate Principals" means Wingate Partners, L.P., Wingate Affiliates, L.P.
and the Management Group.
Asset Sales. The Indenture provides that the Company will not, and will not
permit any of its Subsidiaries to, engage in an Asset Sale unless (i) the
Company (or the Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by
a resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash or Cash
Equivalents; provided that the amount of (x) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet) of the Company or
any of its Subsidiaries (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any guarantee thereof)
that are assumed by the transferee of any such assets pursuant to an agreement
that releases the Company or such Subsidiary from further liability and (y)
any securities received by the Company or any such Subsidiary from such
transferee that are immediately converted by the Company or such Subsidiary
into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents
received), shall be deemed to be cash or Cash Equivalents for purposes of this
provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Subsidiary may apply such Net Proceeds, at its
option, (a) to permanently reduce Senior Debt, including without limitation
Indebtedness under the New Credit Facility (and to correspondingly reduce
commitments with respect thereto) or (b) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets, in each case, in the same or a similar
line of business as the Company
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was engaged in on the date of the Asset Sale. Pending the final application of
any such Net Proceeds, the Company or the applicable Subsidiary may
temporarily reduce Senior Debt, including without limitation Indebtedness
under the New Credit Facility or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of
this paragraph will be deemed to constitute "Excess Proceeds." Within 30 days
after the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company will be required to make an offer to all Holders of Notes (an "Asset
Sale Offer") to purchase an aggregate principal amount of Notes equal to such
Excess Proceeds (the "Offer Amount"), at a Purchase Price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Purchase Date, in
accordance with the procedures set forth in the Indenture and described in
such notice.
The Company will comply with the requirements of Rule 14(e)-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of an Asset Sale.
On the related Purchase Date, which is at least 30 but no more than 60 days
from the date on which the Company mails notice of an Asset Sale Offer, the
Company will, to the extent permitted under applicable law, (i) accept for
payment all Notes or portions thereof properly tendered pursuant to the Asset
Sale Offer in an aggregate principal amount not in excess of the Offer Amount,
(ii) deposit with the Paying Agent an amount equal to the Purchase Price,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Purchase Date, in respect of all Notes or portions thereof so
tendered and accepted for repurchase and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions
thereof being repurchased by the Company. The Paying Agent will promptly mail
to each Holder of Notes so tendered the amount due in connection with such
Notes, and the Company will promptly issue a new Note, and the Trustee, upon
written request from the Company will authenticate and mail or deliver (or
cause to be transferred by book entry) to each relevant Holder a new Note,
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided, that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. The Company will publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the
Purchase Date.
To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company or the
applicable Subsidiary may use any remaining Excess Proceeds for any purpose
not prohibited by the Indenture. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the Offer Amount, the Trustee shall
select the Notes to be purchased on a pro rata basis. Upon completion of an
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Restrictions under Senior Debt. The Indenture provides that prior to
complying with the provisions of the covenants described above relating to a
Change of Control Offer or an Asset Sale Offer, but in any event within 90
days following a Change of Control or the accumulation of Excess Proceeds in
excess of $5.0 million, the Company shall (i) repay, or otherwise make
arrangements satisfactory to the holders of all Senior Debt for the repayment
of, all Senior Debt in full or offer to repay all such Senior Debt in full and
have repaid, or otherwise made arrangements satisfactory to the holders of all
Senior Debt for the repayment of, all Senior Debt in full of any lender who
accepts such offer; and/or (ii) obtain the requisite consents under the New
Credit Facility or under agreements relating to other Senior Debt to purchase
Notes as required by the Indenture.
The New Credit Facility prohibits the Company from purchasing any Notes and
also will provide that certain change of control events with respect to the
Company and asset sales would constitute a default thereunder. Any future
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event the Company becomes
obligated pursuant to the Indenture to purchase Notes at a time when the
Company is contractually prohibited by the New Credit Facility or any other
such agreement from purchasing Notes, the Company could seek the consent of
its lenders to the purchase of Notes or could attempt to refinance the
borrowings under the agreements that contain such prohibition. If the Company
does not obtain such a consent or repay such borrowings, the Company would
remain contractually
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prohibited from purchasing Notes. In such case, the Company's failure to make
the required Change or Control Offer or Asset Sale Offer or to purchase
tendered Notes would constitute an Event of Default under the Indenture which
would, in turn, constitute a default under the New Credit Facility and any
other Senior Debt which contains terms which would result in an event of
default upon the occurrence of an Event of Default under the Notes. In such
circumstances, the Company's ability to make payments to the Holders of Notes
would be subject to the subordination provisions of the Indenture.
CERTAIN COVENANTS
Restricted Payments. The Indenture provides that the Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any other payment or distribution in
respect of the Company's Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company)
or to the direct or indirect holders of the Company's Equity Interests in
their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends
or distributions payable to the Company or any Wholly Owned Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any direct or indirect parent of the
Company or other Affiliate of the Company (other than a Wholly Owned
Subsidiary of the Company); (iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness that is subordinated to the Notes; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
of the Indenture (excluding Restricted Payments permitted by clauses (w)
and (x) of the next succeeding paragraph), is less than the sum of (i) 50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the date of the Indenture of Equity Interests of
the Company or of debt securities of the Company that have been converted
into or exchanged for such Equity Interests (other than Equity Interests
(or convertible debt securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of the Indenture is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment plus (iv) $500,000.
The foregoing provisions will not prohibit (v) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (w) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
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acquisition shall be excluded from clause (c)(ii) of the preceding paragraph;
(x) the defeasance, redemption, repurchase or payment of principal of
Indebtedness that is subordinated to the Notes with the net cash proceeds from
an incurrence of Permitted Refinancing Debt or the substantially concurrent
sale (other than to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph; (y) (A) the acquisition or assumption of the indebtedness
evidenced by the Bond Agreement by and among New Jersey Economic Development
Authority, Wells Fargo Armored, the purchasers thereunder, and Mellon Bank,
N.A., as trustee, dated June 1, 1984, in the original principal amount of $1.0
million (the "IRB"), (B) the payment of principal, interest, or premiums, if
any, in connection with the redemption, repurchase or maturity of the IRB, (C)
the payment or reimbursement of costs, expenses and taxes as may be incurred
by Wells Fargo Armored after the Closing Date with respect to maintaining the
property to which the IRB relates, (D) the payment to the original holders
under the IRB or their assignees of any amount required to cancel or retire
the IRB and the indebtedness evidenced thereby and (E) the reimbursement of
costs and expenses incurred by Wells Fargo Armored in redeeming or
repurchasing the IRB at the request or direction of the Company; and (z) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company held by any
member of the Company's (or any of its Subsidiaries') management pursuant to
any management equity subscription agreement or stock option agreement in
effect as of the date of the Indenture; provided that (i) the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $250,000 in any twelve-month period plus the aggregate cash
proceeds received by the Company during such twelve-month period from any
reissuance of Equity Interests by the Company to members of management of the
Company and its Subsidiaries; (ii) the cash proceeds from any such reissuance
shall be excluded from clause (c)(ii) of the preceding paragraph; and (iii) no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction.
Notwithstanding anything contained in the Indenture to the contrary, the
events described in clause (y) of the preceding paragraph (each, an "IRB
Payment Event") shall be excluded from the definition of Restricted Payments.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
Incurrence of Indebtedness and Issuance of Preferred Stock. The Indenture
provides that the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of Disqualified
Stock or preferred stock (other than to the Company or a Wholly Owned
Subsidiary of the Company); provided, however, that the Company and its
Subsidiaries may incur Indebtedness (including Acquired Debt) and the Company
(but not any of its Subsidiaries) may issue shares of Disqualified Stock, if
the Fixed Charge Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at least 2.0 to
1.0, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company of Senior Debt under the New Credit
Facility and letters of credit thereunder in an aggregate principal amount
at any time outstanding (with letters of credit (other than
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Insurance Letters of Credit) being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) not to exceed an amount equal to $100.0 million under the New
Credit Facility less the aggregate amount of all Net Proceeds of Asset
Sales applied to permanently reduce the commitments with respect to such
Indebtedness pursuant to the covenant described above under the caption
"Repurchase at the Option of Holders--Asset Sales";
(ii) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes;
(iv) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness represented by Capital Lease Obligations, mortgage
financings, purchase money obligations or Acquired Debt, in each case
incurred for the purpose of financing or refinancing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Subsidiary, in an
aggregate principal amount not to exceed $5.0 million at any time
outstanding;
(v) the incurrence in the ordinary course of business by the Company or
any of its Subsidiaries of Indebtedness in respect of Insurance Letters of
Credit;
(vi) the incurrence by any Subsidiary of the Company of Indebtedness
under a Guarantee of any Indebtedness permitted under the Indenture to be
incurred by the Company; provided that (a) in the case such Guarantee is of
Indebtedness that is pari passu in right of payment with the Notes, all
obligations with respect to the Notes are Guaranteed on an equal and
ratable basis with the Indebtedness so Guaranteed, and (b) in the case such
Guarantee is of Indebtedness that is subordinated in right of payment to
the Notes, all obligations with respect to the Notes are Guaranteed on a
senior basis reflecting the subordination of the Indebtedness so Guaranteed
on terms substantially similar to, or more favorable to senior creditors
than, those contained in the Indenture;
(vii) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Indenture to be incurred;
(viii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (i) if the Company is
the obligor of such Indebtedness, such Indebtedness is evidenced by a note
and expressly subordinate to the payment in full of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance, transfer or other
disposition of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Wholly Owned Subsidiary and
(B) any sale, transfer or other disposition of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned Subsidiary shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Subsidiary, as the case may be;
(ix) the incurrence by the Company or any of its Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted
by the terms of this Indenture to be outstanding;
(x) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in respect of bid, performance or advance payment bonds, and
appeal and surety bonds;
(xi) the incurrence by the Company of Indebtedness represented by the
IRB;
(xii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed $10.0 million; and
(xiii) the incurrence by the Company or any of its Subsidiaries of
interest, fees or other expenses on Indebtedness otherwise permitted under
this covenant, provided that such interest, fees or other expenses are
payable on a current basis no less frequently than semi-annually and are
paid when due or within any applicable customary grace period thereafter,
not to exceed thirty days.
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For purposes of determining compliance with this covenant, (i) in the event
that an item of Indebtedness meets the criteria of more than one of the types
of Indebtedness permitted by this covenant, the Company in its sole discretion
will classify such item of Indebtedness and will only be required to include
the amount and type of each class of Indebtedness in the test specified in the
first paragraph of this covenant or in one of the clauses of the second
paragraph of this covenant; (ii) the amount of Indebtedness issued at a price
which is less than the principal amount thereof shall be equal to the amount
of liability in respect thereof determined in accordance with GAAP unless the
Company shall elect upon written notice to the Trustee at the time of issuance
of such Indebtedness to qualify the extended principal amounts or final
accreted value thereof as permitted under the terms of the Indenture; and
(iii) the amount of Indebtedness represented by a Guarantee of a primary
obligation of another Person shall be deemed to be the lower of (x) an amount
equal to the maximum amount of the primary obligation (including without
limitation all principal, premiums, if any, interest, fees and all other
amounts in respect thereof) in respect of which such Guarantee is made and (y)
the maximum amount for which such guaranteeing Person may be liable pursuant
to the terms of the applicable Guarantee, which, in any case in which such
Guarantee consists solely of the granting of a Lien on any asset of such
guaranteeing Person, shall be limited to the fair market value of such asset.
Liens. The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company
or any of its Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of the Indenture; (b) the New Credit Facility as in effect as of the date
of the Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Facility as in effect on the date of the
Indenture, (c) the Indenture and the Notes, (d) applicable law, (e) any
instrument or agreement governing Acquired Debt of the Company or any of its
Subsidiaries or Capital Stock of a Person acquired by the Company or any of
its Subsidiaries as in effect at the time of such acquisition (except to the
extent such Acquired Debt was incurred or Capital Stock was issued in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred and provided, further,
that the Consolidated Cash Flow of such Person is not taken into account in
determining whether such Indebtedness is permitted, (f) by reason of customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (g) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, or (h) Permitted Refinancing Debt, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Debt are no
more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
Merger, Consolidation, or Sale of Assets. The Indenture provides that the
Company may not consolidate or merge with or into (whether or not the Company
is the surviving corporation), or permit any other Person to consolidate or
merge with or into the Company, nor will the Company sell, assign, transfer,
lease, convey or
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otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company shall be the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made (the "Surviving Entity"), is a
corporation organized and existing under the laws of the United States, any
state thereof, or the District of Columbia; (ii) the Surviving Entity assumes
by supplemental indenture in a form reasonably satisfactory to the Trustee all
of the obligations of the Company under the Notes and this Indenture; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iv) immediately after giving
effect to such transaction, the Consolidated Net Worth of the Company or the
Surviving Entity, as the case may be, would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction;
and (v) immediately after giving effect to such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the beginning
of the applicable four quarter period, the Company or the Surviving Entity, as
the case may be, would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates. The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend
any contract, agreement, understanding, loan, advance or guarantee with, or
for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that could
have been reasonably obtained in a comparable transaction by the Company or
such Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a majority
of the disinterested members of the Board of Directors and (b) with respect to
any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Company of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (u) the Contribution Agreement and the
transactions contemplated thereunder, including without limitation the
issuance of the NOL Note, (v) the stockholders agreement, entered into on the
Issue Date, among the Company and Wells Fargo Armored Service Corporation, the
Business Trust and Wingate Partners, L.P., (w) the indemnification of officers
and directors of the Company or its Subsidiaries in accordance with the
charters and by-laws of the Company and its Subsidiaries or pursuant to
director indemnification agreements, (x) any employment agreement entered into
by the Company or any of its Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Subsidiary, (y)
transactions between or among the Company and/or its Wholly Owned Subsidiaries
and (z) Restricted Payments, Permitted Investments and IRB Payment Events that
are permitted by the provisions of the Indenture described above under the
caption "Certain Covenants--Restricted Payments," in each case, shall not be
deemed Affiliate Transactions.
Notwithstanding the foregoing, clause (ii) in the preceding paragraph shall
not apply to any agreement for the provision of security services and related
goods in connection therewith between the Company or any of its Subsidiaries
and an Affiliate that (x) provides for rates that are at least as favorable as
standard published rates then offered by the Affiliate in question or (y) is
entered into pursuant to a commercially bid arrangement in which at least two
Persons that are not Affiliates have been asked to participate.
Sale and Leaseback Transactions. The Indenture provides that the Company
will not, and will not permit any of its Subsidiaries to, enter into any sale
and leaseback transaction; provided that the Company may enter into a sale and
leaseback transaction if (i) the Company could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and
leaseback transaction pursuant to the Fixed Charge Coverage
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Ratio test set forth in the first paragraph of the covenant described above
under the caption "Certain Covenants--Incurrence of Additional Indebtedness
and Issuance of Preferred Stock" and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described above under the caption
"Certain Covenants--Liens," (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as
determined in good faith by the Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, the covenant
described above under the caption "Certain Covenants--Asset Sales."
No Intervening Subordinate Debt. The Indenture provides that (i) the Company
will not incur, create, issue, assume, Guarantee or otherwise become liable
for any Indebtedness that is subordinate or junior in right of payment to any
Senior Debt and senior in right of payment to the Notes, and (ii) no Guarantor
will incur, create, issue, assume, Guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to its
senior debt and senior in any respect in right of payment to the Subsidiary
Guarantees.
Payments for Consent. The Indenture provides that neither the Company nor
any of its Subsidiaries will, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
of any Notes for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid or is paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Reports. The Indenture provides that, whether or not required by the rules
and regulations of the Securities and Exchange Commission (the "Commission"),
so long as any Notes are outstanding, the Company will, and if the Company is
required to file financial statements for any Guarantor, shall cause such
Guarantor to, furnish to the Holders of Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company and/or any Guarantor were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the certified independent
accountants of the Company and/or any Gurantor and (ii) all information that
would be required to be filed with the Commission on Form 8-K if the Company
and/or any Gurantor were required to file such reports. In addition, whether
or not required by the rules and regulations of the Commission, the Company
and/or any Guarantor will file a copy of all such information and reports with
the Commission for public availability (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company has agreed that,
for so long as any Notes remain outstanding, it will, and will cause any
Guarantor to, furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii) default in
payment when due of the principal, Redemption Price or Purchase Price of the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (iii) failure by the Company to comply with the provisions
described under the captions "Repurchase at the Option of Holders"; (iv)
failure by the Company for 30 days after notice from the Trustee or Holders of
not less than 25% of the aggregate principal amount of the Notes outstanding
to comply with the provisions described under the captions "Certain
Covenants--Restricted Payments" or "Incurrence of Indebtedness and Issuance of
Preferred Stock"; (v) failure by the Company for 60 days after notice from the
Trustee or Holders of not less than 25% of the aggregate principal amount of
the Notes outstanding to comply with any of its other agreements in the
Indenture or the Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness
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for money borrowed by the Company or any of its Subsidiaries (or the payment
of which is Guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $7.5 million or more; (vii) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating
in excess of $7.5 million (excluding judgments to the extent covered by
insurance in respect of which coverage has not been disclaimed or denied),
which judgments are not paid, discharged or stayed for a period of 60 days;
(viii) a Subsidiary Guarantee is held in any judicial proceeding to be
unenforceable or invalid, or with respect to any Guarantor that is a
Significant Subsidiary, the Subsidiary Guarantee of such Guarantor ceases to
be in full force and effect; and (ix) certain events of bankruptcy or
insolvency with respect to the Company, any Guarantor or any Subsidiary that
is obligated under the Indenture to execute and deliver a Subsidiary
Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Upon such acceleration, the
entire principal amount of, and accrued and unpaid interest and Liquidated
Damages, if any, on the Notes shall become immediately due and payable, unless
all Events of Default specified in such acceleration notice (other than any
Event of Default in respect of non-payment of principal, premium or interest,
if any, which has become due solely by reason of such declaration of
acceleration) shall have been cured. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Guarantor or any Subsidiary that
is obligated under the Indenture to execute and deliver a Subsidiary
Guarantee, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal, Redemption Price, Purchase Price, interest or Liquidated Damages,
if any) if it determines in good faith that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to the
first date on which the Company may redeem Notes at its option as described in
the first paragraph under "Optional Redemption" by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such first date, then the premium specified in the Indenture for an optional
redemption on such first date shall also become immediately due and payable to
the extent permitted by law upon the acceleration of the Notes.
The Holders of the required percentage of the aggregate principal amount of
the Notes then outstanding as described under "Amendment, Supplement and
Waiver," by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and, in certain
circumstances MAY RESCIND ANY ACCELERATION WITH RESPECT TO THE NOTES AND ITS
CONSEQUENCES.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or of any Guarantor, as such, shall have any liability for any obligations of
the Company under the Notes or the Indenture or of a Guarantor under the
Subsidiary Guarantee, 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 of liabilities under the federal
securities laws is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of the
Obligations of the Company and the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal or
Redemption Price of, and interest and Liquidated Damages, if any, on such
Notes when such payments are due from the trust referred to below, (ii) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Company may, at its option and at any time, elect to have the
Obligations of the Company released with respect to certain covenants
(including those described under "Repurchase at the Option of Holders") 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,
rehabilitation 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 government
securities, or a combination thereof, in such amounts as will be sufficient
(without reinvestment), in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal or Redemption Price of,
and interest and Liquidated Damages, if any, on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or
to a particular redemption date; (ii) in the case of Legal Defeasance, the
Company 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 outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing
of funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit (it being understood that
such condition shall not be deemed to be satisfied until such 91st day); (v)
such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the
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Company or any of its Subsidiaries is bound; (vi) the Company must have
delivered to the Trustee an opinion of counsel to the effect that, after the
91st day after the deposits, the trust funds will not be subject to the effect
of an avoidance or other order under any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii)
the Company must deliver to the Trustee an Officers' Certificate stating that
the deposit was not made by the Company with the intent of preferring the
Holders of Notes over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company or
others; and (viii) the Company must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed. The registered Holder of a Note will be treated as the owner of it
for all purposes.
The Notes will be subject to certain transfer restrictions as described
below under "Notice to Investors" and certificates evidencing the Notes will
bear a legend to such effect. No service charge will be made for any
registration of transfer, exchange or redemption of Notes, except in certain
circumstances for any tax or other governmental charge that may be imposed in
connection therewith.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided below, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, tender offer or exchange
offer for, Notes), and any existing default or compliance with any provision
of the Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal, Redemption Price or Purchase
Price of or change the fixed maturity of any Note or alter the provisions with
respect to the redemption of the Notes (other than a payment required by one
of the covenants described above under the caption "Repurchase at the Option
of Holders"), (iii) reduce the rate of or change the time for payment of
interest or Liquidated Damages, if any, on or with respect to any Note, (iv)
waive a Default or Event of Default in the payment of principal, Redemption
Price or Purchase Price of, or interest or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration), (v) make any Note
payable in money other than that stated in the Notes, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of principal, Redemption Price
or Purchase Price of, or interest or Liquidated Damages, if any, on the Notes,
(vii) waive a redemption or repurchase payment with respect to any Note (other
than a payment required by one of the covenants described above under the
caption "Repurchase at the Option of Holders"), or (viii) make any change in
the foregoing amendment and waiver provisions.
Old Notes that remain outstanding after the consummation of the Exchange
Offer, if any, and New Notes issued in connection with the Exchange Offer will
be entitled to vote or consent on all matters as a single class of securities
under the Indenture.
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Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to the Trustee
against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes will be issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and integral multiples thereof.
Global Notes; Book-Entry Form. New Notes will be evidenced by one or more
global notes (collectively, the "Global Note") which will be deposited with
the Trustee as custodian for The Depository Trust Company, New York, New York
("DTC") and registered in the name of Cede & Co. ("Cede") as DTC's nominee.
Except as set forth below, record ownership of the Global Notes may be
transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
An investor may hold its interests in the Global Note directly through DTC
if such investor is a participant in DTC, or indirectly through organizations
which are participants in DTC (the "Participants"). Transfers between
Participants will be effected in the ordinary way in accordance with DTC rules
and will be settled in same-day funds. The laws of some states require that
certain persons take physical delivery of securities in definitive form.
Consequently, the ability to transfer a beneficial interest in the Global Note
to such person may be limited.
Investors who are not Participants may beneficially own interests in the
Global Notes held by DTC only through Participants, or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). So long as Cede, as nominee of DTC, is the
registered owner of the Global Notes, Cede for all purposes will be considered
the sole Holder of the Global Notes. Except as provided below, owners of
beneficial interests in the Global Notes will not be entitled to have
certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered Holders thereof.
Payment of principal, Redemption Price and Purchase Price of, and interest
and Liquidated Damages, if any, on the Global Notes will be made to Cede, the
nominee for DTC, as the registered owner of the Global
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Notes by wire transfer of immediately available funds. None of the Company,
the Trustee or 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 Notes or for maintaining,
supervising, or reviewing any records relating to such beneficial ownership
interests.
The Company has been informed by DTC that, with respect to any payment of
principal, Redemption Price and Purchase Price of, and interest and Liquidated
Damages, if any, on the Global Notes, DTC's practice is to credit
Participants' accounts on the payment date therefor with payments in amounts
proportionate to their respective beneficial interests in the Notes
represented by the Global Notes, as shown on the records of DTC, unless DTC
has reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in Notes
represented by the Global Notes held through such Participants will be the
responsibility of such Participants, as is now the case with securities held
for the accounts of customers registered in "street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Notes represented by the Global Notes to
pledge such interest to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest, may be affected
by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar or paying agent under
the Indenture) 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. DTC has advised the
Company that it will take any action permitted to be taken by a Holder of New
Notes only at the direction of one or more Participants to whose account with
DTC interests in the Global Notes are credited and only in respect of the
principal amount of the Notes represented by the Global Notes as to which such
Participant or Participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company 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 to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to the 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 may include
certain other organizations such as the Initial Purchasers. Certain of such
Participants (or their representatives), together with other entities, own
DTC. 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.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the
Company will cause New Notes to be issued in definitive form in exchange for
the Global Notes. None of the Company, the Trustee or any of their respective
agents will have any responsibility for the performance by DTC, their
Participants or Indirect Participants of their respective obligations under
the rules and procedures governing their operations, including maintaining,
supervising or reviewing the records relating to, or payments made on account
of, beneficial ownership interests in Global Notes.
An investor may request that their New Note be issued in certificated form,
and may request at any time that their interest in a Global Note be exchanged
for a New Note in certificated form. Finally, certificated New Notes may be
issued in exchange for New Notes represented by the Global Notes if no
successor depositary is appointed by the Company or in certain other
circumstances set forth in the Indenture.
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Same-Day Settlement and Payment. The Indenture requires that payments in
respect of the Notes represented by the Global Notes (including principal,
Redemption Price, Purchase Price, interest and Liquidated Damages, if any) be
made by wire transfer of immediately available funds to the accounts specified
by Cede, the nominee for DTC. With respect to certificated securities, the
Company will make all payments of principal, Redemption Price, Purchase Price,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no
such account is specified, by mailing a check to each such Holder's registered
address. Secondary trading in long-term notes and debentures of corporate
issuers not held in DTC is generally settled in clearing-house or next-day
funds. In contrast, the New Notes represented by the Global Notes are expected
to trade in the Depositary's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such New Notes will, therefore,
be required by the Depositary to be settled in immediately available funds.
The Company expects that secondary trading in the certificated securities will
also be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person or
assumed in connection with the acquisition of assets from such other Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person or such acquisition of assets, and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of
a Person shall be presumed to be control, which presumption may be rebutted by
evidence to the contrary.
"Asset Sale" means (A) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
other than in the ordinary course of business consistent with past practices
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole will be governed by the provisions of the Indenture described above
under the caption "Repurchase at the Option of Holders--Change of Control"
and/or the provisions described above under the caption "Merger, Consolidation
or Sale of Assets" and not by the provisions of the "Asset Sale" covenant), or
(B) the issue or sale by the Company or any of its Subsidiaries of Equity
Interests of any of the Company's Subsidiaries, in the case of either clause
(A) or (B), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $500,000 or (b)
for net proceeds in excess of $500,000. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned Subsidiary of the Company
or by a Subsidiary of the Company to the Company or to a Wholly Owned
Subsidiary of the Company, (ii) an issuance or sale of Equity Interests by a
Subsidiary of the Company to the Company or to a Wholly Owned Subsidiary of
the Company, (iii) a Restricted Payment that is permitted by the covenant
described above under the caption "Certain Covenants--Restricted Payments",
(iv) a disposition of inventory in the ordinary course of business, and (v) a
sale or other disposition of damaged, worn out or obsolete property that is no
longer useful in the conduct of the business of the Company and its
Subsidiaries in the ordinary course of business will not be deemed to be Asset
Sales.
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"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or other business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) in the equity of such association or entity, (iii) in the case of
a partnership, partnership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (ii) demand and time deposits, certificates of deposit
and eurodollar time deposits with maturities of six months or less from the
date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any lender party to the
New Credit Facility or with any domestic commercial bank having capital and
surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or
better, (iii) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (i) and (ii) above
entered into with any financial institution meeting the qualifications
specified in clause (ii) above and (iv) commercial paper rated at least P-1 by
Moody's Investors Service, Inc. or at least A-1 by Standard & Poor's Rating
Group and in each case maturing within six months after the date of
acquisition.
"Consolidated Cash Flow" means, without duplication, with respect to any
Person for any period, the Consolidated Net Income of such Person for such
period plus, to the extent deducted in computing Consolidated Net Income: (i)
an amount equal to any net loss realized in connection with an Asset Sale,
plus (ii) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, plus (iii) consolidated interest expense of
such Person and its Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations, but excluding fees and
expenses related to Insurance Letters of Credit), plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash charges (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Subsidiaries for such period, in each
case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in same
proportion) that the net income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be paid as a dividend to
the Company by such Subsidiary without prior governmental approval (that has
not been obtained), and without direct or indirect restriction pursuant to,
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the net income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance
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with GAAP; provided that there shall be excluded therefrom, without
duplication: (i) all items classified as extraordinary, unusual or
nonrecurring gains or losses; (ii) any net loss or net income of any other
Person (other than a Subsidiary of such Person), except to the extent of the
amount of dividends or other distributions actually paid to such Person or its
Subsidiaries by such other Person during such period; (iii) the net income of
any Person acquired by such Person or a Subsidiary thereof in a pooling-of-
interests transaction for any period prior to the date of such acquisition;
(iv) gains (but not losses) in respect of Asset Sales by such Person or its
Subsidiaries; (v) the net income (but not net loss) of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or
distributions to such Person is restricted by the terms of its constituent
documents or any agreement, instrument, contract, judgment, order, decree,
statute, rule, governmental regulation or otherwise, except for any dividends
or distributions actually paid by such Subsidiary to such Person or another
Subsidiary of such Person; (vi) with regard to a Subsidiary of such Person
(other than a Wholly Owned Subsidiary of such Person), any aggregate net
income (or loss) in excess of such Person's pro rata share of such
Subsidiary's net income (or loss); and (vii) the cumulative effect of any
change in accounting principles.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the consolidated stockholders' equity of such Person and its consolidated
Subsidiaries, as determined in accordance with GAAP, less, to the extent
included therein, all amounts, if any, attributable to Disqualified Stock.
"Contribution Agreement" means that certain Contribution Agreement, dated as
of November 28, 1996, by and among Borg-Warner Security Corporation, Wells
Fargo Armored Service Corporation, the Company, Loomis Holding Corporation,
Loomis Armored Inc. and Business Trust.
"Default" means any event, occurrence or condition that is or with the
passage of time or the giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock of any Person 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 or with the
passage of time, matures or is redeemable, pursuant to a sinking fund
obligation or otherwise (excluding any redemption at the option of the issuer
of such Capital Stock on a date that is at least 91 days after the date on
which the Notes mature), or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means all Indebtedness of the Company and its
Subsidiaries (other than under the New Credit Facility) in existence on the
Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person
and its Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding fees and expenses related to Insurance Letters of
Credit) plus (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period plus (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one
of its Subsidiaries (whether or not such Guarantee or Lien is called upon)
plus (iv) the product of (a) all cash dividend payments (and non-cash dividend
payments in the case of a Person that is a Subsidiary) on any series of
preferred stock of such Person, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
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"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than repayments of revolving credit borrowings) or issues
or redeems preferred stock subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, or such issuance or redemption of
preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related
financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date shall be
deemed to have occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded, and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession of the United States, as in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, without duplication, (i)
any liability of such Person (a) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, bankers' acceptance
or note purchase facility; (b) evidenced by a bond, note, debenture or similar
instrument; (c) for the balance deferred and unpaid of the purchase price for
any property or service or any obligation upon which interest charges are
customarily paid (except for accrued expenses or trade payables arising in the
ordinary course of business); (d) for the payment of money relating to a lease
that is required to be classified as a Capitalized Lease Obligation in
accordance with GAAP; or (e) for the maximum fixed repurchase price of any
Disqualified Stock of such Person plus accrued and unpaid dividends thereon;
(ii) any obligation of others secured by a Lien on any asset of such Person,
whether or not any obligation secured thereby has been assumed, by such
Person; (iii) any obligations of such Person under any Hedging Obligation; and
(iv) any Guarantee of such Person or any obligation of such Person which in
economic effect is a guarantee with respect to any Indebtedness of another
Person.
For purposes of this definition, "maximum fixed repurchase price" of any
Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified 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
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Disqualified Stock, such fair market value shall be determined in good faith
by the board of directors of the Person issuing such Disqualified Stock.
"Insurance Letters of Credit" means letters of credit issued for the account
of the Company or any Wholly Owned Subsidiary of the Company for purposes of
(i) securing certain deductible amounts payable by the Company or a Wholly
Owned Subsidiary of the Company under cargo, automobile or general liability
insurance policies or (ii) complying with workers' compensation requirements
under applicable law.
"Investment" by any Person means any direct or indirect loan, advance (or
other extension of credit) or capital contribution (by means of any transfer
of cash or other property) to another Person or any other payments for
property or services for the account or use of another Person, including
without limitation the following: (i) the purchase or acquisition of any
Capital Stock or other evidence of beneficial ownership in another Person;
(ii) the purchase, acquisition or Guarantee of the Indebtedness of another
Person or the issuance of a "keep well" with respect thereto; and (iii) the
purchase or acquisition of the business or assets of another Person; but shall
exclude: (a) accounts receivable and other extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices;
(b) the acquisition of property and assets from equipment suppliers and other
vendors in the ordinary course of business, provided that such property and
assets do not represent all or substantially all of the production capacity of
the supplier or other vendor; and (c) the acquisition of assets, Capital Stock
or other securities by the Company for consideration consisting solely of the
Capital Stock of the Company other than Disqualified Stock. If the Company or
any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed
of.
"Issue Date" means the date on which the Notes are first authenticated and
delivered under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"NOL Note" means the note having a principal amount of $6.0 million issued
by the Company to the Business Trust pursuant to the terms of the Contribution
Agreement.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received in connection with the sale or other disposition
of any non-cash consideration received in any Asset Sale), net of (i) the
direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (ii) taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (iii) amounts required to be
applied to the repayment of Indebtedness that is (a) secured by a Lien on the
asset or assets that were the subject of such Asset Sale or (b) Senior Debt,
the repayment of which is required either pursuant to the terms thereof, by
applicable law, or in order to obtain a necessary consent to such transaction,
and (iv) any reserves established in accordance with GAAP for adjustment in
respect of the sale price of such asset or assets or for any liabilities
associated with such Asset Sale; provided that any reversal of any such
reserve shall be added back in the determination of Net Proceeds.
"New Credit Facility" means that certain credit facility, dated as of the
Issue Date, by and among the Company and the banks party thereto, providing
for up to $115.0 million of revolving credit borrowings and letters of credit,
including any related notes, Guarantees, collateral documents, instruments and
agreements
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executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Paying Agent" means Marine Midland Bank or any other office or agency where
Notes may be presented for payment, as designated by the Company.
"Permitted Investments" means (a) any Investment in the Company or in a
Subsidiary of the Company that is a Guarantor; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes
a Subsidiary of the Company and a Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Subsidiary of the Company that is a Guarantor; (d) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with the covenant described above under the
caption "Repurchase at the Option of Holders--Asset Sales"; (e) any
obligations or shares of Capital Stock received in connection with or as a
result of a bankruptcy, workout or reorganization of the issuer of such
obligations or shares of Capital Stock; (f) any Investment received
involuntarily; (g) any Investment existing on the date of the Indenture; and
(h) Investments having an aggregate fair market value (together with all other
Investments made pursuant to this clause (h) and outstanding) at any time
outstanding not to exceed $1.0 million.
"Permitted Liens" means (i) Liens on assets of the Company securing the New
Credit Facility and other Senior Debt that was permitted by the terms of the
Indenture to be incurred; (ii) Liens on assets of Subsidiaries securing Senior
Guarantees; (iii) Liens in favor of the Company; (iv) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
the Company or any Subsidiary of the Company; provided that such Liens were in
existence prior to such merger or consolidation and were not incurred in
contemplation thereof and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or any Subsidiary of the
Company; (v) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to such acquisition and were not incurred in contemplation
thereof and do not extend to any assets other than those so acquired by the
Company or any Subsidiary of the Company; (vi) Liens to secure the performance
of statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business (or
to secure reimbursement obligations in respect of letters of credit issued in
connection with any of the foregoing obligations); (vii) Liens existing on the
date of the Indenture; (viii) Liens to secure Indebtedness (including Capital
Lease Obligations) permitted by clause (iv) of the second paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock"
covering only the assets acquired with such Indebtedness; (ix) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (x) covenants, easements, rights-of-way,
restrictions, encroachments or other similar encumbrances not materially
impairing the marketability of the property encumbered thereby and not
interfering in any material respect with the use of such property or with the
ordinary conduct of the business of the Company or any Subsidiary; (xi) Liens
to secure any Indebtedness which is pari passu with or subordinate in right of
payment to the Notes, where (a) in the case of any Lien securing Indebtedness
that is pari passu in right of payment with the Notes, all obligations with
respect to the Notes are secured on an equal and ratable basis with the
Indebtedness so secured and (b) in the case of any Lien securing Indebtedness
that is subordinated in right of payment to the Notes, all obligations with
respect to the Notes are secured on a senior basis reflecting the
subordination of the Indebtedness so secured on terms substantially similar
to, or more favorable to senior creditors than, those contained in the
Indenture, in each case, until such time as such pari passu or subordinated
Indebtedness is no longer secured by such Lien, at which time such Lien
securing the Notes shall be automatically released; (xii) Liens to secure
obligations of the Company or its Subsidiaries under Insurance Letters of
Credit; (xiii) Liens with respect to judgments which have been stayed or for
which a bond
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having a value equal to the judgment amount has been posted, but only for so
long as such judgment has been stayed or such bond remains posted and
outstanding; (xiv) Liens securing the IRB or the property which is subject to
the IRB; (xv) Liens incurred in the ordinary course of business of the Company
or any Subsidiary of the Company with respect to obligations that do not
exceed $1.0 million at any one time outstanding and that (a) are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit (other than trade credit in the ordinary course of business) and (b) do
not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company
or such Subsidiary.
"Permitted Refinancing Debt" means any Indebtedness of the Company or any of
its Subsidiaries issued in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or refund other Indebtedness of
the Company any of its Subsidiaries; provided that (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Debt does not
exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith);
(ii) such Permitted Refinancing Debt has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Debt has a final maturity date later than the final maturity date
of, and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Purchase Date" means each date on which the Company is obligated to
repurchase Notes pursuant to the terms of the Indenture.
"Purchase Price" means the amount payable for the repurchase of any Note on
a Purchase Date, exclusive of accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Purchase Date, unless otherwise specifically
provided.
"Redemption Price" means the amount payable for the redemption of any Note,
exclusive of accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of redemption, unless otherwise specifically provided.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Senior Guarantees" means Guarantees by a Guarantor with respect to Senior
Debt of the Company.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date of the
Indenture.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or in a combination thereof) and (ii) any partnership or limited
liability company (a) the sole general partner or member or the managing
general partner or member of which is such Person or a Subsidiary of such
Person or (b) the only general partners or members of which are such Person or
of one or more Subsidiaries of such Person (or any combination thereof).
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"Transactions" means the formation of the Company and related transactions
contemplated by the Contribution Agreement.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by (i)
such Person or (ii) such Person and one or more Wholly Owned Subsidiaries of
such Person.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of one year
after the date of this Prospectus, they will make this Prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until , 1997 all dealers effecting transactions in
the New Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market. In negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the date of this Prospectus, 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 (including the expenses of one counsel
for the holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby will be
passed upon for the Company by Weil, Gotshal & Manges LLP, Dallas, Texas and
New York, New York.
100
<PAGE>
EXPERTS
The consolidated financial statements of Loomis, Fargo & Co., successor to
Loomis, included in this Prospectus have been audited by Ernst & Young LLP,
independent auditors, as stated in their report with respect thereto included
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing. The consolidated financial
statements of Wells Fargo Armored (a wholly-owned subsidiary of Borg-Warner
Security Corporation) included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report with
respect thereto included herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
101
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LOOMIS, FARGO & CO. (SUCCESSOR TO LOOMIS HOLDING CORPORATION)
Report of Independent Auditors............................................ F-2
Audited Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 1995, June 30, 1996 and De-
cember 31, 1996........................................................ F-3
Consolidated Statements of Operations for the fiscal years ended June
30, 1994, June 30, 1995 and June 30, 1996 and the six months ended De-
cember 31, 1996........................................................ F-4
Consolidated Statements of Cash Flows for the fiscal years ended June
30, 1994, June 30, 1995 and June 30, 1996 and the six months ended De-
cember 31, 1996........................................................ F-5
Notes to Consolidated Financial Statements.............................. F-6
Unaudited Consolidated Financial Statements:
Consolidated Balance Sheet as of March 31, 1997 (Unaudited)............. F-17
Consolidated Statements of Operations for the three months ended March
31, 1996 and March 31, 1997 (Unaudited)................................ F-18
Consolidated Statements of Cash Flows for the three months ended March
31, 1996 and March 31, 1997 (Unaudited)................................ F-19
Consolidated Statement of Stockholders' Deficit (Unaudited)............. F-20
Notes to Unaudited Consolidated Financial Statements.................... F-21
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
Independent Auditors' Report.............................................. F-26
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and December 31,
1996................................................................... F-27
Consolidated Statements of Operations for the fiscal years ended Decem-
ber 31, 1994, December 31, 1995 and December 31, 1996.................. F-28
Consolidated Statements of Stockholder's Equity for the fiscal years
ended December 31, 1994, December 31, 1995 and December 31, 1996....... F-29
Consolidated Statements of Cash Flows for the fiscal years ended Decem-
ber 31, 1994, December 31, 1995 and December 31, 1996.................. F-30
Notes to Consolidated Financial Statements.............................. F-31
</TABLE>
LFC HOLDING CORPORATION
LOOMIS FARGO & CO. (TEXAS)
LFC ARMORED OF TEXAS INC.
LOOMIS FARGO & CO. OF PUERTO RICO
(COLLECTIVELY, "THE GUARANTORS")
LFC Holding Corporation is a holding company whose only significant asset is
all of the capital stock of Loomis Fargo & Co. (Texas), the Operating
Subsidiary. All of the Company's business is conducted through the Operating
Subsidiary and its two wholly-owned subsidiaries, LFC Armored of Texas Inc.
and Loomis Fargo & Co. of Puerto Rico. Separate financial statements of the
Guarantors are not included herein because the guarantors are jointly and
severally liable with respect to the Company's obligations pursuant to the 10%
Senior Subordinated Notes due 2004, their guarantees are full and
unconditional, and the Guarantors have no operations independent of the
Company.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Loomis, Fargo & Co.
We have audited the accompanying consolidated balance sheets of Loomis,
Fargo & Co., successor to Loomis Holding Corporation as of June 30, 1995 and
1996 and December 31, 1996, and the related consolidated statements of
operations and cash flows for each of the three years in the period ended June
30, 1996 and the six months ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Loomis, Fargo
& Co. at June 30, 1995 and 1996 and December 31, 1996, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended June 30, 1996 and the six months ended December 31, 1996, in
conformity with generally accepted accounting principles.
As discussed in Note 7 to the financial statements, during the year ended
June 30, 1994, the Company changed its method of accounting for postretirement
benefits other than pensions.
/s/ Ernst & Young LLP
Houston, Texas
March 14, 1997
F-2
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
------------------ DECEMBER 31
1995 1996 1996
-------- -------- -----------
(IN THOUSANDS, EXCEPT FOR PER
SHARE DATA)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, including
restricted cash and cash equivalents of
$1,500, $1,505 and $1,536, respectively
(Note 2).................................... $ 1,902 $ 3,376 $ 2,469
Trade accounts receivable, net (Note 3)...... 6,394 8,515 10,235
Other receivables............................ 338 577 704
Parts and supplies........................... 619 322 267
Prepaid expenses............................. 2,915 2,724 1,986
-------- -------- --------
Total current assets........................ 12,168 15,514 15,661
Property and equipment:
Land......................................... 1,899 1,865 1,865
Buildings.................................... 4,472 4,215 4,216
Armored vehicles............................. 22,861 24,194 24,506
Other equipment.............................. 4,837 5,662 7,626
Leasehold improvements....................... 2,792 2,641 2,655
-------- -------- --------
36,861 38,577 40,868
Less accumulated depreciation and
amortization................................ 19,156 22,381 24,052
-------- -------- --------
Property and equipment, net.................... 17,705 16,196 16,816
Other assets, net (Note 3)..................... 9,006 8,045 10,569
-------- -------- --------
Total assets................................ $ 38,879 $ 39,755 $ 43,046
======== ======== ========
LIABILITIES AND COMMON SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................. $ 6,797 $ 7,530 $ 5,439
Accrued expenses (Note 3).................... 13,691 13,896 15,597
Short-term debt (Note 4)..................... 445 -- 1,022
Current portion, long-term debt (Note 4)..... -- 1,500 1,500
Current portion, capital lease obligations
(Note 5).................................... 43 110 496
-------- -------- --------
Total current liabilities................... 20,976 23,036 24,054
Long-term liabilities:
Long-term debt--affiliates (Note 4).......... 7,539 7,561 7,569
Long-term debt--other (Note 4)............... 15,597 14,123 13,381
Capital lease obligations (Note 5)........... 84 243 966
Accrued management fees (Note 8)............. 1,312 1,487 1,575
Postretirement benefits other than pensions
(Note 7).................................... 1,193 -- --
-------- -------- --------
Total long-term liabilities................. 25,725 23,414 23,491
Redeemable preferred stock, par value $.01 per
share (Note 10):
Authorized shares--4,000,000 Issued and
outstanding shares--3,500,000............... 3,500 3,500 3,500
Redeemable common stock warrants (Note 10)..... 28 355 355
Common shareholders' deficit (Note 10):
Class A common stock, par value $.01 per
share: Authorized shares--10,000,000 Issued
and outstanding shares--1,500,000........... 15 15 15
Class B common stock, par value $.01 per
share: Authorized shares--2,000,000 Issued
and outstanding shares--none................ -- -- --
Common stock warrants........................ 304 304 304
Additional paid-in capital................... 1,485 1,485 1,485
Accumulated deficit.......................... (13,154) (12,354) (10,158)
-------- -------- --------
Total common shareholders' deficit.......... (11,350) (10,550) (8,354)
-------- -------- --------
Total liabilities and common shareholders'
deficit.................................... $ 38,879 $ 39,755 $ 43,046
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED JUNE 30 ENDED
------------------------------- DECEMBER 31
1994 1995 1996 1996
--------- --------- --------- -----------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues.......................... $ 106,447 $ 115,136 $ 119,455 $ 65,765
Cost of operations:
Payroll and related expense..... 72,447 77,270 79,974 43,031
Vehicle expense................. 13,583 13,815 14,035 7,637
Facilities expense.............. 5,395 4,991 5,094 2,661
Other operating expenses........ 14,679 15,936 17,120 8,745
Gains associated with benefit
plans.......................... (1,677) -- (954) --
--------- --------- --------- ---------
104,427 112,012 115,269 62,074
--------- --------- --------- ---------
Operating income.................. 2,020 3,124 4,186 3,691
Interest expense--affiliates (Note
8)............................... 1,099 1,099 1,099 550
Interest expense--other........... 1,954 2,059 1,882 895
--------- --------- --------- ---------
3,053 3,158 2,981 1,445
--------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of change
in accounting principle.......... (1,033) (34) 1,205 2,246
Income taxes (Note 6)............. -- -- 78 50
--------- --------- --------- ---------
Income (loss) before cumulative
effect of change in accounting
principle........................ (1,033) (34) 1,127 2,196
Cumulative effect of change in
accounting principle............. (453) -- -- --
--------- --------- --------- ---------
Net income (loss)................. (1,486) (34) 1,127 2,196
Increase in value of redeemable
warrants......................... -- -- 327 --
--------- --------- --------- ---------
Net income (loss) available to
common shareholders.............. (1,486) (34) 800 2,196
Accumulated deficit at beginning
of period........................ (11,634) (13,120) (13,154) (12,354)
--------- --------- --------- ---------
Accumulated deficit at end of
period........................... $ (13,120) $ (13,154) $ (12,354) $ (10,158)
========= ========= ========= =========
Net income (loss) per share before
cumulative effect of change in
accounting principle............. $ (0.36) $ (0.01) $ 0.16 $ 0.43
Cumulative effect of change in
accounting principle............. (0.15) -- -- --
--------- --------- --------- ---------
Net income (loss) per share....... $ (0.51) $ (0.01) $ 0.16 $ 0.43
========= ========= ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED JUNE 30 ENDED
------------------------------- DECEMBER 31
1994 1995 1996 1996
--------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................ $ (1,486) $ (34) $ 1,127 $ 2,196
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Cumulative effect of change in
accounting principle.......... 453 -- -- --
Depreciation and amortization
expense....................... 7,080 5,220 4,886 2,061
(Gain) loss on disposal of
property and equipment........ 44 (265) 92 3
Provision for allowance for
doubtful accounts............. (181) (12) 27 60
Accrued management fees........ 350 262 175 88
Postretirement benefits other
than pensions................. -- 340 (954) --
Change in restricted cash...... -- (1,500) (5) (31)
Changes in current assets and
liabilities:
Trade accounts receivable.... 826 (806) (2,148) (1,780)
Other receivables............ (7) (155) (239) (127)
Parts and supplies........... 38 (133) (62) 55
Prepaid expenses............. (1,084) (461) 191 738
Accounts payable............. (1,539) 3,182 733 (2,091)
Accrued expenses............. (2,612) (4,073) (34) 17
Deferred interest and
accretion of discounts...... 1,001 (890) 48 16
--------- --------- --------- --------
Net cash provided by operating
activities...................... 2,883 675 3,837 1,205
INVESTING ACTIVITIES
Acquisition of property and
equipment....................... (419) (688) (1,930) (1,355)
Proceeds from sale of property
and equipment................... 33 295 162 1
--------- --------- --------- --------
Net cash used in investing
activities...................... (386) (393) (1,768) (1,354)
FINANCING ACTIVITIES
Borrowings of debt............... 117,937 123,528 130,485 66,600
Repayments of debt and capital
leases.......................... (120,413) (123,492) (131,005) (66,435)
Other............................ -- -- (80) (954)
--------- --------- --------- --------
Net cash provided by (used in)
financing activities............ (2,476) 36 (600) (789)
--------- --------- --------- --------
Net increase (decrease) in cash
and cash equivalents............ 21 318 1,469 (938)
Cash and cash equivalents at
beginning of period*............ 63 84 402 1,871
--------- --------- --------- --------
Cash and cash equivalents at end
of period*...................... $ 84 $ 402 $ 1,871 $ 933
========= ========= ========= ========
</TABLE>
- --------
* Excludes restricted cash and cash equivalents of $1,500, $1,505 and $1,536 at
June 30, 1995 and 1996 and December 31, 1996, respectively.
See accompanying notes.
F-5
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. BACKGROUND
Loomis Holding Corporation was reorganized into Loomis, Fargo & Co. (the
"Company") on January 24, 1997, in connection with the transactions described
in Note 11. Through its wholly owned subsidiary, Loomis Armored Inc., which on
January 24, 1997 was renamed Loomis, Fargo & Co., a Texas corporation (the
"Subsidiary"), the Company provides armored car transport services to a
variety of financial, commercial, industrial and retail establishments within
the United States. It offers secure, expedited transportation and protection
for a variety of valuable commodities such as coin and currency, negotiable
and nonnegotiable securities, precious metals, bullion, food coupons, gems and
works of art. The Company also offers several ancillary services including
storage and issuance of U.S. government food stamps, coin wrapping, vault
storage and other related services. In addition, Loomis provides an extensive
automatic teller machine supply and repair service.
On May 5, 1991, the Company acquired the Subsidiary for cash and debt of
$27,787,000 and assumed liabilities of $8,052,000. Acquisition-related costs
to purchase the Subsidiary were $5,705,000 which included arbitration costs
incurred prior to finalizing the purchase price. As part of the final
settlement agreement of the purchase price, the seller ("Seller") agreed to
assume all preacquisition contingencies relating to outstanding or pending
litigation, workers' compensation claims and state income taxes and a portion
of preacquisition contingencies relating to environmental liabilities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. Intercompany accounts and transactions have
been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity date of three months or less to be cash equivalents. Approximately
$1,500,000, $1,505,000 and $1,536,000 of cash and cash equivalents at June 30,
1995 and 1996 and December 31, 1996, respectively, were held under restricted
arrangements as required by insurance agreements.
Revenue Recognition
Revenue on service contracts is recognized as services are provided.
Unearned revenues represent billings for recurring services to be performed in
the month subsequent to year-end.
Property and Equipment
Property and equipment, which includes assets resulting from capital leases,
are recorded at cost and are depreciated on a straight-line basis over the
estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings.................................................... 20--40 years
Trucks and other vehicles.................................... 3--12 years
Other equipment.............................................. 2--8 years
</TABLE>
Leasehold improvements are amortized over the term of the related leases or
the useful lives of the improvements, whichever is less. Repairs and
maintenance costs are charged to expense as incurred.
The Company acquired $121,000, $301,000 and $1,216,000 of assets under
capital lease agreements in the years ended June 30, 1995 and 1996 and the six
months ended December 31, 1996, respectively, which represent both non-cash
investing and non-cash financing activities.
F-6
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During 1994, the Company changed its estimates for depreciable lives of
certain assets. The effect of this change was to increase depreciation expense
for 1994 by approximately $1,000,000.
Other Assets
Goodwill resulting from the purchase acquisition is being amortized on a
straight-line basis over 40 years. A related covenant not to compete entered
into with the Seller and certain service contracts acquired by the Company in
the state of Alaska subsequent to May 5, 1991 were amortized on a straight-
line basis over a five-year period and were fully amortized at June 30, 1996.
Amortization expense on other assets was $1,194,000 for each of the years
ended June 30, 1994 and 1995, $1,041,000 for the year ended June 30, 1996 and
$114,000 for the six months ended December 31, 1996.
Long-Lived Assets
Under Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (Statement 121), impairment losses are required to be recorded on long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amounts. Statement 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Company's
adoption of Statement 121 in fiscal 1996 did not impact the Company's results
of operations or financial position.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Stock-Based Compensation
The Company grants stock options to employees for a fixed number of shares
with an exercise price no less than the fair value of the shares at the date
of grant. The Company accounts for stock option grants in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and, accordingly, recognizes no compensation expense for the
stock option grants.
Net Income (Loss) Per Share
Net income (loss) per share amounts are computed by dividing net income
(loss) available to common shareholders by the weighted-average number of
common shares and common stock equivalents outstanding during the year as
restated to reflect retroactively the reorganization and recapitalization of
the Company described in Note 11. Common stock equivalents include stock
options and warrants and are computed under the treasury stock method. Because
the Company's common stock is not publicly traded, the computation of common
stock equivalents is based on the fair value of the Company's common stock,
rather than the market price of the stock. The fair value of the Company's
common stock has been estimated by a third party in connection with the
transaction described in Note 11. The number of shares used in the computation
of net income (loss) per share for the years ended June 30, 1994, 1995 and
1996 and the six months ended December 31, 1996 was 2,883,849, 2,883,849,
5,092,171 and 5,092,171, respectively.
Reclassifications
Certain reclassifications have been made in the prior years' financial
statements to conform to the current year presentation.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, accounts receivable and
accounts payable approximates fair value due to the short-term maturities of
these instruments. The carrying amount of the Company's debt also
F-7
<PAGE>
LOOMIS, FARGO, & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
approximates fair value because the debt was recently renegotiated at a market
rate of interest or the debt accrues interest at a variable rate based on
current market rates.
Fiscal Year
Effective July 1, 1996, the Company changed its fiscal year end from June 30
to December 31. Accordingly, the financial statements include a presentation
as of and for the six months ended December 31, 1996. Certain unaudited
comparative information for the six months ended December 31, 1995 are
presented below (in thousands, except per share information):
<TABLE>
<S> <C>
Revenues.......................................................... $57,806
Operating income.................................................. $ 1,855
Net income........................................................ $ 302
Net income per share.............................................. $ 0.10
</TABLE>
3. BALANCE SHEET DATA
Detailed balance sheet data are as follows:
<TABLE>
<CAPTION>
JUNE 30
---------------- DECEMBER 31
1995 1996 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Trade accounts receivable:
Gross trade accounts
receivable............... $13,099 $15,871 $17,937
Unearned revenues......... (6,484) (7,109) (7,394)
Allowance for doubtful
accounts receivable...... (221) (247) (308)
------- ------- --------
Net trade accounts
receivable................. $ 6,394 $ 8,515 $ 10,235
======= ======= ========
Other assets:
Goodwill.................. $ 9,153 $ 9,153 $ 9,153
Covenant not to compete... 4,500 -- --
Purchased contracts....... 385 -- --
------- ------- --------
14,038 9,153 9,153
Less accumulated
amortization............. (5,032) (1,188) (1,302)
Deferred financing and
acquisition costs........ -- 80 2,718
------- ------- --------
Total other assets,
net.................... $ 9,006 $ 8,045 $ 10,569
------- ------- --------
Accrued expenses:
Payroll and related
expenses................. $ 5,698 $ 5,917 $ 6,450
Insurance................. 6,043 6,488 6,095
Other..................... 1,950 1,491 3,052
------- ------- --------
Total accrued expenses.. $13,691 $13,896 $ 15,597
======= ======= ========
</TABLE>
4. DEBT
Long-term debt consists of the following at:
<TABLE>
<CAPTION>
JUNE 30
--------------- DECEMBER 31
1995 1996 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
14% senior subordinated notes due September
30, 1999..................................... $12,211 $10,211 $10,211
9% junior subordinated note due September 30,
1999......................................... 11,015 9,015 9,015
Term loan with commercial finance company..... -- 4,000 3,250
------- ------- -------
23,226 23,226 22,476
Less discount................................. 90 42 26
Less current portion.......................... -- 1,500 1,500
------- ------- -------
$23,136 $21,684 $20,950
======= ======= =======
</TABLE>
F-8
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The senior subordinated notes include $7,580,000 owed to affiliates. The
junior subordinated debt is held by the Seller as a result of the purchase of
the Subsidiary by the Company.
Effective June 25, 1996, the Company renegotiated its senior subordinated
and junior subordinated debt agreements and, as a result, deferred all
principal payments to September 30, 1999.
During 1994, the Company entered into an agreement to repay the $991,000
interest due on the junior subordinated note for the period May 7, 1993
through May 6, 1994, of which $46,000 was repaid in fiscal 1994 and $945,000
in fiscal 1995.
The Company has a $29,500,000 credit facility consisting of a term loan and
a line of credit with a commercial finance company which expires on September
30, 1999. The facility is structured such that the total maximum borrowings
for the term loan and for guarantees for letters of credit cannot exceed
$21,500,000. The total credit facility and the total maximum borrowings for
the term loan and for the guarantees for letters of credits are reduced by an
amount equal to the aggregate amount of all payments made on the term loan. At
December 31, 1996, the total credit facility and maximum borrowings were
reduced by term loan payments of $750,000 to $28,750,000 and $20,750,000,
respectively. Borrowings under the term loan are repayable in monthly
installments through February 1999. At December 31, 1996, the Company had
approximately $15,900,000 in letters of credit outstanding which were
guaranteed under this agreement and approximately $1,600,000 available for
additional guarantees of letters of credit. Fees charged for the letter of
credit guarantee range from 2.00% to 2.25% of the face amount of the letter of
credit. The maximum amount allowed under the resulting line of credit is the
lesser of (a) 85% of outstanding eligible accounts receivable or (b)
$8,000,000. The balances under the line of credit are classified as short-term
debt under the terms of the agreement. Available borrowings were approximately
$4,800,000 at December 31, 1996. Interest is determined using the bank
reference rate plus 1.75% on the term loan and the bank reference rate plus
1.5% on the line of credit. The interest rates for the term loan and line of
credit were 10% and 9.75% at June 30, 1996 and December 31, 1996. The interest
rate on the line of credit was 10.5% at June 30, 1995.
Collateral pledged under the credit facility includes virtually all the
assets of the Company. The agreement contains restrictive covenants regarding
the level of net worth and working capital, the creation of loans, the
compensation of officers, limitations on capital expenditures, the entering
into of capital leases and maintenance of certain financial ratios.
Additionally, the agreement generally prohibits the payment of dividends to
the Company by the Subsidiary. The Company is in compliance with the terms of
the credit agreement.
The Company's long-term debt maturities for years following December 31,
1996 are $1,500,000 in 1997; $1,500,000 in 1998; $19,476,000 in 1999 and none
thereafter.
Interest of $2,100,000, $4,000,000, $3,100,000 and $1,300,000 was paid
during the years ended June 30, 1994, 1995 and 1996 and the six months ended
December 31, 1996, respectively.
On January 24, 1997, the Company issued $85,000,000 in notes due 2004, the
proceeds of which were used to repay all outstanding long-term debt, and
replaced its credit facility with a new $115,000,000 facility (see Note 11).
F-9
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LEASES
At December 31, 1996, the scheduled future minimum lease payments under
capital leases are as follows (in thousands):
<TABLE>
<S> <C>
1997................................................................. $ 594
1998................................................................. 566
1999................................................................. 407
2000................................................................. 53
2001................................................................. 23
------
Total minimum lease payments......................................... 1,643
Less amount representing interest.................................... 181
------
Present value of capital lease obligations........................... 1,462
Less current portion of capital lease obligations.................... 496
------
Long-term capital lease obligations.................................. $ 966
======
</TABLE>
The Company leases various office space and equipment under noncancelable
operating leases expiring on various dates through 2004. The Company also
subleases certain office space under noncancelable operating leases expiring
on various dates through 1997.
The following is a schedule of future minimum lease payments and future
minimum sublease income under noncancelable operating leases having remaining
terms in excess of one year as of December 31, 1996:
<TABLE>
<CAPTION>
LEASE SUBLEASE NET
PAYMENTS INCOME OBLIGATION
-------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
1997............................................ $ 2,893 $ 11 $ 2,882
1998............................................ 2,476 -- 2,476
1999............................................ 1,763 -- 1,763
2000............................................ 1,131 -- 1,131
2001............................................ 635 -- 635
Thereafter...................................... 1,407 -- 1,407
------- ---- -------
$10,305 $ 11 $10,294
======= ==== =======
</TABLE>
Rent expense for the years ended June 30, 1994, 1995 and 1996 and the six
months ended December 31, 1996 was $2,907,000, $2,993,000, $3,093,000 and
$1,765,000, respectively.
The Company has certain operating leases which contain (i) rent escalation
clauses, some of which are fixed annual increases with others tied to the
Consumer Price Index and (ii) the passthrough of operating expenses and
property taxes. In addition, certain leases contain options to renew.
6. INCOME TAXES
The Company accounts for income taxes using the liability method required by
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.
Taxes on income from operations for the year ended June 30, 1996 and the six
months ended December 31, 1996 consisted of current federal tax expense.
F-10
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The reconciliation of income tax attributable to operations before the
cumulative effect of a change in accounting principle computed at the federal
statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED JUNE 30 ENDED
----------------------- DECEMBER 31
1994 1995 1996 1996
------- ------ ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Tax (benefit) at statutory rate....... $ (351) $ (12) $ 410 $ 764
Change in valuation allowance......... 503 228 (418) (977)
Nondeductible goodwill amortization
and other............................ (152) (216) 86 263
------- ------ ------ -----
Income tax expense.................... $ -- $ -- $ 78 $ 50
======= ====== ====== =====
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
as of June 30, 1995 and 1996 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
JUNE 30
---------------- DECEMBER 31
1995 1996 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforward............. $ 8,360 $ 6,646 $ 5,574
Minimum tax credit carryforward............. -- 67 119
Accrued vacation and bonuses................ 1,082 1,141 1,038
Self-insurance reserve...................... 574 1,663 2,271
Postretirement plan obligation.............. 480 -- --
Deferred management fees.................... 245 455 630
Other reserves not currently deductible..... 210 8 --
Other, net.................................. 204 276 140
------- ------- -------
Total deferred tax assets................. 11,155 10,256 9,772
Valuation allowance for deferred tax assets... (8,362) (7,944) (6,967)
------- ------- -------
Net deferred tax assets....................... 2,793 2,312 2,805
Deferred tax liabilities:
Tax over book depreciation.................. 2,401 1,908 2,138
Prepaid pension cost........................ 392 404 404
Other....................................... -- -- 263
------- ------- -------
Total deferred tax liabilities............ 2,793 2,312 2,805
------- ------- -------
Net deferred tax assets................... $ -- $ -- $ --
======= ======= =======
</TABLE>
The Company has a federal net operating loss carryover of $22,594,000,
$17,885,000 and $15,065,000 at June 30, 1995 and 1996 and December 31, 1996,
respectively. The net operating loss carryover expires in years 2007 through
2009.
During the years ended June 30, 1995 and 1996 and the six months ended
December 31, 1996, the Company paid taxes of $-0-, $84,000 and $50,000,
respectively.
A valuation allowance of $3,892,000 was recognized as of the acquisition
date. Any subsequent reduction in this valuation allowance will result in a
reduction of goodwill. The change in the valuation allowance results primarily
from the recognition of tax benefits attributable to the net operating loss
carryforward which is recognized as the loss is utilized.
F-11
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. BENEFIT PLANS
Pension Plan
Employees of the Company participate in a qualified, defined-benefit pension
plan (the "Plan") sponsored by the Company, covering substantially all
employees who meet the eligibility requirements regarding age and length of
service and who are not participants in another plan to which the Company may
contribute. Plan assets are comprised primarily of investments in equity
securities.
During 1994, the Company froze future benefits under the Plan effective June
30, 1994. Due to the curtailment, the funding requirements under the Employee
Retirement Income Security Act of 1974, as amended, were changed from the
projected unit credit actuarial cost method to the accrued benefit cost
method. This change in funding methods resulted in an increase in the total
actuarial present value of accumulated benefit obligations of $983,000 to
$14,050,000 and an increase in the actuarial present value of projected
benefit obligations of $1,099,000 to $15,586,000 as of July 1, 1994.
The effect of the curtailment resulted in a $1,698,000 decrease to the
projected benefit obligation and a $21,000 decrease to the unrecognized net
gain which affected the $480,000 net pension liability at June 30, 1994,
resulting in prepaid pension cost after curtailment of $1,197,000.
The following table sets forth the funded status of the Plan:
<TABLE>
<CAPTION>
JUNE 30
--------------- DECEMBER 31
1995 1996 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested...................................... $14,358 $14,109 $16,051
Nonvested................................... 369 458 78
------- ------- -------
Total..................................... 14,727 14,567 16,129
------- ------- -------
Plan assets at fair value..................... 14,955 15,380 16,373
------- ------- -------
Funded status................................. 228 813 244
Unrecognized net loss......................... 752 196 798
------- ------- -------
Prepaid pension cost.......................... $ 980 $ 1,009 $ 1,042
======= ======= =======
</TABLE>
A summary of the components of the net periodic pension cost is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED JUNE 30 ENDED
------------------------ DECEMBER 31
1994 1995 1996 1996
------ ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Service cost......................... $ 459 $ -- $ -- $ --
Interest cost........................ 1,207 1,195 1,120 563
Actual return on plan assets......... (627) (1,826) (1,511) (1,444)
Deferred gain (loss) on plan assets.. (490) 849 362 848
------ ------- ------- -------
Net periodic pension cost
(income)........................ $ 549 $ 218 $ (29) $ (33)
====== ======= ======= =======
Assumptions:
Discount rate...................... 8.0% 8.5% 8.0% 7.5%
Expected long-term rate of return
on assets......................... 8.0% 8.0% 8.0% 8.0%
</TABLE>
F-12
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company contributes to certain multiemployer, defined-benefit plans
covering certain employees under collective bargaining agreements. Total
expenses of these plans were $703,000, $789,000, $1,029,000 and $593,000 for
the years ended June 30, 1994, 1995 and 1996 and the six months ended December
31, 1996, respectively.
The Company also contributes to a 401(k) defined-contribution plan covering
substantially all employees. Contributions and cost are determined as 25% of
employees' contributions up to a maximum of $188 per employee. Total expenses
of this Plan were $-0-, $108,000, $109,000 and $89,000 for the years ended
June 30, 1994, 1995 and 1996 and the six months ended December 31, 1996,
respectively. The Company did not begin contributions to the Plan until August
1, 1994.
In addition to providing pension benefits, the Company had a defined-benefit
postretirement plan that provided medical care to its employees. The
postretirement plan was contributory and contained other cost- sharing
features such as deductibles and Medicare coordination. The funding policy was
to pay for these benefits as incurred.
During the year ended June 30, 1996, the Company terminated the
postretirement benefit plan. As a result of the termination, the Company made
lump-sum payments totaling approximately $89,000 to current retirees and
certain employees. The Company also incurred costs of approximately $150,000
associated with the plan termination and recognized a gain of $954,000.
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, Employer's Accounting for Postretirement
Benefits Other Than Pensions. The effect of adopting the new rules increased
net periodic postretirement benefit expense by approximately $453,000 for the
year ended June 30, 1994.
A summary of the components of the net periodic postretirement benefit
expense was as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Service cost............................................. $ 64 $ 57
Interest cost............................................ 66 93
--------- ---------
$ 130 $ 150
========= =========
</TABLE>
Actuarial Assumptions
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Discount rate.................................................... 8.0% 8.0%
Health care cost trend rate--current year........................ 9.5% 9.5%
Health care cost trend rate--next year........................... 9.5% 9.5%
Ultimate health care cost trend rate............................. 4.5% 4.5%
</TABLE>
The following sets forth the funded status of the plans as of June 30, 1995
(in thousands):
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees.......................................................... $ 683
Fully eligible active plan participants........................... 80
Other active plan participants.................................... 430
-------
1,193
Plan assets at fair value........................................... --
-------
Accrued postretirement benefit liability............................ $ 1,193
=======
</TABLE>
F-13
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. TRANSACTIONS WITH AFFILIATES
The Company's statements of operations include management fees charged by
affiliates of $350,000 for the years ended June 30, 1994, 1995 and 1996 and
$175,000 for the six months ended December 31, 1996. Cumulative management
fees of $1,312,000, $1,487,000 and $1,575,000 have not been paid and are
included in long-term liabilities at June 30, 1995 and 1996 and December 31,
1996, respectively. In addition, the Company paid interest of $1,061,000,
$1,076,000, $1,076,000 and $542,000 to affiliates in the years ended June 30,
1994, 1995 and 1996 and the six months ended December 31, 1996, respectively.
9. EMPLOYEE COMPENSATION PLANS
On January 1, 1993, the Board of Directors adopted the Loomis Holding
Corporation Management Stock Option Plan (the "Stock Option Plan"). Under the
Stock Option Plan, officers and key employees of the Company and its
subsidiary may be selected by the Compensation Committee of the Board of
Directors (the "Committee") to receive incentive or nonqualified stock options
to purchase the Company's Class A common stock at an exercise price not less
than the fair market value of the Class A shares at the grant date. The Stock
Option Plan also provides that outside directors of the Company may be
selected by the Compensation Committee to receive nonqualified stock options.
Subject to adjustment, the number of options that may be issued under the
Stock Option Plan will not in the aggregate exceed 50,000. No options were
granted under the plan during the three and one-half years in the period ended
December 31, 1996. Options to acquire 12,530 shares of Class A common stock at
a price of $3.33 per share were issued in previous periods and currently are
fully vested and exercisable.
On February 24, 1995, the Company adopted the Loomis Holding Corporation
Management Equity Growth and Appreciation Plan (the "Old MEGA Plan"),
effective May 5, 1991, pursuant to which the Company may award a maximum of
350,000 units to certain directors and key employees of the Company and its
subsidiary. Units do not represent securities, but merely serve as a basis to
compute compensation. Cash compensation is payable based on the value of a
unit under this plan only in the event of a change in control of the Company.
In the event of a public offering of the Company's common stock, units under
the plan will be exchanged for stock options with a fair value equal to the
value of the units. The value of a unit is based on (i) the value received
from a sale of over 50% of the Company's stock or substantially all the assets
of the Company (on a per share basis), less (ii) amounts received upon
issuance of the Company's equity securities (net of capital distributions),
currently equal to $3.33 per share. There are 284,351 units that vest ratably
over a five-year period. However, upon a change in control of the Company, the
units attributable to current employees vest immediately. In the event of a
public offering of the Company's common stock, units in the plan will be
converted to common stock options with a value equivalent to the units then
outstanding. At December 31, 1996, 320,351 units under the Old MEGA Plan were
outstanding, of which 217,560 were vested.
An additional 29,476 units will be issued in the event that, on or before
June 30, 1998, the Company's principal shareholder receives, in cash or fair
market value of equity securities of a class that is publicly traded, a return
on its investment equal to a compound rate of return of 45%.
In connection with the transactions described in Note 11, the Old MEGA Plan
was terminated and each Unit was cancelled. Holders of Units received options
("Options") to purchase a number of shares of Common Stock of the Company that
were substantially equivalent in value pursuant to the New MEGA Unitholder
Option Plan (the "New MEGA Plan") established by the Company. The Options are
subject to substantially the same vesting schedule and other limitations on
exercise and transfer as existed under the Old MEGA Plan, including without
limitation, the requirement that a Triggering Event (as defined) occur before
the Options become exercisable.
F-14
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. REDEEMABLE PREFERRED AND COMMON STOCK
Redeemable Preferred Stock
The Company's articles of incorporation authorize the issuance of 4,000,000
shares of $.01 par value Series I Preferred Stock, of which 3,500,000 shares
were issued in May 1991 and remain outstanding. There are no dividend
requirements associated with the preferred stock, except that the preferred
stock is entitled to share equally and ratably in dividends with holders of
common stock as if all such shares were a single class. In the event of a
change in control (as defined), the holders of not less than 66 2/3% of
outstanding preferred shares have the right to require that the Company
purchase all outstanding shares of preferred stock for cash at a price of $1
per share. Also, the Company has the right to redeem the preferred stock at
any time, in whole or in part, at a price of $1 per share. The holders of the
preferred stock are entitled to one vote for each share of preferred stock and
vote together with the holders of common stock as a single class. On January
24, 1997, the Company redeemed all its outstanding redeemable preferred stock
(see Note 11).
Common Stock
The Company's articles of incorporation authorize the issuance of 10,000,000
shares of $.01 par value Class A Common Stock and 2,000,000 shares of $.01 par
value Class B Common Stock, of which 1,500,000 and -0- shares, respectively,
are outstanding. The holders of Class A and Class B shares have identical
rights and privileges, except that holders of Class B common stock cannot vote
on matters submitted to shareholders, with the exception of certain
reorganizations or transactions that would result in a change in control of
the Company, in which case Class A and Class B shareholders vote as a single
class and are entitled to one vote per share. Class A shares may be converted
into Class B shares at any time. Class B shares may be converted into Class A
shares upon a change in control or a public offering of securities of the
Company. On January 24, 1997, the Company's shareholders exchanged all their
common stock in the Company for shares of Loomis, Fargo & Co. that
concurrently were transferred to a Business Trust owned by the shareholders of
the Company (see Note 11).
Warrants
In 1991, the Company issued to a lender warrants to purchase 39,301 shares
of the Company's Class A Common Stock at a price of $0.0654 per share, subject
to adjustment for the issuance of certain additional common equity securities.
The warrants expire on May 6, 2001. The warrant holders may require the
Company to repurchase their warrants and/or common equity securities resulting
from the exercise of a portion of their warrants anytime after May 6, 1996,
but before a public offering of the Company's common stock. The repurchase
price is equal to an amount determined by multiplying (a) the higher of (i)
the market value of the Company as of the exercise date or (ii) an amount
equal to (A) six times "put earnings before interest and taxes" (as defined)
for the four fiscal quarters immediately preceding the exercise date, plus (B)
the Company's cash equivalents as of the fiscal quarter immediately preceding
the exercise date, minus (C) outstanding debt and certain other liabilities as
of the fiscal quarter immediately preceding the exercise date, by (b) an
amount equal to the number of warrants or common securities being repurchased
divided by the total number shares of common stock and other dilutive
securities outstanding. Additionally, the Company may repurchase the warrants
and/or common equity securities resulting from the exercise of a portion of
the warrants for the purchase price defined above anytime after May 6, 1995,
but before a public offering of the Company's securities. The warrants are
carried at the greater of their initial book value or their redemption value,
which resulted in a $327,000 charge to retained earnings in the year ended
June 30, 1996.
In 1991, the Company also issued to another lender warrants to purchase
268,794 shares of the Company's Class B Common Stock and issued warrants to
certain shareholders to purchase 838,345 shares of the Company's Class A
Common Stock. All of these warrants are exercisable at a price of $0.0654 per
share. The number of shares that may be purchased under the warrants, as well
as the purchase price, are subject to adjustment for the issuance of certain
additional common equity securities. The warrants expire on May 22, 2002.
F-15
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On January 23, 1997, all warrant holders exercised their warrants and on
January 24, 1997 exchanged the resulting common shares for shares of Loomis,
Fargo & Co., which concurrently were transferred to a Business Trust owned by
the shareholders of the Company (see Note 11).
11. SUBSEQUENT EVENTS
On January 24, 1997 (the "transaction date"), the Company completed its
reorganization into Loomis, Fargo & Co. and the acquisition of certain assets
of Wells Fargo Armored Service Corporation ("Wells Fargo"), a wholly owned
subsidiary of Borg Warner Security Corporation. The reorganization involved
the exchange of all outstanding common stock of the Company for 5,100,000
shares of the common stock of Loomis, Fargo & Co. which concurrently were
transferred to a Business Trust owned by the shareholders of the Company, the
distribution of a total of $14,085,000 to the shareholders of the Company (or
to a trust established for the benefit of the shareholders) and the assumption
by the shareholders of the Company of certain of the Company's employee and
other liabilities.
The aggregate purchase price for the assets acquired and the assumption of
certain liabilities of Wells Fargo was approximately $132,575,000, which
includes cash payments of $106,600,000 and the issuance of 4,900,000 shares of
the common stock of Loomis, Fargo & Co. The acquisition has been accounted for
by the purchase method. The excess of the purchase price over net assets
acquired, which is expected to exceed $90,000,000, will be amortized to
expense principally over 40 years.
Concurrent with the acquisition, the Company issued $85,000,000 of 10%
unsecured notes due 2004 in a private placement and repaid all of its
outstanding long-term debt and redeemable preferred stock and replaced its
existing lines of credit with a $115,000,000 revolving credit agreement.
F-16
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 8,591
Accounts receivable, net....................................... 39,060
Prepaid expenses and other assets.............................. 4,928
--------
Total current assets......................................... 52,579
Property and equipment, net...................................... 45,962
Goodwill......................................................... 106,080
Other assets..................................................... 5,201
--------
Total assets................................................. $209,822
========
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................... $ 14,810
Accrued expenses and other current liabilities................. 29,839
Current portion, capital lease obligations..................... 951
--------
Total current liabilities.................................... 45,600
Long-term liabilities:
Long-term debt................................................. 163,883
Capital lease obligations...................................... 840
Other long-term liabilities.................................... 2,226
--------
Total long-term liabilities.................................. 166,949
Common stockholders' deficit:
Common stock................................................... 100
Additional paid-in capital..................................... 24,755
Accumulated deficit............................................ (27,582)
--------
Total common stockholders' deficit........................... (2,727)
--------
Total liabilities and common stockholders' deficit........... $209,822
========
</TABLE>
See accompanying notes.
F-17
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1997
-------------- --------------
(IN THOUSANDS, EXCEPT FOR PER
SHARE DATA)
<S> <C> <C>
Revenues........................................ $30,229 $79,892
Cost of operations:
Payroll and related expense................... 19,629 47,632
Vehicle expense............................... 3,565 10,423
Facilities expense............................ 1,288 3,286
Other operating expenses...................... 4,930 17,524
Expenses relating to the business
combination.................................. -- 1,139
------- -------
29,412 80,004
------- -------
Operating Income (Loss)......................... 817 (112)
Interest expense................................ 734 3,078
------- -------
Income (loss) before income taxes and
extraordinary item............................. 83 (3,190)
Income taxes.................................... -- 25
------- -------
Income (loss) before extraordinary item......... 83 (3,215)
Extraordinary item (net of provision for income
taxes of $1)................................... -- (124)
------- -------
Net income (loss)............................... $ 83 $(3,339)
======= =======
Net income (loss) per share: before extraordi-
nary item...................................... $ 0.02 $ (0.37)
Extraordinary item.............................. -- (0.01)
------- -------
Net income (loss)............................... $ 0.02 $ (0.38)
======= =======
</TABLE>
See accompanying notes.
F-18
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1997
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ 83 $ (3,339)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense.......... 1,263 3,377
Amortization of financing costs................ -- 192
Accretion of discount on NOL note.............. -- 91
Loss on disposal of property and equipment..... 7 --
Change in restricted cash...................... (26) 1,536
Provision for allowance for doubtful accounts.. -- 432
Accrued management fees........................ 87 23
Changes in current assets and liabilities (net
of the effects of the acquisition):
Trade accounts receivable.................... 450 (440)
Prepaid expenses............................. (1,383) (80)
Accounts payable............................. 248 (2,155)
Accrued expenses............................. 1,221 (1,503)
------- ---------
Net cash provided by (used in) operating
activities...................................... 1,950 (1,866)
INVESTING ACTIVITIES
Purchase of Wells Fargo Armored (net of cash
acquired)....................................... -- (105,236)
Capital expenditures............................. (619) (537)
------- ---------
Net cash used in investing activities............ (619) (105,773)
FINANCING ACTIVITIES
Borrowings of debt............................... -- 73,450
Issuance of senior subordinated notes............ -- 85,000
Repayments of debt and capital lease
obligations..................................... (344) (24,686)
Payment of accrued management fees............... -- (1,598)
Financing costs related to senior subordinated
notes and new credit facility................... -- (4,722)
Redemption of preferred stock.................... -- (3,500)
Exercise of common stock warrants................ -- 96
Distributions to stockholders.................... -- (8,743)
------- ---------
Net cash provided by (used in) financing
activities...................................... (344) 115,297
------- ---------
Net increase in cash and cash equivalents........ 987 7,658
Cash and cash equivalents at beginning of
period*......................................... 274 933
------- ---------
Cash and cash equivalents at end of period*...... $ 1,261 $ 8,591
======= =========
</TABLE>
- --------
* Excludes restricted cash and cash equivalents of $1,523, $1,549 and $1,536 at
December 31, 1995, March 31, 1996 and December 31, 1996, respectively
See accompanying notes.
F-19
<PAGE>
LOOMIS, FARGO & CO.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON COMMON COMMON ADDITIONAL
STOCK STOCK STOCK COMMON PAID-IN ACCUMULATED
CLASS A CLASS B WARRANTS STOCK CAPITAL DEFICIT
------- ------- -------- ------ ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1996................... $ 15 $ -- $ 304 $ -- $ 1,485 $(10,158)
Exercise of common stock
warrants............... 9 3 (304) 743
Exchange common stock of
Loomis Holding
Corporation for common
stock of Loomis, Fargo
& Co................... (24) (3) 51 (24)
Distribution to stock-
holders................ (14,085)
Issuance of common stock
as part of the purchase
consideration for Wells
Fargo Armored.......... 49 22,551
Net loss................ (3,339)
----- ----- ----- ----- ------- --------
Balances at March 31,
1997................... $ -- $ -- $ -- $ 100 $24,755 $(27,582)
===== ===== ===== ===== ======= ========
</TABLE>
See accompanying notes.
F-20
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
Loomis, Fargo & Co. (the "Company"), a Delaware corporation, was
incorporated in August 1996. On January 24, 1997, Loomis Holding Corporation,
a Delaware corporation, completed its business combination into Loomis, Fargo
& Co. and the acquisition of certain assets and the assumption of certain
liabilities of Wells Fargo Armored Service Corporation ("Wells Fargo
Armored"), a wholly owned subsidiary of Borg-Warner Security Corporation. The
reorganization involved the exchange of all outstanding common stock of Loomis
Holding Corporation for 5,100,000 shares of the common stock of the Company,
which concurrently were transferred to a business trust owned by the former
shareholders of Loomis Holding Corporation (the "Business Trust"). Earnings
per share have been restated to reflect retroactively the effects of the
reorganization.
The Company owns LFC Holding Corporation (formerly Loomis Holding
Corporation), which in turn owns Loomis, Fargo & Co., a Texas corporation
(formerly Loomis Armored Inc. which was originally incorporated in 1928).
Loomis, Fargo & Co. (the Texas corporation) has two subsidiaries, LFC Armored
of Texas Inc., a Texas corporation, and Loomis, Fargo & Co. of Puerto Rico, a
Tennessee corporation. The common stock of these two subsidiaries was
contributed to the Company by Wells Fargo Armored as part of the assets
transferred by Wells Fargo Armored in the business combination.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
audited consolidated financial statements of Loomis, Fargo & Co. and Wells
Fargo Armored as of December 31, 1996 included elsewhere herein. In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997.
Certain prior period amounts have been reclassified to conform with the 1997
presentation.
NOTE 2. DEBT
Long-term debt consists of the following at March 31, 1997 (in thousands):
<TABLE>
<S> <C>
Bank credit facility............................................ $ 73,450
10% senior subordinated notes................................... 85,000
Non-interest bearing NOL note................................... 5,433
--------
$163,883
========
</TABLE>
Concurrent with the purchase of the assets of Wells Fargo Armored, and the
reorganization of Loomis Holding Corporation and the financing transactions
discussed below, substantially all of the then-existing Loomis Holding
Corporation indebtedness was repaid (other than capital leases). Deferred
financing costs associated with the retired debt were written off as an
extraordinary item in the accompanying consolidated statement of operations
for the three months ended March 31, 1997. The Company also entered into a
five-year step-down revolving bank credit facility agreement which provides
for aggregate initial commitments of up to $115 million. Aggregate commitments
are reduced by $2.5 million per quarter in 1998, by an additional $3.75
million per quarter in 1999, by an additional $4.375 million per quarter in
2000 and for the first two quarters of 2001, and $31.875 million per quarter
for the final two quarters of the agreement. The interest rate of the credit
facility is a
F-21
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
variable rate based on either LIBOR or a base rate tied to the bank's prime
rate. At March 31, 1997, the interest rates on the Company's borrowings were
9.75% on base-rate borrowings of $6.45 million and 7.69%--7.79% on LIBOR
borrowings totaling $67 million. Interest on base-rate borrowings is payable
on a quarterly basis. Interest on LIBOR borrowings is due at the end of the
repayment term, which terms vary from 30 to 90 days at March 31, 1997.
Borrowings under the credit facility are secured by substantially all of the
assets of the Company and its subsidiaries. The agreement contains restrictive
covenants regarding the levels of net worth and working capital, the issuance
of additional debt, the compensation of officers, the payment of dividends,
capital expenditures, new capital leases and maintenance of certain financial
ratios. The first required measurement date for financial condition covenants
is the fiscal quarter ending June 30, 1997. At March 31, 1997 there were no
retained earnings available for the payment of dividends.
The 10% senior subordinated notes were issued on January 24, 1997 in a
private placement. In connection with the sale, the Company entered into a
Registration Rights Agreement with the purchasers to provide for the exchange
of the original notes issued for new notes with substantially similar terms
issued in a transaction registered under the Securities Act of 1933, as
amended. The notes mature in January 2004, and provide for semiannual interest
payments of $4.25 million beginning in July 1997. The notes are subordinated
to borrowings under the credit facility and contain certain restrictive
covenants.
On January 24, 1997, the Company issued a $6,000,000 NOL note to the
Business Trust. The NOL note does not accrue interest and has a term of
fifteen years, subject to mandatory prepayments as, and to the extent that,
the Company realizes a tax benefit attributable to the utilization of net
operating losses of Loomis Holding Corporation available at the date of
closing of the Wells Fargo Armored acquisition. The NOL note was discounted at
10% over the Company's expected period of repayment of the principal. The
Company expects that its utilization of net operating losses will result in
the NOL Note being repaid in full by April 1998.
The amount of interest paid in the three months ended March 31, 1996 and
1997 was $309,080 and $927,239, respectively.
NOTE 3. LEASES
At March 31, 1997, the scheduled future minimum lease payments under capital
leases are as follows for years ending March 31(in thousands):
<TABLE>
<S> <C>
1998................................................................. $1,064
1999................................................................. 539
2000................................................................. 305
2001................................................................. 51
2002................................................................. 6
------
Total minimum lease payments......................................... 1,965
Less amount representing interest.................................... 174
------
Present value of capital lease obligations........................... 1,791
Less current portion of capital lease obligations.................... 951
------
Long-term capital lease obligations.................................. $ 840
======
</TABLE>
The Company leases various office space and equipment under noncancelable
operating leases expiring on various dates through 2006. The Company also
subleases certain office space under a noncancelable operating lease expiring
in 1997.
F-22
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following is a schedule of future minimum lease payments and future
minimum sublease income under noncancelable operating leases with terms
exceeding one year for years ending March 31:
<TABLE>
<CAPTION>
LEASE SUBLEASE NET
PAYMENTS INCOME OBLIGATION
-------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
1998............................................ $12,541 $ 6 $12,535
1999............................................ 9,537 -- 9,537
2000............................................ 6,633 -- 6,633
2001............................................ 4,700 -- 4,700
2002............................................ 2,150 -- 2,150
Thereafter...................................... 1,901 -- 1,901
------- --- -------
$37,462 $ 6 $37,456
======= === =======
</TABLE>
Rent expense for the quarters ended March 31, 1996 and 1997 was $834,000 and
$2,093,000, respectively.
The Company has certain operating leases which contain (i) rent escalation
clauses, some of which are fixed annual increases with others tied to the
Consumer Price Index and (ii) the passthrough of operating expenses and
property taxes. In addition, certain leases contain renewal options.
NOTE 4. PURCHASE OF WELLS FARGO ARMORED SERVICE CORPORATION
On January 24, 1997 the Company purchased certain assets and assumed certain
liabilities of Wells Fargo Armored, a wholly-owned subsidiary of Borg-Warner
Security Corporation. (See Note 1.) The acquisition was accounted for using
the purchase method. The aggregate purchase price for the assets acquired and
the liabilities assumed was approximately $128,000,000, which included cash
payments of $105,236,000 and the issuance of 4,900,000 shares of the common
stock of the Company. The excess of the purchase price over the net assets
acquired, approximately $98,715,000, will be amortized to expense principally
over 40 years. The purchase price has been preliminarily allocated to the net
assets acquired and liabilities assumed. The purchase price will be finalized
when all fair market value appraisals are completed and severance, relocation
and leasehold abandonment costs are finalized.
Concurrent with the acquisition, the Company repaid substantially all of the
long-term obligations of Loomis Holding Corporation, replaced its existing
lines of credit with a $115,000,000 revolving bank credit facility and issued
$85,000,000 of 10% unsecured notes due in 2004 in a private placement. See
Note 2.
The consolidated statements of operations and cash flows presented for the
three months ended March 31, 1996 are those of Loomis Holding Corporation,
predecessor to the Company. The statements of operations and cash flows
presented for the three months ended March 31, 1997 include the transactions
of Loomis Holding Corporation for the twenty-three days before the business
combination on January 24, 1997, and those of the Company for the remainder of
the three-month period.
F-23
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The pro forma unaudited results of operations for the three months ended
March 31, 1996 and March 31, 1997, assuming consummation of the purchase and
the restructuring of the Company's debt and capital structure as of January 1,
1996, are as follows:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
REVENUES............................................. $ 89,233 $ 95,221
=========== ===========
Income (loss) before extraordinary item.............. $ 1,003 $ (3,373)
=========== ===========
Net income (loss).................................... $ 1,003 $ (3,497)
=========== ===========
Income (loss) before extraordinary item per common
share............................................... $ 0.10 $ (0.34)
=========== ===========
Net income (loss) per common share................... $ 0.10 $ (0.35)
=========== ===========
</TABLE>
The net income (loss) presented above includes pro forma adjustments to (i)
interest expense to reflect the Company's revised capital structure after the
business combination (ii) depreciation (iii) amortization of goodwill to
reflect the effects of purchase accounting and (iv) elimination of management
fees paid by both of the combined companies to their former owners.
The March 31, 1997 balance sheet reflects adjustments to record acquired
assets and assumed liabilities at their fair market values and to conform
certain accounting policies of Wells Fargo Armored to the policies of the
Company. Reserves totalling approximately $5,466,000 have been recorded for
costs associated with consolidating headquarters and branch facilities,
related relocation costs and severance payments, and obligations under
noncancelable leases for space, vehicles and equipment that extend beyond the
expected periods of use by the Company.
At March 31, 1997, charges of $398,000 have been taken against the
established reserves. The Company anticipates charges of $2,864,000 against
the purchase accounting reserves in the next twelve months, all of which will
represent cash outflows. All reorganization and consolidation activities are
expected to be completed by August 31, 1997.
NOTE 5. EMPLOYEE COMPENSATION PLANS
Before the reorganization of Loomis Holding Corporation into the Company,
certain key employees of Loomis Holding Corporation were compensated under a
Management Equity Growth and Appreciation Plan (the MEGA Plan), under which
Loomis Holding Corporation issued participation units representing unfunded,
unsecured, potential rights to receive deferred compensation. The units vested
over a five-year schedule and required the occurrence of a triggering event
(as defined) before they became exercisable.
Upon the reorganization of the Company and the acquisition of Wells Fargo
Armored, the MEGA Plan was terminated and all of its units canceled. The
Loomis, Fargo & Co. Unitholders Option Plan (the Option Plan) was established,
under which options to purchase shares of the Company's common stock were
issued to the holders of units under the MEGA Plan that were substantially
equivalent to the canceled units. Options under the Option Plan are subject to
vesting requirements and other limitations that are substantially similar to
those that existed with respect to the units under the MEGA Plan. The Option
Plan also requires a triggering event before the options may be exercised. A
triggering event is the first to occur of (i) any sale or disposition of more
than 1,250,000 shares of common stock of the Company by the majority
shareholder to a non-affiliate, (ii) any sale or disposition of substantially
all of the assets of the Company to a non-affiliate, (iii) a merger of the
Company with or into a non-affiliated entity, or (iv) a public offering or
series of offerings producing aggregate gross proceeds of at least $100
million.
F-24
<PAGE>
LOOMIS, FARGO & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of March 31, 1997, there are 612,967 options outstanding under the Option
Plan, 457,113 of which are vested.
NOTE 6. COMMON STOCK
The capital structure of the Company changed with the reorganization of
Loomis Holding Corporation into Loomis, Fargo & Co. and the acquisition of
Wells Fargo Armored on January 24, 1997. The 3,500,000 outstanding shares of
$.01 par value Loomis Holding Corporation Series 1 Preferred Stock were
redeemed out of the proceeds of the new financing arrangements. The 2,383,911
outstanding shares of Class A Loomis Holding Corporation common stock and the
268,794 outstanding shares of Class B Loomis Holding Corporation common stock
(both having a par value of $.01 per share) were exchanged for 5,100,000
shares of common stock of Loomis, Fargo & Co., which were concurrently
transferred to a Business Trust owned by the former stockholders of Loomis
Holding Corporation. (See Note 1.) Under certain circumstances, shares held by
the Business Trust may be provided subsequent to the exercise of certain stock
options. The remaining 4,900,000 outstanding shares of common stock of the
Company were issued to Wells Fargo Armored as part of the purchase price
consideration.
The common stock of the Company consists of one class and has a $.01 par
value. 20,000,000 shares are authorized, 10,000,000 of which are issued and
outstanding as described in the preceding paragraph. 10,000,000 shares of $.01
preferred stock are authorized, but none have been issued at March 31, 1997.
In 1991 and 1992, warrants were issued to certain lenders and shareholders
of Loomis Holding Corporation to purchase an aggregate of 877,646 shares of
Loomis's Class A Common Stock and 268,794 shares of Loomis's Class B Common
Stock. On January 23, 1997, all warrant holders exercised their warrants. The
shares issued upon exercise of the warrants were included in the January 24,
1997 exchange of common stock of Loomis Holding Corporation for shares of
common stock of the Company.
Concurrent with the business combination on January 24, 1997, the non-
interest bearing NOL note described in Note 2, having a discounted value at
that date of approximately $5,342,000, and net cash consideration of
approximately $8,743,000 were distributed for the benefit of the shareholders
of Loomis Holding Corporation.
NOTE 7. NET INCOME (LOSS) PER SHARE
Net income (loss) per share amounts are computed by dividing net income
(loss) available to common stockholders by the weighted average number of
common shares and common stock equivalents outstanding during the period.
Common stock equivalents include stock options and warrants and are computed
under the treasury stock method. The numbers of shares outstanding used in the
computation of net income (loss) per share for the three months ended March
31, 1996 and 1997 were 5,092,171 and 8,745,777, respectively. Earnings per
share have been restated to reflect retroactively the effects of the
recapitalization described in Note 6.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating "basic earnings per share" (which
calculation replaces the current "primary earnings per share"), the dilutive
effect of stock options will be excluded. The impact of Statement 128 on the
calculation of earnings per share for the quarters ended March 31, 1996 and
March 31, 1997 was not material.
NOTE 8. INCOME TAXES
The Company had a federal net operating loss carryforward of $15,100,000 at
December 31, 1996. Accordingly, the Company's income tax expense is limited to
the amount resulting from the computation of the alternative minimum tax.
F-25
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
Wells Fargo Armored Service Corporation:
We have audited the consolidated balance sheets of Wells Fargo Armored
Service Corporation (a wholly owned subsidiary of Borg-Warner Security
Corporation ("Borg-Warner")) and subsidiaries (the "Company") as of December
31, 1995 and 1996, and the related consolidated statements of operations,
stockholder's equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Wells Fargo
Armored Service Corporation and subsidiaries at December 31, 1995 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 10, in January 1997 the Company declared a dividend
payable to Borg-Warner and contributed substantially all of its assets and
assigned certain of its liabilities to Loomis, Fargo & Co.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 14, 1997
F-26
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1996
PRO FORMA
(UNAUDITED)
ASSETS 1995 1996 (NOTE 1)
------ -------- -------- -----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................... $ 4,330 $ 4,601 $ 4,601
Receivables--net............................ 14,197 14,618 14,618
Inventories................................. 1,987 1,809 1,809
Amounts receivable from Borg-Warner......... 33,256 39,857 39,857
Deferred tax asset.......................... 2,626 2,017 2,017
Other current assets........................ 4,575 5,566 5,566
-------- -------- --------
Total current assets...................... 60,971 68,468 68,468
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings.......................... 21,768 20,709 20,709
Machinery and equipment..................... 49,935 47,800 47,800
Capital leases.............................. 9,041 7,943 7,943
-------- -------- --------
80,744 76,452 76,452
Less accumulated depreciation............... 49,687 45,587 45,587
-------- -------- --------
Property, plant and equipment--net........ 31,057 30,865 30,865
NET EXCESS PURCHASE PRICE OVER NET ASSETS
ACQUIRED..................................... 28,887 27,416 27,416
DEFERRED TAX ASSET............................ 3,822 5,198 5,198
OTHER LONG-TERM ASSETS........................ 3,455 4,257 4,257
-------- -------- --------
Total other assets........................ 36,164 36,871 36,871
-------- -------- --------
TOTAL ASSETS.................................. $128,192 $136,204 $136,204
======== ======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable and capital lease
obligations................................ $ 532 $ 574 $ 574
Accounts payable and accrued expenses....... 16,791 18,075 18,075
-------- -------- --------
Total current liabilities................. 17,323 18,649 18,649
LONG-TERM LIABILITIES:
Note payable and capital lease obligations.. 2,064 1,010 1,010
Note payable to Borg-Warner................. 51,518 51,518 68,518
Accrual for casualty insurance.............. 13,582 14,742 14,742
-------- -------- --------
Total long-term liabilities............... 67,164 67,270 84,270
-------- -------- --------
Total liabilities......................... 84,487 85,919 102,919
STOCKHOLDER'S EQUITY:
Capital stock............................... 1 1 1
Capital in excess of par value.............. 31,437 36,903 36,903
Dividends declared.......................... (17,000)
Retained earnings........................... 12,307 13,424 13,424
Cumulative translation adjustment........... (40) (43) (43)
-------- -------- --------
Total stockholder's equity................ 43,705 50,285 33,285
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY.... $128,192 $136,204 $136,204
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-27
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
NET SERVICE REVENUES.............................. $211,204 $230,999 $246,328
COST OF SERVICES.................................. 177,093 188,639 204,543
-------- -------- --------
GROSS PROFIT...................................... 34,111 42,360 41,785
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...... 21,406 18,705 20,309
DEPRECIATION...................................... 7,096 7,150 6,997
MANAGEMENT FEES TO BORG-WARNER.................... 3,004 3,185 3,353
AMORTIZATION OF EXCESS PURCHASE PRICE OVER NET
ASSETS ACQUIRED.................................. 1,325 1,474 1,466
-------- -------- --------
EARNINGS FROM OPERATIONS.......................... 1,280 11,846 9,660
INTEREST EXPENSE AND FINANCE CHARGES.............. 6,567 7,135 7,683
-------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES............... (5,287) 4,711 1,977
PROVISION (BENEFIT) FOR INCOME TAXES.............. (1,798) 1,866 860
-------- -------- --------
NET EARNINGS (LOSS)............................... $ (3,489) $ 2,845 $ 1,117
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
1996
PRO FORMA
(UNAUDITED)
1994 1995 1996 (NOTE 1)
------- ------- ------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
COMMON STOCK (100 shares issued and
outstanding).......................... $ 1 $ 1 $ 1 $ 1
CAPITAL IN EXCESS OF PAR VALUE:
Beginning balance.................... 21,544 25,920 31,437 31,437
Capital contributions................ 4,376 5,517 5,466 5,466
------- ------- ------- -------
Balance at December 31............... 25,920 31,437 36,903 36,903
DIVIDENDS DECLARED..................... (17,000)
RETAINED EARNINGS:
Beginning balance.................... 12,951 9,462 12,307 12,307
Net earnings (loss).................. (3,489) 2,845 1,117 1,117
------- ------- ------- -------
Balance at December 31............... 9,462 12,307 13,424 13,424
CUMULATIVE TRANSLATION ADJUSTMENT:
Beginning balance.................... (43) (42) (40) (40)
Current year adjustment.............. 1 2 (3) (3)
------- ------- ------- -------
Balance at December 31............... (42) (40) (43) (43)
------- ------- ------- -------
TOTAL STOCKHOLDER'S EQUITY............. $35,341 $43,705 $50,285 $33,285
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-29
<PAGE>
WELLS FARGO ARMORED SERVICES CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings (loss).................................... $(3,489) $ 2,845 $ 1,117
Adjustments to reconcile earnings (loss) to net
cash flows provided
by operating activities:
Depreciation and amortization..................... 8,421 8,624 8,463
Provision for losses on receivables............... 945 983 1,853
Change in deferred income taxes................... (2,610) (1,522) (767)
Changes in assets and liabilities:
Increase in receivables.......................... (7,462) (2,777) (2,122)
(Increase) decrease in other assets and
liabilities..................................... 7,119 (5,285) (7,311)
Increase (decrease) in accounts payable and
accrued expenses................................ 4,845 (1,630) 1,284
------- ------- -------
Net cash provided by operating activities...... 7,769 1,238 2,517
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................... (6,231) (3,695) (8,065)
Proceeds from sales of fixed assets................ 2,029 430 1,520
Payments related to businesses acquired............ (5,623) (311)
------- ------- -------
Net cash used in investing activities.......... (9,825) (3,576) (6,545)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances of debt.................................. 3,500 756 32
Redemption of debt................................. (3,133) (5,119) (1,044)
Contributions from parent.......................... 4,376 5,517 5,466
Other.............................................. (15) (155)
------- ------- -------
Net cash provided by financing activities...... 4,728 1,154 4,299
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................ 2,672 (1,184) 271
CASH AND CASH EQUIVALENTS--Beginning of year........ 2,842 5,514 4,330
------- ------- -------
CASH AND CASH EQUIVALENTS--End of year.............. $ 5,514 $ 4,330 $ 4,601
======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid...................................... $ 5,051 $ 5,918 $ 5,759
Income taxes paid.................................. 56 108 352
</TABLE>
See notes to consolidated financial statements.
F-30
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS OF DOLLARS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Wells Fargo
Armored Service Corporation and subsidiaries (the "Company"), a wholly owned
subsidiary of Borg-Warner Security Corporation ("Borg- Warner").
Nature of Operations--The Company transports currency, securities and other
valuables, and provides full-service automated teller machine operations and
cash management services such as deposit verification and currency processing.
The principal markets for the Company's services are the United States and
Puerto Rico.
Use of Estimates--The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported amounts and
related disclosures. Actual results may differ from the estimates.
Cash and Cash Equivalents--Cash and cash equivalents consists primarily of
cash and certificates of deposit with original maturities of three months or
less.
Inventories--Inventories are valued at the lower of cost or market. Cost of
substantially all inventories is determined by the first-in, first-out method.
Property, Plant and Equipment and Depreciation--Property, plant and
equipment is carried at cost less accumulated depreciation. Expenditures for
maintenance, repairs and renewals of relatively minor items are generally
charged to expense as incurred. Renewals of significant items are capitalized.
Depreciation is computed generally on the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements.................................. 15 to 20 years
Machinery and equipment..................................... 3 to 12 years
Property under capital leases............................... 3 to 7 years
</TABLE>
Income Taxes--The Company is included in Borg-Warner's consolidated United
States ("U.S.") income tax return. The Company's provision for income taxes is
determined on a separate return basis.
Income taxes are determined using the liability method under which deferred
tax assets and liabilities are based on the differences between the financial
accounting and tax bases of assets and liabilities. Deferred tax assets or
liabilities at the end of each period are determined using the currently
enacted tax rate expected to apply to taxable income in the periods in which
the deferred tax asset or liability is expected to be settled or realized.
Retirement Benefit Plans--A number of eligible salaried and hourly employees
participate in contributory or noncontributory defined benefit or defined
contribution plans sponsored by Borg-Warner. Borg-Warner's funding policy is
based upon independent actuarial valuations and is within the limits required
by the Employment Retirement Income Security Act of 1974 ("ERISA") for U.S.
defined benefit plans.
The benefits provided to certain salaried employees covered under the
various defined benefit plans are based on years of service and final average
pay and utilize the projected unit credit method for cost allocation. The
benefits provided to certain hourly employees under the various defined
benefit plans are based on years of service and utilize the unit credit method
for cost allocation.
F-31
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Under the defined contribution plan, contributions are based on the
employees' salaries and are charged to earnings as they become payable to the
plan.
Casualty Insurance Liabilities--The Company has accrued a discounted
liability for the retained portion of insurance costs related to its various
deductible policies. This insurance liability is determined by Borg-Warner and
allocated to the Company based on claims filed and an estimate of claims
incurred but not yet reported. The discount rate used to value the future
obligation at December 31, 1995 and 1996 was 5.5%.
Amortization of Excess of Purchase Price Over Net Assets Acquired--Excess of
purchase price over net assets acquired is being amortized on a straight-line
basis over 5 to 40 years, with the majority being amortized over 40 years. The
Company periodically reviews the appropriateness of both the carrying value
and remaining life of the excess of purchase price over fair value of net
assets acquired by assessing recoverability based on forecasted operating cash
flows, on an undiscounted basis, and other factors. Management believes that
the carrying value and remaining life of the excess of purchase price over
fair value of net assets acquired are appropriate.
Revenue Recognition--Revenue is recognized at the time services are
provided. In certain circumstances, this can result in revenue recognition
prior to customer billing and revenue deferral from advance billings.
Pro Forma Information (Unaudited)--The pro forma information presented in
the accompanying consolidated balance sheet as of December 31, 1996 and the
accompanying consolidated statement of stockholder's equity for the year ended
December 31, 1996 includes the effects of a dividend payable declared on
January 17, 1997 (described in Note 10) recorded as a portion of long-term
debt in the pro forma balance sheet.
2. BALANCE SHEET INFORMATION
Detailed balance sheet data are as follows:
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Receivables:
Customers............................................... $14,418 $14,010
Other................................................... 763 2,456
------- -------
15,181 16,466
Less allowance for losses............................... 984 1,848
------- -------
Net receivables........................................... $14,197 $14,618
======= =======
Accounts payable and accrued expenses:
Trade payables.......................................... $ 8,589 $ 8,253
Payroll and related..................................... 3,042 5,615
Casualty insurance (short-term)......................... 1,418 1,258
Cargo insurance......................................... 2,867 1,812
Other................................................... 875 1,137
------- -------
Total accounts payable and accrued expenses........... $16,791 $18,075
======= =======
</TABLE>
The Company participates in Borg-Warner's agreement to sell a $120,000
undivided interest in a revolving pool of customer receivables. The Company's
portion of this sold interest is $13,194 and $13,042 at December 31, 1995 and
1996, respectively, and is reflected as a reduction of "Receivables-net" in
the accompanying Consolidated Balance Sheets. The full amount of the allowance
for losses has been retained because the Company has retained substantially
the same risk of credit loss as if the receivables had not been sold. The
F-32
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
discount related to the sale of receivables is included with "Interest expense
and finance charges" in the Consolidated Statements of Operations.
Selling, general and administrative expenses include provisions for losses
on receivables of approximately $945, $983 and $1,853 in 1994, 1995 and 1996,
respectively. The allowance for doubtful accounts includes deductions of
$1,191 and $989 in 1995 and 1996, respectively.
Accumulated depreciation related to capital leases amounted to approximately
$5,790 and $5,603 at December 31, 1995 and 1996, respectively. Accumulated
amortization related to excess purchase price over net assets acquired
amounted to $10,063 and $9,581 at December 31, 1995 and 1996, respectively.
Trade payables include checks outstanding in excess of bank deposits in
Borg-Warner's central disbursement accounts, since arrangements with the banks
do not call for reimbursement until checks are presented for payment. Such
amounts were $5,483 and $4,085 at December 31, 1995 and 1996, respectively.
The long-term portion of the casualty insurance accrual was $13,582 and
$14,742 at December 31, 1995 and 1996, respectively. The estimated aggregate
undiscounted insurance liability was $17,226 and $17,086 at December 31, 1995
and 1996, respectively.
3. COMMITMENTS
Rental commitments on non-cancelable operating leases with terms exceeding
one year are summarized at December 31, 1996 as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997............................................................... $ 8,027
1998............................................................... 6,970
1999............................................................... 4,504
2000............................................................... 3,276
2001............................................................... 2,652
2002 and after..................................................... 2,317
-------
Total............................................................ $27,746
=======
</TABLE>
Total rental expense amounted to $5,799, $9,303 and $10,321 in 1994, 1995
and 1996, respectively.
F-33
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
The following is a summary of all borrowings of the Company:
<TABLE>
<CAPTION>
1995 1996
----------------- -----------------
CURRENT LONG-TERM CURRENT LONG-TERM
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Note payable to Borg-Warner (at an
average rate of 10.5% in 1995 and
10.3% in 1996)........................ $51,518 $51,518
Capital lease liabilities (at an
average rate of 9.3% in 1995 and 9.0%
in 1996).............................. $532 1,064 $574 10
Industrial revenue bond (at an average
rate of 11.2%)........................ 1,000 1,000
---- ------- ---- -------
Total notes payable and long-term
debt................................ $532 $53,582 $574 $52,528
==== ======= ==== =======
</TABLE>
Maturities of long-term debt and capital lease obligations are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997............................................................... $ 574
1998............................................................... 10
1999............................................................... --
2000............................................................... 200
2001............................................................... 200
2002 and after..................................................... 52,118
-------
Total............................................................ $53,102
=======
</TABLE>
5. CONTINGENT LIABILITIES
The Company is involved in a number of legal actions arising in the ordinary
course of business. The Company believes that the various asserted claims and
litigation in which it is involved will not materially affect its financial
position or future operating results, although no assurance can be given with
respect to the ultimate outcome of any such claim or litigation.
6. TRANSACTIONS WITH AFFILIATES
Pursuant to an agreement, the Company paid management fees to Borg-Warner of
$3,004, $3,185 and $3,353 in 1994, 1995 and 1996, respectively. The fees
include charges for administrative services provided by Borg-Warner during the
ordinary course of business.
The Company maintained a note payable to a subsidiary of Borg-Warner of
$51,518 at December 31, 1995 and 1996. The note bears interest at the prime
rate plus 2.0% and its stated maturity is January 1, 2003. Related interest
expense was $4,606, $5,648 and $5,401 in 1994, 1995 and 1996, respectively.
Amounts receivable from Borg-Warner primarily represent advances to Borg-
Warner offset by certain tax and other liabilities owed to Borg-Warner.
F-34
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. PENSION AND OTHER RETIREMENT BENEFITS
The Company participates in various defined benefit plans and a defined
contribution plan (the "Plans") sponsored by Borg-Warner, which cover eligible
employees. The Plans are funded according to ERISA and income tax regulations
as applicable. The expense allocated to the Company by Borg-Warner under
defined benefit plans amounted to $784, $486 and $625 in 1994, 1995 and 1996,
respectively. This expense was actuarially determined based upon factors
including the number of participating employees and the related accumulated
benefit obligation. Management believes that this allocation method is
reasonable. The expense allocated to the Company by Borg-Warner under the
defined contribution plan, representing matching contributions made on behalf
of the Company's employees, was $153, $159 and $157 in 1994, 1995 and 1996
respectively.
8. INCOME TAXES
Provision (benefit) for income taxes consists of:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- ------
<S> <C> <C> <C>
Current:
Federal........................................ $ 332 $ 3,178 $1,176
State.......................................... 480 210 451
Deferred......................................... (2,610) (1,522) (767)
------- ------- ------
Provision (benefit) for income taxes............. $(1,798) $ 1,866 $ 860
======= ======= ======
</TABLE>
The analysis of the variance of income taxes as reported from income taxes
computed at the U.S. statutory federal income tax rate is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ -----
<S> <C> <C> <C>
Income taxes at U.S. statutory rate of 35%......... $(1,850) $1,649 $ 692
Increases (decreases) resulting from:
State income taxes............................... 312 137 293
Non-temporary differences........................ 61 (47) 157
Other--net....................................... (321) 127 (277)
------- ------ -----
Income taxes reported.............................. $(1,798) $1,866 $ 860
======= ====== =====
</TABLE>
F-35
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the deferred tax asset at December 31, 1995 and 1996 were
as follows:
<TABLE>
<CAPTION>
1995 1996
-------------- --------------
LONG- LONG-
CURRENT TERM CURRENT TERM
------- ------ ------- ------
<S> <C> <C> <C> <C>
Deferred tax assets:
Accruals for casualty insurance............ $5,884 $6,415
Allowance for bad debts.................... $1,363 $ 739
Miscellaneous accruals..................... 1,060 2,156
Other--net................................. 287 8
------ ------ ------ ------
Total deferred tax assets.................... 2,710 5,884 2,903 6,415
Deferred tax liabilities:
Net excess purchase price over net assets
acquired.................................. 160 222
Fixed assets............................... 1,902 995
Prepaid assets............................. 84 886
------ ------ ------ ------
Total deferred tax liabilities............... 84 2,062 886 1,217
------ ------ ------ ------
Net deferred tax assets...................... $2,626 $3,822 $2,017 $5,198
====== ====== ====== ======
</TABLE>
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, receivables, notes
payable and accounts payable approximate fair value because of the short
maturity of these instruments and because interest rates are based on floating
rates identified by market rates.
10. SUBSEQUENT EVENTS
On January 17, 1997, the Company declared a dividend of $17,000 to Borg-
Warner payable in the form of a promissory note at a rate of prime plus 2.0%
due and payable on January 1, 2003.
On January 24, 1997, the Company contributed substantially all of its assets
and assigned certain of its liabilities to Loomis, Fargo & Co. ("Loomis
Fargo") in exchange for (i) 4,900,000 shares of Loomis Fargo common stock and
(ii) a cash payment of approximately $105 million which includes amounts paid
to satisfy intercompany indebtedness assumed by Loomis Fargo, including all
intercompany payables to Borg-Warner. Borg-Warner and the former stockholders
of Loomis Holding Corporation own 49% and 51%, respectively, of Loomis Fargo.
F-36
<PAGE>
WELLS FARGO ARMORED SERVICE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF BORG-WARNER SECURITY CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------
1995 1996
------------------------------------------ -------------------------------------------
MAR. 31 JUN. 30 SEPT. 30 DEC. 31 YEAR 1995 MAR. 31 JUN. 30 SEPT. 30 DEC. 31 YEAR 1996
------- ------- -------- ------- --------- ------- ------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net service revenues.... $56,684 $56,750 $58,092 $59,473 $230,999 $59,004 $60,733 $62,545 $64,046 $246,328
Cost of services........ 45,739 47,581 48,441 46,878 188,639 49,559 51,211 52,599 51,174 204,543
------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Gross profit............ 10,945 9,169 9,651 12,595 42,360 9,445 9,522 9,946 12,872 41,785
Selling, general and
administrative
expenses............... 4,928 3,894 4,740 5,143 18,705 4,358 3,925 5,539 6,487 20,309
Depreciation............ 1,716 1,785 1,738 1,911 7,150 1,690 1,718 1,786 1,803 6,997
Management fees to Borg-
Warner................. 799 776 801 809 3,185 830 825 848 850 3,353
Amortization of excess
purchase price over net
assets acquired........ 370 358 368 378 1,474 368 365 367 366 1,466
------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Earnings from
operations............. 3,132 2,356 2,004 4,354 11,846 2,199 2,689 1,406 3,366 9,660
Interest expense and
finance charges........ 1,701 1,763 1,762 1,909 7,135 1,820 1,802 2,020 2,041 7,683
------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Earnings (loss) before
income taxes........... 1,431 593 242 2,445 4,711 379 887 (614) 1,325 1,977
Provision (benefit) for
income taxes........... 539 213 87 1,027 1,866 199 566 (344) 439 860
------- ------- ------- ------- -------- ------- ------- ------- ------- --------
Net earnings (loss)..... $ 892 $ 380 $ 155 $ 1,418 $ 2,845 $ 180 $ 321 $ (270) $ 886 $ 1,117
======= ======= ======= ======= ======== ======= ======= ======= ======= ========
</TABLE>
F-37
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED
HEREBY NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT
WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 17
The Transactions......................................................... 22
Use of Proceeds.......................................................... 25
Capitalization........................................................... 26
Pro Forma Combined Financial Information................................. 27
Selected Historical Financial Information................................ 34
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 38
Business................................................................. 49
Management............................................................... 57
Security Ownership of Certain Beneficial Owners and Management........... 62
Certain Relationships and Related Transactions........................... 64
Description of New Credit Facility....................................... 66
The Exchange Offer....................................................... 68
Certain Federal Income Tax Considerations................................ 74
Description of New Notes................................................. 75
Plan of Distribution..................................................... 100
Legal Matters............................................................ 100
Experts.................................................................. 101
Index to Financial Statements............................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OFFER FOR ALL
OUTSTANDING 10% SENIOR
SUBORDINATED NOTES DUE 2004
IN EXCHANGE FOR
10% SENIOR SUBORDINATED NOTES
DUE 2004
OF
LOOMIS, FARGO & CO.
------------------
PROSPECTUS
------------------
JUNE , 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table set forth the expenses payable in connection with the
offering of the securities to be registered and offered hereby. All of such
expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $25,757.58
Printing and Engraving Expenses................................... *
----------
Legal Fees and Expenses .......................................... *
----------
Accounting Fees and Expenses...................................... *
----------
Miscellaneous..................................................... *
----------
Total......................................................... $ *
==========
</TABLE>
- --------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware law authorizes corporations to limit or to eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The Certificate of
Incorporation of Loomis, Fargo & Co. (the "Company"), as amended (the
"Charter"), limits the liability of the Company's directors to the Company or
its stockholders to the fullest extent permitted by the Delaware statute as in
effect from time to time. Specifically, directors of the Company will not be
personally liable for monetary damages for breach of a director's fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, (iii) for unlawful payments of dividends or unlawful stock repurchases
or redemptions as provided in the Delaware law, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Charter of the Company provides that Company shall indemnify its
officers and directors and former officers and directors to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Pursuant to
the provisions of Section 145 of the General Corporation Law of the State of
Delaware, the Company has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding (other than an action by or in the right
of the Company) by reason of the fact that he is or was a director, officer,
employee, or agent of the Company, against any and all expenses, judgments,
fines, and amounts paid in actually and reasonably incurred m connection with
such action, suit, or proceeding. The power to indemnify applies only if such
person acted in good faith and in a manner he reasonably believed to be in the
best interest or not opposed to the best interest, of the Company and with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of the
Company as well, but only to the extent of defense and settlement expenses and
not to any satisfaction of a judgment or settlement of the claim itself, and
with the further limitation that in such actions no indemnification shall be
made in the event of any adjudication of negligence or misconduct unless the
court, in its discretion, believes that in light of all the circumstances
indemnification should apply.
The statute further specifically provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or director may be entitled under any bylaws, agreements,
vote of stockholders or disinterested directors, or otherwise.
II-1
<PAGE>
Insofar as indemnifications for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person thereof in the successful defense of any action,
suit or proceeding) is asserted by a director, officer or controlling person
in connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlled
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On January 24, 1997, the Company sold $85,000,000 aggregate principal amount
of 10% Senior Subordinated Notes due 2004 (the "Old Notes") in a private
placement in reliance on Section 4(2) under the Securities Act, at a price
equal to 100% of the stated principal amount of such Old Notes. The Old Notes
were immediately resold by the initial purchasers thereof in reliance on Rule
144A under the Securities Act.
On January 24, 1997, the Company issued 10,000,000 shares of its common
stock, $0.01 par value, to two purchasers in a transaction exempt from the
registration requirements of the Securities Act in reliance on Section 4(2)
thereof. Such shares of common stock were issued in exchange for securities
and assets in connection with the initial capitalization of the Company.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
2.1 -- Contribution Agreement, dated as of November 28, 1996, among
the Company, LFC Holding Corporation (formerly known as Loomis
Holding Corporation) ("LFC Holding") Loomis Fargo & Co (Texas)
(formerly known as Loomis Armored Inc.) ("Loomis, Fargo Texas"),
Borg-Warner Security Corporation, Wells Fargo Armored Service
Corporation, and the Loomis Stockholders Trust.*
2.2 -- Business Trust Agreement, dated as of November 27, 1996, among
Wingate Partners, L.P. and Wingate Affiliates, L.P., as initial
grantors, Wilmington Trust Company, as trustee, Frederick B.
Hegi, Jr., as manager, and the Unitholders parties thereto.*
2.3 -- Trust Unit Exchange Agreement, dated as of January 24, 1997,
among the Loomis Stockholders Trust and the Exchanging
Shareholders parties thereto.*
3.1 -- Certificate of Incorporation of Loomis, Fargo & Co.
(Delaware), as amended.**
3.2 -- Bylaws of Loomis, Fargo & Co. (Delaware).**
3.3 -- Certificate of Incorporation of LFC Holding, as amended.**
3.4 -- Bylaws of LFC Holding, as amended.**
3.5 -- Articles of Incorporation of Loomis, Fargo Texas, as
amended.**
3.6 -- Restated Bylaws of Loomis, Fargo Texas.**
3.7 -- Articles of Incorporation of LFC Armored of Texas Inc., as
amended.**
3.8 -- Bylaws of LFC Armored of Texas, Inc.**
3.9 -- Amended and Restated of Incorporation of Loomis, Fargo & Co.
of Puerto Rico, as amended.**
3.10 -- Bylaws of Loomis, Fargo & Co. of Puerto Rico.**
4.1 -- Indenture, dated as of January 24, 1997, among the Company, as
Issuer, LFC Holding, Loomis, Fargo Texas, LFC Armored of Texas
Inc. (formerly known as Wells Fargo Armored Service Corporation
of Texas) ("LFC of Texas"), and Loomis, Fargo & Co of Puerto
Rico (formerly known as Wells Fargo Armored Service Corporation
of Puerto Rico) ("LFC of Puerto Rico"), as Guarantors, and
Marine Midland Bank, as trustee.*
4.2 -- Form of Old Note (included in Exhibit 4.1, Exhibit A-1).
4.3 -- Form of New Note (included in Exhibit 4.1, Exhibit A-3).
4.4 -- Registration Rights Agreement, dated as of January 24, 1997,
among Loomis, the Company, LFC Holding, Loomis, Fargo Texas, LFC
of Texas, LFC of Puerto Rico and Lehmen Brothers Inc. and
NationsBanc Capital Markets, Inc.*
4.5 -- Purchase Agreement, dated as of January 17, 1997, among the
Company, LFC Holding, Loomis, Fargo Texas and Lehman Brothers
Inc. and NationsBanc Capital Markets, Inc., as initial
purchasers.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the securities
registered hereby.+
II-3
<PAGE>
10.1 -- Credit Agreement, dated as of January 24, 1997, among the
Company, as borrower, the several lenders parties thereto,
Lehman Commercial Paper Inc. ("LCPI") and NationsBank of Texas,
N.A. ("NationsBank"), as arrangers, LCPI and NationsBanc Capital
Markets, Inc., as syndication agents, LCPI as documentation
agent, and NationsBank as administrative agent.**
10.2 -- Guarantee and Collateral Agreement made by the Company, LFC
Holding, Loomis, Fargo Texas, LFC of Texas and LFC of Puerto
Rico, in favor of NationsBank of Texas, N.A.+
10.3 -- Stockholders Agreement dated as of January 24, 1997 among the
Company, Wells Fargo Armored Service Corporation, the Loomis
Stockholders Trust and Wingate Partners, L.P.*
10.4 -- Loomis Indemnity Trust Agreement, dated as of January 24,
1997, among the Company, the Loomis Stockholders Trust, and
Frederick B. Hegi, Jr., as trustee.*
10.5 -- Excess Claims Assumption Agreement, dated as of January 24,
1997, among the Company, LFC Holding, Loomis, Fargo Texas, and
the Loomis Stockholders Trust.*
10.6 -- Unitholders Option Plan and Agreement, dated as of January 24,
1997, among the Company and the Unitholders signatories
thereto.*
10.7 -- Stock Contribution Agreement, dated as of January 24, 1997,
between the Company and the Loomis Stockholders Trust.*
10.8 -- NOL Promissory Note, dated as of January 24, 1997, of the
Company in the principal amount of $6,000,000, payable to the
Loomis Stockholders Trust.*
10.9 -- Fleet Lease Agreement, dated as of December 2, 1996, between
Associates Leasing, Inc. and Wells Fargo Armored Service
Corporation.*
10.10 -- Transfer and Assumption Agreement, dated as of January 2,
1997, among Wells Fargo Armored Service Corporation, Borg-Warner
Security Corporation, the Company and Associates Leasing, Inc.*
10.11 -- Transition Services Agreement, dated as of January 24, 1997,
between the Company and Pony Express Courier Corp.*
10.12 -- Employment Agreement, dated as of November 11, 1991, as
amended, between LFC Holding Corporation (formerly known as
Loomis Holding Corporation) and James B. Mattly.**
12.1 -- Statement Re: Computation of Ratio of Earnings to Fixed
Charges of Loomis Holding Corporation.**
12.2 -- Statement Re: Computation of Pro Forma Ratio of Earnings to
Fixed Charges of Loomis, Fargo & Co.**
21.1 -- Subsidiaries of the Company.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).
23.2 -- Consent of Ernst & Young LLP, independent auditors.**
23.3 -- Consent of Deloitte & Touche LLP, independent auditors.**
24.1 -- Powers of Attorney.*
25.1 -- Form T-1 of Marine Midland Bank, as Trustee under the
Indenture filed as Exhibit 4.1.+
99.1 -- Form of Letter of Transmittal.+
99.2 -- Form of Notice of Guaranteed Delivery.+
- --------
* Previously filed.
** Filed herewith.
+ To be filed by amendment.
II-4
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted since the required information is either not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Co-Registrants hereby undertaken:
(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;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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 the time shall be
deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) See Item 14.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 2nd day of June, 1997.
LOOMIS, FARGO & CO., a Delaware
corporation
/s/ James K. Jennings, Jr.
BY: ___________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, and Director of the June 2, 1997
---------------------------- Co-Registrant listed above
J. Joe Adorjan
* President, Chief Executive Officer and June 2, 1997
---------------------------- Director of the Co-Registrant listed
James B. Mattly above (Principal Executive Officer)
/s/ James K. Jennings, Jr. Executive Vice President and chief June 2, 1997
---------------------------- Financial Officer of the Co-Registrant
James K. Jennings, Jr. listed above (Principal Financial and
Accounting Officer)
* Director of the Co-Registrant listed June 2, 1997
---------------------------- above
Frederick B. Hegi, Jr.
* Director of the Co-Registrant listed June 2, 1997
---------------------------- above
Timothy M. Wood
* Director of the Co-Registrant listed June 2, 1997
---------------------------- above
Jay I. Applebaum
* Director of the Co-Registrant listed June 2, 1997
---------------------------- above
John D. O'Brien
* Director of the Co-Registrant listed June 2, 1997
---------------------------- above
James T. Callier, Jr.
*/s/ James K. Jennings, Jr.
----------------------------
James K. Jennings, Jr.
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 2nd day of June, 1997.
LFC HOLDING CORPORATION
/s/ James K. Jennings, Jr.
BY: ___________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, and Director of the June 2, 1997
- ---------------------------- Co-Registrant listed above
J. Joe Adorjan
* President, Chief Executive Officer and June 2, 1997
- ---------------------------- Director of the Co-Registrant listed
James B. Mattly above (Principal Executive Officer)
/s/ James K. Jennings, Jr. Executive Vice President and chief June 2, 1997
- ---------------------------- Financial Officer of the Co-Registrant
James K. Jennings, Jr. listed above (Principal Financial and
Accounting Officer)
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Frederick B. Hegi, Jr.
* Director of the Co-Registrant listed June 2, 1997
- ----------------------------
Timothy M. Wood above
* Director of the Co-Registrant listed June 2, 1997
- ----------------------------
Jay I. Applebaum above
* Director of the Co-Registrant listed June 2, 1997
- ----------------------------
John D. O'Brien above
* Director of the Co-Registrant listed June 2, 1997
- ----------------------------
James T. Callier, Jr. above
*/s/ James K. Jennings, Jr.
- ----------------------------
James K. Jennings, Jr.
Attorney-in-Fact
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 2nd day of June, 1997.
LOOMIS, FARGO & CO., a Texas
corporation
/s/ James K. Jennings, Jr.
BY: ___________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, and Director of the June 2, 1997
- ---------------------------- Co-Registrant listed above
J. Joe Adorjan
* President, Chief Executive Officer and June 2, 1997
- ---------------------------- Director of the Co-Registrant listed
James B. Mattly above (Principal Executive Officer)
/s/ James K. Jennings, Jr. Executive Vice President and chief June 2, 1997
- ---------------------------- Financial Officer of the Co-Registrant
James K. Jennings, Jr. listed above (Principal Financial and
Accounting Officer)
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Frederick B. Hegi, Jr.
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Timothy M. Wood
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Jay I. Applebaum
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
John D. O'Brien
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
James T. Callier, Jr.
*/s/ James K. Jennings, Jr.
- ----------------------------
James K. Jennings, Jr.
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 2nd day of June, 1997.
LFC ARMORED OF TEXAS INC.
/s/ James K. Jennings, Jr.
BY: ___________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, and Director of the June 2, 1997
- ---------------------------- Co-Registrant listed above
J. Joe Adorjan
* President, Chief Executive Officer and June 2, 1997
- ---------------------------- Director of the Co-Registrant listed
James B. Mattly above (Principal Executive Officer)
/s/ James K. Jennings, Jr. Executive Vice President and chief June 2, 1997
- ---------------------------- Financial Officer of the Co-Registrant
James K. Jennings, Jr. listed above (Principal Financial and
Accounting Officer)
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Frederick B. Hegi, Jr.
*/s/ James K. Jennings, Jr.
- ----------------------------
James K. Jennings, Jr.
Attorney-in-Fact
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 2nd day of June, 1997.
LOOMIS, FARGO & CO. OF PUERTO RICO
/s/ James K. Jennings, Jr.
BY: ___________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, and Director of the June 2, 1997
- ---------------------------- Co-Registrant listed above
J. Joe Adorjan
* President, Chief Executive Officer and June 2, 1997
- ---------------------------- Director of the Co-Registrant listed
James B. Mattly above (Principal Executive Officer)
/s/ James K. Jennings, Jr. Executive Vice President and chief June 2, 1997
- ---------------------------- Financial Officer of the Co-Registrant
James K. Jennings, Jr. listed above (Principal Financial and
Accounting Officer)
* Director of the Co-Registrant listed June 2, 1997
- ---------------------------- above
Frederick B. Hegi, Jr.
*/s/ James K. Jennings, Jr.
- ----------------------------
James K. Jennings, Jr.
Attorney-in-Fact
</TABLE>
II-10
<PAGE>
EXHIBIT 3.1
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "LOOMIS-WELLS CORPORATION", CHANGING ITS NAME FROM "LOOMIS-WELLS CORPORATION"
TO "LOOMIS, FARGO & CO.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF
DECEMBER, A.D. 1996, AT 2:15 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL APPEARS HERE] /s/ EDWARD J. FREEL
------------------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8263753
2650365 8100
DATE: 12-27-96
960386148
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOOMIS-WELLS CORPORATION
Loomis-Wells Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
-----------
hereby certify as follows:
FIRST: The Corporation has not received any payment for any of its stock.
SECOND: The amendment to the Corporation's Certificate of Incorporation set
forth in the following resolution approved by the sole director of the
Corporation was duly adopted in accordance with the provisions of Section 241 of
the General Corporation Law of the State of Delaware:
"RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by striking Article FIRST in its entirety and replacing therefor:
'FIRST: The name of the Corporation is Loomis, Fargo & Co.'"
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment as of the 27th day of December, 1996.
LOOMIS-WELLS CORPORATION
By: /s/ F. B. Hegi, Jr.
-------------------------------------
Frederick B. Hegi, Jr., President
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "LOOMIS-WELLS CORPORATION", FILED IN THIS OFFICE ON THE FIFTH
DAY OF AUGUST, A.D. 1996, AT 3 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL APPEARS HERE] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8055451
2650365 8100
DATE: 08-05-96
960227718
<PAGE>
CERTIFICATE OF INCORPORATION
OF
LOOMIS-WELLS CORPORATION
- --------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General Corporation
Law of the State of Delaware, do hereby adopt the following Certificate of
Incorporation for the Corporation:
FIRST: The name of the Corporation is Loomis-Wells Corporation.
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of the State of Delaware. The Corporation will
have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 21,000,000 shares of capital stock, classified as (i)
1,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"), and (ii) 20,000,000 shares of common stock, par value $.01 per share
("Common Stock").
The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock and Common Stock are as
follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations
and powers, preferences, and rights, and qualifications, limitations, and
restrictions thereof, as are stated and expressed herein and in the resolution
or resolutions providing for the issue of such class or series adopted by the
board of directors of the Corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and vested in the board of
directors of the Corporation to authorize the issuance of the Preferred Stock
from time to
<PAGE>
time in one or more classes or series, and with respect to each class or series
of the Preferred Stock, to fix and state by the resolution or resolutions from
time to time adopted providing for the issuance thereof the following:
(i) whether or not the class or series is to have voting rights, full,
special, or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences, and relative, participating, optional, or other
special rights, if any, and the qualifications, limitations, or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be
redeemable at the option of the Corporation or the holders thereof or upon the
happening of any specified event, and, if redeemable, the redemption price or
prices (which may be payable in the form of cash, notes, securities, or other
property), and the time or times at which, and the terms and conditions upon
which, such shares shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to
the operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof, and the terms
and provisions relative to the operation thereof;
(vi) whether or not dividends shall be payable and, if so, the dividend
rate, whether dividends are payable in cash, stock of the Corporation, or other
property, the conditions upon which and the times when such dividends are
payable, the preference to or the relation to the payment of dividends payable
or any other class or classes or series of stock, whether or not such dividends
shall be cumulative or noncumulative, and if cumulative, the date or dates from
which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders
of any class or series thereof shall be entitled to receive upon the voluntary
or involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
2
<PAGE>
(viii) whether or not the shares of any class or series, at the option
of the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the board of directors of the Corporation seem
advisable.
(c) The shares of each class or series of the Preferred Stock may vary
from the shares of any other class or series thereof in any or all of the
foregoing respects. The board of directors of the Corporation may increase the
number of shares of the Preferred Stock designated for any existing class or
series by a resolution adding to such class or series authorized and unissued
shares of the Preferred Stock not designated for any other class or series. The
board of directors of the Corporation may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares of the
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of the
preferential amounts, if any, to be distributed to the holders of shares of the
Preferred Stock or any series thereof, the holders of shares of the Common Stock
shall be entitled to receive all of the remaining assets
3
<PAGE>
of the Corporation available for distribution to its stockholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms are
used in this Paragraph (c), shall not be deemed to be occasioned by or to
include any consolidation or merger of the Corporation with or into any other
corporation or corporations or other entity or a sale, lease, exchange, or
conveyance of all or a part of the assets of the Corporation.
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Preferred Stock and
Common Stock from time to time for such consideration (not less than the par
value thereof) as may be fixed by the board of directors of the Corporation,
which is expressly authorized to fix the same in its absolute and uncontrolled
discretion subject to the foregoing conditions. Shares so issued for which the
consideration shall have been paid or delivered to the Corporation shall be
deemed fully paid stock and shall not be liable to any further call or
assessment thereon, and the holders of such shares shall not be liable for any
further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights
and options entitling their holders to purchase shares of the Corporation's
capital stock of any class or series or other securities of the Corporation, and
such rights and options shall be evidenced by instrument(s) approved by the
board of directors of the Corporation. The board of directors of the Corporation
shall be empowered to set the exercise price, duration, times for exercise, and
other terms of such options or rights; provided, however, that the consideration
--------- -------
to be received for any shares of capital stock subject thereto shall not be less
than the par value thereof.
FIFTH: The name of the incorporator of the Corporation is W. Stuart Ogg,
and the mailing address of such incorporator is 100 Crescent Court, Suite 1300,
Dallas, Texas 75201-6950.
SIXTH: The number of directors constituting the initial board of directors
is one, and the name and mailing address of the person who is to serve as
director until the first annual meeting of stockholders or until his successor
is elected and qualified is as follows:
Frederick B. Hegi, Jr. 750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
4
<PAGE>
SEVENTH: Directors of the Corporation need not be elected by written ballot
unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to adopt,
amend, and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or more
of its directors, officers, or stockholders or between the Corporation and any
person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved, or ratified by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended. Such right shall be a
contract right and as such shall run to the benefit of any director or officer
who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Tenth is in effect. Any repeal or amendment of
this Article Tenth shall be prospective only and
5
<PAGE>
shall not limit the rights of any such director or officer or the obligations of
the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior to
any such repeal or amendment to this Article Tenth. Such right shall include the
right to be paid by the Corporation expenses incurred in investigating or
defining any such proceeding in advance of its final disposition to the maximum
extent permitted under the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation within
sixty (60) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and if successful in whole or in part,
the claimant shall also be entitled to be paid the expenses of prosecuting such
claim. It shall be a defense to any such action that such indemnification or
advancement of costs of defense are not permitted under the General Corporation
Law of the State of Delaware, but the burden of proving such defense shall be on
the Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof, independent legal counsel, or stockholders)
to have made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators, and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, bylaw, resolution of stockholders or directors,
agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ELEVENTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve
6
<PAGE>
intentional misconduct or knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or amendment of this Article Eleventh by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Eleventh, a director shall not be liable to the Corporation or its stockholders
to such further extent as permitted by any law hereafter enacted, including
without limitation any subsequent amendment to the General Corporation Law of
the State of Delaware.
TWELFTH: The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
I, the undersigned, for the purpose of forming the Corporation under the
laws of the State of Delaware, do make, file, and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 5th
day of August, 1996.
/s/ W. Stuart Ogg
---------------------------------------------
W. Stuart Ogg
7
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
LOOMIS-WELLS CORPORATION
A Delaware Corporation
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent...................... 1
---------------------------
1.2 Other Offices.................................... 1
-------------
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting.................................. 1
--------------
2.2 Special Meeting................................. 2
---------------
2.3 Place of Meetings............................... 2
-----------------
2.4 Notice.......................................... 2
------
2.5 Voting List..................................... 2
-----------
2.6 Quorum.......................................... 3
------
2.7 Required Vote; Withdrawal of Quorum............. 3
-----------------------------------
2.8 Method of Voting; Proxies....................... 3
-------------------------
2.9 Record Date..................................... 4
-----------
2.10 Conduct of Meeting.............................. 5
------------------
2.11 Inspectors...................................... 5
----------
ARTICLE THREE: DIRECTORS
3.1 Management...................................... 6
----------
3.2 Number; Qualification; Election; Term........... 6
-------------------------------------
3.3 Change in Number................................ 6
----------------
3.4 Removal......................................... 6
-------
3.5 Vacancies....................................... 6
---------
3.6 Meetings of Directors........................... 7
---------------------
3.7 First Meeting................................... 7
-------------
3.8 Election of Officers............................ 7
--------------------
3.9 Regular Meetings................................ 7
----------------
3.10 Special Meetings................................ 7
-----------------
3.11 Notice.......................................... 7
------
3.12 Quorum; Majority Vote........................... 8
---------------------
3.13 Procedure....................................... 8
---------
3.14 Presumption of Assent........................... 8
---------------------
(i)
<PAGE>
Page
----
3.15 Compensation.................................... 9
------------
ARTICLE FOUR: COMMITTEES
4.1 Designation..................................... 9
-----------
4.2 Number; Qualification: Term..................... 9
---------------------------
4.3 Authority....................................... 9
---------
4.4 Committee Changes............................... 9
-----------------
4.5 Alternate Members of Committees................. 9
-------------------------------
4.6 Regular Meetings................................ 10
----------------
4.7 Special Meetings................................ 10
----------------
4.8 Quorum; Majority Vote........................... 10
---------------------
4.9 Minutes......................................... 10
-------
4.10 Compensation.................................... 10
------------
4.11 Responsibility.................................. 10
--------------
ARTICLE FIVE: NOTICE
5.1 Method.......................................... 10
------
5.2 Waiver.......................................... 11
------
ARTICLE SIX: OFFICERS
6.1 Number; Titles: Term of Office................. 11
-------------------------------
6.2 Removal........................................ 11
-------
6.3 Vacancies...................................... 12
---------
6.4 Authority...................................... 12
---------
6.5 Compensation................................... 12
------------
6.6 Chairman of the Board.......................... 12
---------------------
6.7 President...................................... 12
---------
6.8 Vice Presidents................................ 12
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6.9 Treasurer...................................... 12
---------
6.10 Assistant Treasurers........................... 13
--------------------
6.11 Secretary...................................... 13
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6.12 Assistant Secretaries.......................... 13
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ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares........................ 13
-----------------------
(ii)
<PAGE>
Page
----
7.2 Replacement of Lost or Destroyed Certificates.. 14
---------------------------------------------
7.3 Transfer of Shares............................. 14
------------------
7.4 Registered Stockholders........................ 14
-----------------------
7.5 Regulations.................................... 14
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7.6 Legends........................................ 15
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ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends...................................... 15
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8.2 Reserves....................................... 15
--------
8.3 Books and Records.............................. 15
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8.4 Fiscal Year.................................... 15
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8.5 Seal........................................... 15
----
8.6 Resignations................................... 15
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8.7 Securities of Other Corporations............... 16
--------------------------------
8.8 Telephone Meetings............................. 16
------------------
8.9 Action Without a Meeting....................... 16
------------------------
8.10 Invalid Provisions............................. 17
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8.11 Mortgages, etc................................. 17
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8.12 Headings....................................... 17
--------
8.13 References..................................... 17
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8.14 Amendments..................................... 17
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(iii)
<PAGE>
BYLAWS
of
LOOMIS-WELLS CORPORATION
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Loomis-Wells Corporation, a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions of
these bylaws and the mandatory provisions of the Delaware General Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Delaware General Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
---------------------------
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
-------------
places, both within and without the State of Delaware, as the board of directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the Corporation
--------------
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meeting, the stockholders shall elect directors and transact such other business
as may properly be brought before the meeting.
<PAGE>
2.2 Special Meeting. A special meeting of the stockholders may be called
---------------
at any time by the Chairman of the Board, the President or the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be held
on such date and at such time as shall be designated by the person(s) calling
the meeting and stated in the notice of the meeting or in a duly executed waiver
of notice of such meeting. Only such business shall be transacted at a special
meeting as may be stated or indicated in the notice of such meeting or in a duly
executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held at
-----------------
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and time of
------
each meeting of the stockholders and, in 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 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person(s) calling the meeting, to each stockholder of record entitled to vote at
such meeting. If such notice is to be sent by mail, it shall be directed to such
stockholder at his address as it appears on the records of the Corporation,
unless he shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, in which case it
shall be directed to him at such other address. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the meeting is
not lawfully called or convened, or who shall, either before or after the
meeting, submit a signed waiver of notice, in person or by proxy.
2.5 Voting List. At least ten days before each meeting of stockholders,
-----------
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to
2
<PAGE>
be held, which place shall be specified in the notice of meeting or a duly
executed waiver of notice of such meeting or, if not so specified, at the place
where the meeting is to be held and shall be open to examination by any
stockholder during ordinary business hours. Such list shall be produced at such
meeting and kept at the meeting at all times during such meeting and may be
inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares entitled
------
to vote on a matter, present in person or by proxy, shall constitute a quorum at
any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present at any
-----------------------------------
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in the
-------------------------
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the
3
<PAGE>
proxy. If no date is stated in a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each proxy
shall be revocable unless expressly provided therein to be irrevocable and
coupled with an interest sufficient in law to support an irrevocable power or
unless otherwise made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
-----------
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination of
stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business
on the day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(iii) 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.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law or these bylaws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its
4
<PAGE>
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office in the State of
Delaware, principal place of business, or such officer or agent shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the board of directors and prior action by the board of
directors is required by law or these bylaws, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office has been
------------------
filled, and, if not or if the Chairman of the Board is absent or otherwise
unable to act, the President shall preside at all meetings of stockholders. The
Secretary shall keep the records of each meeting of stockholders. In the absence
or inability to act of any such officer, such officer's duties shall be
performed by the officer given the authority to act for such absent or non-
acting officer under these bylaws or by some person appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any meeting of
----------
stockholders, appoint one 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 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
all 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.
5
<PAGE>
ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
----------
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The first board of directors
-------------------------------------
shall consist of the number of directors named in the certificate of
incorporation of the Corporation. Thereafter, the number of directors which
shall constitute the entire board of directors shall be determined by resolution
of the board of directors or by resolution of the stockholders at the annual
meeting thereof or at a special meeting thereof called for that purpose. Except
as otherwise required by law, the certificate of incorporation of the
Corporation, or these bylaws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy and entitled to vote on the election of directors. Each director so chosen
shall hold office until the first annual meeting of stockholders held after his
election and until his successor is elected and qualified or, if earlier, until
his death, resignation, or removal from office. None of the directors need be a
stockholder of the Corporation or a resident of the State of Delaware. Each
director must have attained the age of majority.
3.3 Change in Number. No decrease in the number of directors constituting
----------------
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
-------
incorporation of the Corporation or these bylaws, at any meeting of stockholders
called expressly for that purpose, any director or the entire board of directors
may be removed, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote on the election of directors; provided,
however, that if at any time stockholders have the right to cumulate votes in
the election of directors pursuant to the certificate of incorporation of the
Corporation, if less than the entire board of directors is to be removed, no one
of the directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board of directors.
3.5 Vacancies. Vacancies and newly-created directorships resulting from
---------
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by the sole
remaining director, and each director so chosen shall hold office until the
first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death, resignation,
or
6
<PAGE>
removal from office. If there are no directors in office, an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly-created directorship, the directors then in
office shall constitute less than a majority of the whole board of directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 10% of the
total number of the shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly-created directorships or to replace the directors chosen by
the directors then in office. Except as otherwise provided in these bylaws, when
one or more directors shall resign from the board of directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have the power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and may
---------------------
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 First Meeting. Each newly elected board of directors may hold its
-------------
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 Election of Officers. At the first meeting of the board of directors
--------------------
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors shall be
----------------
held at such times and places as shall be designated from time to time by
resolution of the board of directors. Notice of such regular meetings shall not
be required.
3.10 Special Meetings. Special meetings of the board of directors shall be
----------------
held whenever called by the Chairman of the Board, the President, or any
director.
3.11 Notice. The Secretary shall give notice of each special meeting to
------
each director at least 24 hours before the meeting. 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
7
<PAGE>
shall attend such meeting without protesting, prior to or at its commencement,
the lack of notice to him. 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.
3.12 Quorum; Majority Vote. At all meetings of the board of directors, a
---------------------
majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these bylaws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall be
---------
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of the
Corporation shall act as the secretary of each meeting of the board of directors
unless the board of directors appoints another person to act as secretary of the
meeting. The board of directors shall keep regular minutes of its proceedings
which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is present at
---------------------
the meeting of the board of directors at which action on any corporate matter is
taken shall be presumed to have assented to the action 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 secretary of the meeting before
the adjournment thereof or shall forward any dissent by certified or 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.
8
<PAGE>
3.15 Compensation. The board of directors shall have the authority to fix
------------
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted by a
-----------
majority of the entire board of directors, designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
---------------------------
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 Authority. Each committee, to the extent expressly provided in the
---------
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the power at any
-----------------
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The board of directors may designate
-------------------------------
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee 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.
9
<PAGE>
4.6 Regular Meetings. Regular meetings of any committee may be held
----------------
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
----------------
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of the
---------------------
number of members designated by the board of directors shall constitute a quorum
for the transaction of business. If a quorum is not present at a meeting of any
committee, a majority of the members present may adjourn the meeting from time
to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to be
-------
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board of
------------
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the delegation
--------------
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of the
------
Corporation, or these bylaws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given,
10
<PAGE>
personal notice shall not be required and any such notice may be given (a) in
writing, by mail, postage prepaid, addressed to such committee member, director,
or stockholder at his address as it appears on the books or (in the case of a
stockholder) the stock transfer records of the Corporation, or (b) by any
other method permitted by law (including but not limited to overnight courier
service, telegram, telex, or telecopy). Any notice required or permitted to be
given by mail shall be deemed to be delivered and given at the time when the
same is deposited in the United States mail as aforesaid. Any notice required or
permitted to be given by overnight courier service shall be deemed to be
delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be given
by telegram, telex, or telecopy shall be deemed to be delivered and given at the
time transmitted with all charges prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
------
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, 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 equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles: Term of Office. The officers of the Corporation shall
------------------------------
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including without limitation, a Chairman
of the Board, a Chief Executive Officer, one or more Vice Presidents (with each
Vice President to have such descriptive title, if any, as the board of directors
shall determine), and a Treasurer. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, until his
death, or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two or more offices may be held by the same person.
None of the officers need be a stockholder or a director of the Corporation or a
resident of the State of Delaware.
6.2 Removal. Any officer or agent 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 will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
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6.3 Vacancies. Any vacancy occurring in any office of the Corporation by
---------
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such duties
---------
in the management of the Corporation as are provided in these bylaws or as may
be determined by resolution of the board of directors not inconsistent with
these bylaws.
6.5 Compensation. The compensation, if any, of officers and agents shall
------------
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected by the
----------- ---------
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 President. The President may be the chief executive officer of the
---------
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the Board or in the absence or inability to act of the Chairman of the Board,
the President shall exercise all of the powers and discharge all of the duties
of the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that there is no Chairman of the Board
or that the Chairman of the Board is absent or unable to act.
6.8 Vice Presidents. Each Vice President shall have such powers and duties
---------------
as may be assigned to him by the board of directors, the Chairman of the Board,
or the President, and (in order of their seniority as determined by the board of
directors or, in the absence of such determination, as determined by the length
of time they have held the office of Vice President) shall exercise the powers
of the President during that officer's absence or inability to act. As between
the Corporation and third parties, any action taken by a Vice President in the
performance of the duties of the President shall be conclusive evidence of the
absence or inability to act of the President at the time such action was taken.
6.9 Treasurer. The Treasurer shall have custody of the Corporation's funds
---------
and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all
12
<PAGE>
monies and valuable effects in the name and to the credit of the Corporation in
such depository or depositories as may be designated by the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors, the Chairman of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have such powers
--------------------
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, the President or the Treasurer. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these bylaws, the Secretary
---------
shall keep the minutes of all meetings of the board of directors and of the
stockholders in books provided for that purpose, and he shall attend to the
giving and service of all notices. He may sign with the Chairman of the Board or
the President, in the name of the Corporation, all contracts of the Corporation
and affix the seal of the Corporation thereto. He may sign with the Chairman of
the Board or the President all certificates for shares of stock of the
Corporation, and he shall have charge of the certificate books, transfer books,
and stock papers as the board of directors may direct, all of which shall at all
reasonable times be open to inspection by any director upon application at the
office of the Corporation during business hours. He shall in general perform all
duties incident to the office of the Secretary, subject to the control of the
board of directors, the Chairman of the Board, and the President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have such powers
---------------------
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, the President or the Secretary. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
-----------------------
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all signatures
on the certificate may be a facsimile and may be sealed with the seal of the
13
<PAGE>
Corporation or a facsimile thereof. If any officer, transfer agent, or registrar
who has signed, or whose facsimile signature has been placed upon, a certificate
has ceased to be such officer, transfer agent, or registrar before such
certificate is issued, such certificate 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. The certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued and shall exhibit the
holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of directors
---------------------------------------------
may direct a new certificate or certificates to be issued in place of a
certificate or certificates theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates representing shares to be lost
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 or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
------------------
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
-----------------------
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and authority
-----------
to make all such rules and regulations as they may deem expedient concerning the
issue, transfer, and registration or the replacement of certificates for shares
of stock of the Corporation.
14
<PAGE>
7.6 Legends. The board of directors shall have the power and authority to
-------
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
---------
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and payment
shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of funds
--------
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall keep correct and complete
--------- -------
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by the
-----------
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to time
----
may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may resign by
------------
so stating at any meeting of the board of directors or by giving written notice
to the board of directors, the Chairman of the Board, the President, or the
Secretary. Such resignation shall take effect at the time specified therein or,
if no time is specified therein, immediately upon its
15
<PAGE>
receipt. Unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board, the
--------------------------------
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or through a
------------------
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
------------------------
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
16
<PAGE>
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these bylaws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held invalid
------------------
or inoperative for any reason, the remaining parts, so far as it is possible and
reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage, or
--------------
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these bylaws have been inserted for
--------
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
----------
shall include the plural where appropriate, and words of any gender should
include other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed or new
----------
bylaws may be adopted by the stockholders or by the board of directors at any
regular meeting or special meeting of the stockholders or the board of
directors.
17
<PAGE>
The undersigned, being the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the consent of the sole director of
the Corporation as of August 6, 1996.
/s/ JAY I. APPLEBAUM
--------------------------------
Jay I. Applebaum, Secretary
18
<PAGE>
EXHIBIT 3.3
PAGE 1
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "LOOMIS HOLDING CORPORATION", CHANGING ITS NAME FROM "LOOMIS HOLDING
CORPORATION" TO "LFC HOLDING CORPORATION", FILED IN THIS OFFICE ON THE TWENTY-
FOURTH DAY OF JANUARY, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL APPEARS HERE] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8299316
2252806 8100
DATE: 01-24-97
971024073
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOOMIS HOLDING CORPORATION
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
Loomis Holding Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify as follows:
FIRST: The name of the Corporation is Loomis Holding Corporation.
SECOND: On January 24, 1997, the Board of Directors of the Corporation
duly adopted a resolution setting forth the following amendment to the
Certificate of Incorporation of the Corporation.
The First Article of the Corporation's Certificate of Incorporation
is amended in its entirety to read as follows:
"The name of the Corporation is LFC Holding Corporation."
THIRD: The stockholders of the Corporation entitled to vote on the
above-stated proposed amendment executed a written consent in accordance with
the provisions of Section 228 of the General Corporation Law of the State of
Delaware adopting such amendment.
FOURTH: Said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment as of the 24th day of January, 1997.
LOOMIS HOLDING CORPORATION
By: /s/ JAMES K. JENNINGS, JR.
-------------------------------------
James K. Jennings, Jr.
Executive Vice President, Chief
Financial Officer and Secretary
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "LOOMIS HOLDING CORPORATION" FILED IN THIS OFFICE ON THE FOURTEENTH
DAY OF JUNE, A.D. 1993, AT 4:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * * * *
[SEAL APPEARS HERE] /s/ WILLIAM T. QUILLEN
-------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *3937083
733165024
DATE: 06/15/1993
<PAGE>
CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
OF
LOOMIS HOLDING CORPORATION
The undersigned, being (i) the Chairman of the Board and Chief Executive
Officer and (ii) the Secretary, respectively, of Loomis Holding Corporation, a
Delaware corporation (the "Corporation"), do hereby certify:
FIRST: The name of the Corporation is Loomis Holding Corporation.
SECOND: Article TENTH of the Certificate of Incorporation hereby is
amended to read in its entirety as set forth on Exhibit A attached hereto (and
---------
incorporated herein by reference).
THIRD: The aforementioned amendment to the Certificate of Incorporation was
duly adopted in accordance with Section 242 of the General Corporation Law of
the State of Delaware (the "DGCL"). Written consent has been given in accordance
with the provisions of Section 228 of the DGCL and written notice has been given
to nonconsenting stockholders as provided in Section 228(d) of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of this 1st day of
January, 1993.
LOOMIS HOLDING CORPORATION
By: /s/ F.B. HEGI, JR.
-------------------------------------
Name: Frederick B. Hegi, Jr.
Title: Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ JAY I. APPLEBAUM
- ----------------------------------
Name: Jay I. Applebaum
Title: Secretary
<PAGE>
EXHIBIT A
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the Delaware General Corporation Law, as the same
exists or may hereafter be amended. Such right shall be a contract right and as
such shall run to the benefit of any director or officer who is elected and
accepts the position of director or officer of the Corporation or elects to
continue to serve as a director or officer of the Corporation while this Article
Tenth is in effect. Any repeal or amendment of this Article Tenth shall be
prospective only and shall not limit the rights of any such director or officer
or the obligations of the Corporation with respect to any claim arising from or
related to the services of such director or officer in any of the foregoing
capacities prior to any such repeal or amendment to this Article Tenth. Such
right shall include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense is not permitted under the
Delaware General Corporation Law, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an
A-1
<PAGE>
actual determination by the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or stockholders) that such
indemnification or advancement is not permissible shall be a defense to the
action or create a presumption that such indemnification or advancement is not
permissible. In the event of the death of any person having a right of
indemnification under the foregoing provisions, such right shall inure to the
benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, by-law,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Tenth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
<PAGE>
PAGE 1
State of Delaware
Office of Secretary of State
-----------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF LOOMIS HOLDING CORPORATION FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF JANUARY, A.D. 1991, AT 10 O'CLOCK A.M.
* * * * * * * * * *
[SEAL OF STATE OF /s/ Michael Harkins
DELAWARE APPEARS HERE] ---------------------------------------
731023002 Michael Harkins, Secretary of State
AUTHENTICATION: #2932319
DATE: 01/24/1991
<PAGE>
CERTIFICATE OF INCORPORATION
OF
LOOMIS HOLDING CORPORATION
- --------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General Corporation
Law of the State of Delaware, do hereby adopt the following Certificate of
Incorporation for the Corporation:
FIRST: The name of the Corporation is Loomis Holding Corporation.
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of Delaware. The Corporation will have
perpetual existence.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 shares, par value $.01 per share, designated
Common Stock.
FIFTH: The name of the incorporator of the Corporation is Nancy B.
Hollander, and the mailing address of such incorporator is 4100 NCNB Plaza, 901
Main Street, Dallas, Texas 75201.
SIXTH: The number of directors constituting the initial board of directors
is four, and the name and mailing address of each person who is to serve as
director until the first annual meeting of stockholders or until his successor
is elected and qualified are Frederick B. Hegi, Jr., Thomas W. Sturgess, James
T. Callier, Jr., and David S. Teed.
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the by-laws of the Corporation otherwise provide.
<PAGE>
EIGHTH: The directors of the Corporation shall have the power to adopt,
amend, and repeal the by-laws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or more
of its directors, officers, or stockholders or between the Corporation and any
person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved, or ratified by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee,
agent, or similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan,
or other enterprise, to the fullest extent permitted under the Delaware General
2
<PAGE>
Corporation Law, as the same exists or may hereafter be amended. Such right
shall be a contract right and as such shall run to the benefit of any director
or officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article TENTH is in effect. Any repeal or amendment of
this Article TENTH shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
Article TENTH. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Delaware General Corporation Law, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors or any committee legal counsel, or stockholders) to have
made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators, and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, by-law, resolution of stockholders or directors,
agreement, or otherwise.
3
<PAGE>
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ELEVENTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper is
Article ELEVENTH by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability of
a director of the Corporation arising from an act or omission occurring prior to
the time of such repeal or amendment. In addition to the circumstances in which
a director of the Corporation is not personally liable as set forth in the
foregoing provisions of this Article ELEVENTH, a director shall not be liable to
the Corporation or its stockholders to such further extent as permitted by any
law hereafter enacted, including without limitation any subsequent amendment to
the Delaware General Corporation Law.
TWELFTH: The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of Delaware.
I, the undersigned, for the purpose of forming the Corporation under the
laws of the State of Delaware, do make, file, and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 23rd
day of January, 1991.
/s/ NANCY B. HOLLANDER
--------------------------------
Nancy B. Hollander, Incorporator
4
<PAGE>
EXHIBIT 3.4
AMENDMENT TO BY-LAWS
OF
LOOMIS HOLDING CORPORATION
The by-laws dated as of January 24, 1991 of Loomis Holding Corporation, a
Delaware corporation (the "Corporation"), are hereby amended by adding the
provisions set forth in Exhibit A attached hereto (and incorporated herein by
---------
reference).
The undersigned, as Secretary of the Corporation, hereby certifies that the
foregoing amendment to the by-laws of the Corporation was adopted by the
directors of the Corporation as of this 1st day of January, 1993.
/s/ JAY I. APPLEBAUM
-------------------------------------
Jay I. Applebaum,
Secretary
<PAGE>
EXHIBIT A
8.15 Indemnification. The Corporation shall indemnify any person who
---------------
was, is, or is threatened to be made a party to a proceeding (as hereinafter
defined) by reason of the fact that he or she (i) is or was a director or
officer of the Corporation or (ii) while a director or officer of the
Corporation, is or was serving at the reguest of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
to the fullest extent permitted under the Delaware General Corporation Law, as
the same exists or may hereafter be amended. Such right shall be a contract
right and as such shall run to the benefit of any director or officer who is
elected and accepts the position of director or officer of the Corporation or
elects to continue to serve as a director or officer of the Corporation while
this Article Tenth is in effect. Any repeal or amendment of this Article 8.15
shall be prospective only and shall not limit the rights of any such director or
officer or the obligations of the Corporation with respect to any claim arising
from or related to the services of such director or officer in any of the
foregoing capacities prior to any such repeal or amendment to this Article 8.15.
Such right shall include the right to be paid by the Corporation expenses
incurred in investigating or defending any such proceeding in advance of its
final disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecut It shall be a defense to any such action that such indemnification or
advancement of costs of defense is not permitted under the Delaware General
Corporation Law, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof, independent legal counsel, or stockholders)
to have made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
A-1
<PAGE>
permissible in the circumstances nor an actual determination by the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators, and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, by-law, resolution of stockholders or directors,
agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Tenth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
A-2
<PAGE>
BY-LAWS
OF
LOOMIS HOLDING CORPORATION
A Delaware Corporation
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent..................................... 1
1.2 Other Offices................................................... 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting.................................................. 1
2.2 Special Meeting................................................. 2
2.3 Place of Meetings............................................... 2
2.4 Notice.......................................................... 2
2.5 Voting List..................................................... 3
2.6 Quorum.......................................................... 3
2.7 Required Vote; Withdrawal of Quorum ............................ 3
2.8 Method of Voting; Proxies....................................... 4
2.9 Record Date..................................................... 4
2.10 Conduct of Meeting.............................................. 5
2.11 Inspectors...................................................... 6
ARTICLE THREE: DIRECTORS
3.1 Management...................................................... 6
3.2 Number; Qualification; Election; Term........................... 6
3.3 Change in Number................................................ 7
3.4 Removal......................................................... 7
3.5 Vacancies....................................................... 7
3.6 Meetings of Directors........................................... 8
3.7 First Meeting................................................... 8
3.8 Election of Officers............................................ 8
3.9 Regular Meetings................................................ 9
3.10 Special Meetings................................................ 9
3.11 Notice.......................................................... 9
3.12 Quorum; Majority Vote........................................... 9
3.13 Procedure....................................................... 9
3.14 Presumption of Assent........................................... 10
3.15 Compensation.................................................... 10
ARTICLE FOUR: COMMITTEES
4.1 Designation..................................................... 10
4.2 Number; Qualification; Term..................................... 10
4.3 Authority....................................................... 11
4.4 Committee Changes............................................... 11
4.5 Alternate Members of Committees................................. 11
i
<PAGE>
4.6 Regular Meetings................................................ 11
4.7 Special Meetings................................................ 11
4.8 Quorum; Majority Vote........................................... 11
4.9 Minutes......................................................... 12
4.10 Compensation.................................................... 12
4.11 Responsibility.................................................. 12
ARTICLE FIVE: NOTICE
5.1 Method.......................................................... 12
5.2 Waiver.......................................................... 13
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office.................................. 13
6.2 Removal......................................................... 13
6.3 Vacancies....................................................... 13
6.4 Authority....................................................... 13
6.5 Compensation.................................................... 14
6.6 Chairman of the Board........................................... 14
6.7 President....................................................... 14
6.8 Vice Presidents................................................. 14
6.9 Treasurer....................................................... 14
6.10 Assistant Treasurers............................................ 15
6.11 Secretary....................................................... 15
6.12 Assistant Secretaries........................................... 15
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares......................................... 16
7.2 Replacement of Lost or Destroyed Certificates................... 16
7.3 Transfer of Shares.............................................. 16
7.4 Registered Stockholders......................................... 17
7.5 Regulations..................................................... 17
7.6 Legends......................................................... 17
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends....................................................... 17
8.2 Reserves........................................................ 17
8.3 Books and Records............................................... 18
8.4 Fiscal Year..................................................... 18
8.5 Seal............................................................ 18
8.6 Resignations.................................................... 18
8.7 Securities of Other Corporations................................ 18
8.8 Telephone Meetings.............................................. 18
8.9 Action Without a Meeting........................................ 19
<PAGE>
8.10 Invalid Provisions.............................................. 20
8.11 Mortgages, etc.................................................. 20
8.12 Headings........................................................ 20
8.13 References...................................................... 20
8.14 Amendments...................................................... 20
iii
<PAGE>
BY-LAWS
OF
LOOMIS HOLDING CORPORATION
A Delaware Corporation
PREAMBLE
These by-laws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Loomis Holding Corporation, a Delaware
corporation (the "Corporation"). In the event of a direct conflict between the
provisions of these by-laws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
---------------------------
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
-------------
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the Corporation
--------------
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meeting, the stockholders shall elect directors and transact such other business
as may properly be brought before the meeting.
<PAGE>
2.2 Special Meeting. A special meeting of the stockholders may be
---------------
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held
-------------------
at any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and time of
------
each meeting of the stockholders and, in 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 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person(s) calling the meeting, to each stockholder of record entitled to vote at
such meeting. If such notice is to be sent by mail, it shall be directed to
such stockholder at his address as it appears on the records of the Corporation,
unless he shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, in which case it
shall be directed to him at such other address. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the meeting is
not lawfully called or convened, or who shall, either before or after the
meeting, submit a signed waiver of notice, in person or by proxy.
2
<PAGE>
2.5 Voting List. At least ten days before each meeting of stockholders,
-----------
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
------
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Ouorum. When a quorum is present at any
-----------------------------------
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
3
<PAGE>
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in the
-------------------------
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
-----------
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business
on the
4
<PAGE>
day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(iii) 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.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law or these by-laws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office in the State of Delaware, principal place of business, or such officer or
agent shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by law or these by-laws, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office has
------------------
been filled, and, if not or if the Chairman of the Board is absent or otherwise
unable to act, the
5
<PAGE>
President shall preside at all meetings of stockholders. The Secretary shall
keep the records of each meeting of stockholders. In the absence or inability to
act of any such officer, such officer's duties shall be performed by the officer
given the authority to act for such absent or nonacting officer under these by-
laws or by some person appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any meeting of
----------
stockholders, appoint one 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 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
all 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.
ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
----------
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these by-laws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Oualification; Election; Term. The number of directors which
-------------------------------------
shall constitute the entire board of
6
<PAGE>
directors shall be not less than one. The first board of directors shall consist
of the number of directors named in the certificate of incorporation of the
Corporation or, if no directors are so named, shall consist of the number of
directors elected by the incorporator(s) at an organizational meeting or by
unanimous written consent in lieu thereof. Thereafter, within the limits above
specified, the number of directors which shall constitute the entire board of
directors shall be determined by resolution of the board of directors or by
resolution of the stockholders at the annual meeting thereof or at a special
meeting thereof called for that purpose. Except as otherwise required by law,
the certificate of incorporation of the Corporation, or these bylaws, the
directors shall be elected at an annual meeting of stockholders at which a
quorum is present. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy and entitled to vote on the
election of directors. Each director so chosen shall hold office until the first
annual meeting of stockholders held after his election and until his successor
is elected and qualified or, if earlier, until his death, resignation, or
removal from office. None of the directors need be a stockholder of the
Corporation or a resident of the State of Delaware. Each director must have
attained the age of majority.
3.3 Change in Number. No decrease in the number of directors constituting
----------------
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
-------
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire board
of directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote on the election of directors;
pright to cumulate votes in the election of directors pursuant to the
certificate of incorporation of the Corporation, if less than the entire board
of directors is to be removed, no one of the directors may be removed if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire board of directors.
3.5 Vacancies. Vacancies and newly-created directorships resulting from
---------
any increase in the authorized
7
<PAGE>
number of directors may be filled by a majority of the directors then in office,
though less than a quorum, or by the sole remaining director, and each director
so chosen shall hold office until the first annual meeting of stockholders held
after his election and until his successor is elected and qualified or, if
earlier, until his death, resignation, or removal from office. If there are no
directors in office, an election of directors may be held in the manner provided
by statute. If, at the time of filling any vacancy or any newly-created
directorship, the directors then in office shall constitute less than a majority
of the whole board of directors (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least 10% of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly-created directorships or
to replace the directors chosen by the directors then in office. Except as
otherwise provided in these by-laws, when one or more directors shall resign
from the board of directors, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have the
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and each director so
chosen shall hold office as provided in these by-laws with respect to the
filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and may
---------------------
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 First Meeting. Each newly elected board of directors may hold its
-------------
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 Election of Officers. At the first meeting of the board of directors
--------------------
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
8
<PAGE>
3.9 Regular Meeting. Regular meetings of the board of directors shall be
---------------
held at such times and places as shall be designated from time to time by
resolution of the board of directors. Notice of such regular meetings shall not
be required.
3.10 Special Meetings. Special meetings of the board of directors shall
----------------
be held whenever called by the Chairman of the Board, the President, or any
director.
3.11 Notice. The Secretary shall give notice of each special meeting to
------
each director at least 24 hours before the meeting. 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 without
protesting, prior to or at its commencement, the lack of notice to him.
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.
3.12 Quorum; Majority Vote. At all meetings of the board of directors, a
---------------------
majority of the directors fixed in the manner provided in these by-laws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these by-laws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall be
---------
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of
9
<PAGE>
directors from among the directors present. The Secretary of the Corporation
shall act as the secretary of each meeting of the board of directors unless the
board of directors appoints another person to act as secretary of the meeting.
The board of directors shall keep regular minutes of its proceedings which shall
be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is present
---------------------
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action 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 secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or 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.
3.15 Compensation. The board of directors shall have the authority to fix
------------
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted by a
-----------
majority of the entire board of directors, designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
---------------------------
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased
from time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
10
<PAGE>
4.3 Authority. Each committee, to the extent expressly provided in the
---------
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these by-laws.
4.4 Committee Changes. The board of directors shall have the power at any
-----------------
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The board of directors may designate
-------------------------------
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee 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.
4.6 Regular Meetings. Regular meetings of any committee may be held
-----------------
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
-----------------
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of
---------------------
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is
11
<PAGE>
present. The act of a majority of the members present at any meeting at which a
quorum is in attendance shall be the act of a committee, unless the act of a
greater number is required by law, the certificate of incorporation of the
Corporation, or these by-laws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to be
-------
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board of
------------
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the delegation
--------------
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of the
------
Corporation, or these by-laws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall not be required and any such notice may be
given (a) in writing, by mail, postage prepaid, addressed to such committee
member, director, or stockholder at his address as it appears on the books or
(in the case of a stockholder) the stock transfer records of the Corporation, or
(b) by any other method permitted by law (including but not limited to overnight
courier service, telegram, telex, or telefax). Any notice required or permitted
to be given by mail shall be deemed to be delivered and given at the time when
the same is deposited in the United States mail as aforesaid. Any notice
required or permitted to be given by overnight courier service shall be deemed
to be delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be given
by telegram, telex, or telefax shall be deemed to be delivered and given at the
time transmitted with all charges prepaid and addressed as aforesaid.
12
<PAGE>
5.2 Waiver. Whenever any notice is required to be given to any
------
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these by-laws, 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 equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation shall
------------------------------
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including a Chairman of the Board, one
or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and a Treasurer.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified, until his death, or until he shall resign or shall
have been removed in the manner hereinafter provided. Any two or more offices
may be held by the same person. None of the officers need be a stockholder or a
director of the Corporation or a resident of the State of Delaware.
6.2 Removal. Any officer or agent 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 will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the Corporation
---------
(by death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such duties
---------
in the management of the Corporation as are provided in these by-laws or as may
be determined by resolution of the board of directors not inconsistent with
these by-laws.
13
<PAGE>
6.5 Compensation. The compensation, if any, of officers and agents shall
------------
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected by the
---------------------
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 President. The President shall be the chief executive officer of the
---------
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the Board or in the absence or inability to act of the Chairman of the Board,
the President shall exercise all of the powers and discharge all of the duties
of the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that there is no Chairman of the Board
or that the Chairman of the Board is absent or unable to act.
6.8 Vice Presidents. Each Vice President shall have such powers and
---------------
duties as may be assigned to him by the board of directors, the Chairman of the
Board, or the President, and (in order of their seniority as determined by the
board of directors or, in the absence of such shall exercise the powers of the
President during that officer's absence or inability to act. As between the
Corporation and third parties, any action taken by a Vice President in the
performance of the duties of the President shall be conclusive evidence of the
absence or inability to act of the President at the time such action was taken.
6.9 Treasurer. The Treasurer shall have custody of the Corporation's
---------
funds and securities, shall keep full and
14
<PAGE>
accurate account of receipts and disbursements, shall deposit all monies and
valuable effects in the name and to the credit of the Corporation in such
depository or depositories as may be designated by the board of directors, and
shall perform such other duties as may be prescribed by the board of directors,
the Chairman of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have such powers
--------------------
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President. The Assistant Treasurers (in the order of their
seniority as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these by-laws, the
---------
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with the
Chairman of the Board or the President all certificates for shares of stock of
the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which shall
at all reasonable times be open to inspection by any director upon application
at the office of the Corporation during business hours. He shall in general
perform all duties incident to the office of the Secretary, subject to the
control of the board of directors, the Chairman of the Board, and the President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have such
---------------------
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the order
of their seniority as determined by the board of directors or, in the absence of
such a determination, as determined by the length of time they have held the
office of Assistant Secretary) shall exercise the powers of the Secretary during
that officer's absence or inability to act.
15
<PAGE>
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
-----------------------
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all signatures
on the certificate may be a facsimile and may be sealed with the seal of the
Corporation or a facsimile thereof. If any officer, transfer agent, or registrar
who has signed, or whose facsimile signature has been placed upon, a certificate
has ceased to be such officer, transfer agent, or registrar before such
certificate is issued, such certificate 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. The certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued and shall exhibit the
holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of directors
---------------------------------------------
may direct a new certificate or certificates to be issued in place of a
certificate or certificates theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates representing shares to be lost
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 or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that certificate
or certificates alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
------------------
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession,
16
<PAGE>
assignment, or authority to transfer, the Corporation or its transfer agent
shall issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
-----------------------
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
-----------
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and authority to
-------
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
---------
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of funds
--------
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
17
<PAGE>
8.3 Books and Records. The Corporation shall keep correct and complete
-----------------
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by the
-----------
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to time
----
may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may resign
------------
by so stating at any meeting of the board of directors or by giving written
notice to the board of directors, the Chairman of the Board, the President, or
the Secretary. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, immediately upon its receipt. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board, the
--------------------------------
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or through a
------------------
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting,
18
<PAGE>
except where a person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
------------------------
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these by-laws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same
19
<PAGE>
force and effect as a vote of such directors or committee members, as the case
may be, and may be stated as such in any certificate or document filed with the
Secretary of State of the State of Delaware or in any certificate delivered to
any person. Such consent or consents shall be filed with the minutes of
proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these by-laws shall be held
------------------
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage,
--------------
or other instrument executed by the Corporation through its duly authorized
officer or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these by-laws have been inserted for
--------
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
----------
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These by-laws may be altered, amended, or repealed or
----------
new by-laws may be adopted by the stockholders or by the board of directors at
any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new by-laws be contained in the
notice of such special meeting.
20
<PAGE>
The undersigned, the Secretary of the Corporation, hereby certifies that
the foregoing by-laws were adopted by unanimous consent by the directors of the
Corporation as of January 24, 1991.
/s/ SUZANNE C. GODDARD
--------------------------------------------
______________, Secretary
Suzanne C. Goddard
21
<PAGE>
EXHIBIT 3.5
[SEAL OF THE STATE OF TEXAS APPEARS HERE]
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
LOOMIS, FARGO & Co.
FORMERLY:
LOOMIS ARMORED INC.
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Amendment for the above named entity have been received in
this office and are found to conform to law.
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Amendment.
Dated: January 24, 1997
Effective: January 24, 1997
[SEAL APPEARS HERE] /s/ ANTONIO O. GARZA, JR.
----------------------------
Antonio O. Garza, Jr.
Secretary of State
<PAGE>
Filed
In the Office of the
Secretary of State of Texas
January 24, 1997
Corporations Section
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
LOOMIS ARMORED INC
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, the undersigned corporation adopts the following Articles of Amendment to
its Articles of Incorporation:
ARTICLE ONE: The name of the Corporation is Loomis Armored Inc. (the
"Corporation").
ARTICLE TWO: The following Amendment to the Articles of Incorporation (the
"Amendment") was adopted by the Shareholders of the Corporation on January 24,
---------
1997. The Amendment has been adopted to change the name of the Corporation to
Loomis, Fargo & Co.
The Amendment amends ARTICLE ONE of the original Articles of Incorporation,
-----------
which, as amended, shall read as follows:
ARTICLE ONE
-----------
The name of the Corporation is Loomis, Fargo & Co.
ARTICLE THREE: The holders of all of the shares of capital stock outstanding
are entitled to vote on the Amendment and have signed a Written Consent adopting
the Amendment. The number of shares of capital stock of the Corporation
outstanding at the time of such adoption was 1,000 and the number of shares of
capital stock entitled to vote thereon was 1,000.
<PAGE>
IN WITNESS WHEREOF, the undersigned Corporation has executed these Articles
of Amendment as of this 24th day of January, 1997
LOOMIS ARMORED INC
By: /s/ JAMES K. JENNINGS, JR.
----------------------------------------------
James K. Jennings, Jr.
Vice President, Chief Financial
Officer and Treasurer
2
<PAGE>
[SEAL OF THE STATE OF TEXAS APPEARS HERE]
CERTIFICATE OF AMENDMENT
FOR
LOOMIS ARMORED INC.
CHARTER NUMBER 00051636
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS,
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF AMENDMENT FOR THE ABOVE
NAMED ENTITY HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO
CONFORM TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE OF THE
AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE OF
AMENDMENT.
DATED DEC. 30, 1993
EFFECTIVE DEC. 30, 1993
/s/ JOHN HANNAH JR.
------------------------------------
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES of INCORPORATION OF
LOOMIS ARMORED INC.
Loomis Armored Inc., a Texas corporation, (the "Corporation"), pursuant to
the provisions of Article 4.04 of the Texas Business Corporation Act, hereby
adopts the following amendment to its existing Articles of Incorporation.
ARTICLE I
---------
The name of the Corporation is Loomis Armored Inc.
ARTICLE II
----------
The Articles of Incorporation are hereby amended to add a Section 10 to
Article VIII of the Articles of Incorporation to read as follows:
Section 10. Elimination of Director Liability. Directors of the
---------------------------------
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for any act or omission undertaken in the director's
capacity as a director, except that this provision of the Articles of
Incorporation shall not limit the liability of a director to the extent that
the director is found and finally determined by order of a court of last
resort and competent jurisdiction to be liable for: (i) a breach of the
director's duty of
<PAGE>
loyalty to the Corporation; (ii) an act or omission undertaken in bad faith
that constitutes a breach of the duty of the director to the Corporation or
an act or omission that involves intentional misconduct or a knowing
violation of law; (iii) transactions from which the director receives an
improper personal benefit; (iv) an act or omission for which the liability
of the director is expressly provided by. an applicable statute; or (v)
causing the payment by the Corporation of a wrongful dividend or unlawful
repurchase of the Corporation's stock.
ARTICLE III
------------
The foregoing amendment to the Articles was adopted and approved by the sole
shareholder of the Corporation by executing a written consent adopting said
amendment.
ARTICLE IV
----------
Forty-Six Thousand Seven Hundred Sixty-Nine (46,769) shares of common stock,
par value $10 per share, of the Corporation ("Common Stock") were issued and
outstanding at the time of such adoption. The number of shares entitled to vote
thereon is 46,769.
ARTICLE V
---------
All 46,769 shares of Common Stock were voted in favor of the foregoing
amendment.
<PAGE>
ARTICLE VI
----------
The foregoing amendment does not provide for an exchange, reclassification,
or cancellation of issued shares, nor does it affect a change in the amount of
stated capital.
IN WITNESS WHEREOF, these Articles of Amendment have been executed by the
undersigned officers of the Corporation as of this the 22nd day of November,
1993.
LOOMIS ARMORED INC.
By /s/ JAMES B. MATTLY
-------------------------------
JAMES B. MATTLY, President
and Chief Operating Officer
By /s/ JAY I. APPLEBAUM
-------------------------------
JAY I. APPLEBAUM, Secretary
<PAGE>
FILED
In the Office of the
Secretary of State of Texas
AUG 12 1993
Corporations Section
RESTATEMENT
-----------
OF
--
ARTICLES OF INCORPORATION OF
----------------------------
LOOMIS ARMORED INC.
-------------------
(Including Amendments Thereto)
LOOMIS ARMORED INC., a Texas corporation (the "Corporation"), pursuant
to the provisions of Articles 4.04 and 4.07 of the Texas Business Corporation
Act, hereby adopts the following Restated Articles of Incorporation, including
an Amendment to its Articles of Incorporation.
ARTICLE ONE
-----------
The name of the Corporation is LOOMIS ARMORED INC.
ARTICLE TWO
-----------
The Board of Directors of the Corporation, by unanimous consent of the
Directors dated as of the 26th day of July 1993 did propose that the Articles of
Incorporation of the Corporation be amended and restated, and the shareholders
of the Corporation unanimously approved such proposed amendments and the
restatement of the articles, as follows:
1. The Articles of Incorporation of LOOMIS ARMORED INC. set forth
below are to replace and restate the entire Articles of Incorporation, such
following Articles now including all of the Articles of Incorporation of the
Corporation as amended are supplemented to date and including further amendments
implemented hereby:
<PAGE>
"RESTATED ARTICLES OF INCORPORATION
-----------------------------------
OF
--
LOOMIS ARMORED INC.
-------------------
ARTICLE I.
Name
----
The name of the Corporation is LOOMIS ARMORED INC.
ARTICLE II.
Duration
--------
The period of the duration of the Corporation is perpetual.
ARTICLE III.
Purpose
-------
The purpose for which the Corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE IV.
Capital Stock
-------------
Section 1. Authorized Shares. The aggregate number of shares which the
-----------------
Corporation shall have authority to issue is 50,000 of which all shall be shares
of Common Stock of $10.00 par value per share.
Section 2. Preemptive Rights Denied. No shareholder shall have any
------------------------
preemptive right to acquire any additional
2
<PAGE>
unissued or treasury shares of the Corporation of any class now or hereafter
authorized or held.
Section 3. Cumulative Voting Denied. shareholders of the Corporation
------------------------
shall not have the right to accumulate their votes at any election of directors.
At each such election of directors, each shareholder shall be entitled to vote
in person or by proxy the number of shares owned by him in the election of each
director for whose election he has a right to vote.
ARTICLE V.
Initial Consideration for Issuance of Shares
--------------------------------------------
The Corporation will not commence business until it has received for
the issuance of its shares consideration of a value of at least One Thousand
Dollars ($1,000), consisting of money, labor done or property actually received.
ARTICLE VI.
Registered Office and Agent
---------------------------
The address of the registered office of the Corporation is 350 North St.
Paul Street, Dallas, Texas 75201. The name of the registered agent of the
Corporation is C.T. Corporation Systems.
ARTICLE VII
Board of Directors
------------------
The number of directors shall from time to time be fixed by the Bylaws
of the Corporation. The number of directors constituting the board of Directors
is not less than three (3) nor more than eleven (11). Directors need not be
residents of the State of Texas or shareholders of the Corporation. The names
3
<PAGE>
and addresses of the persons who are elected to serve as directors until the
next annual meeting of the shareholders, or until their successors shall have
been duly elected and qualified, unless they shall sooner die, resign or be
removed, in accordance with the Bylaws of the Corporation, are as follows:
Name Address
---- -------
Frederick B. Hegi, Jr. 750 North St. Paul, #1200
Dallas, TX 75201
Thomas W. Sturgess 750 North St. Paul, #1200
Dallas, TX 75201
James T. Callier, Jr. 950 Echo Lane, #335
Houston, TX 77024
James B. Mattly 750 North St. Paul, #1200
Dallas, TX 75201
David S. Teed 521 South Rossmore Avenue
Los Angeles, CA 90020
Edward H. Hamlett 1222 Sherfield Ridge
Katy, TX 77450
The power to amend the Bylaws of the Corporation is reserved for the Board of
Directors, which amendment may not be effected without the unanimous approval of
the Board of Directors.
ARTICLE VIII.
Indemnification and Limitation of Director Liability
----------------------------------------------------
Section 1. Definitions. For the purposes of this section, "agent"
-----------
means any person who is or was a director, officer, or other authorized agent of
this Corporation, and any person who is or was serving as a director, officer or
authorized agent of another corporation, partnership, joint venture, trust or
other enterprise controlled by this Corporation and at the request of
4
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this Corporation; "proceeding" means any threatened, pending, or completed
action or proceeding, whether civil, criminal, administrative, or investigative;
and "expenses" include, but are not limited to, attorneys' fees and any expenses
of establishing a right to indemnification under this section.
Section 2. Power to Indemnify. The Corporation shall indemnify any
------------------
person who was, is, or is threatened to be made a party to a proceeding by
reason of the fact that he or she is or was an agent of this Corporation,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding, to the fullest extent
permitted under the Texas Business Corporation Act, as the same exists or may
hereafter be amended. Such right shall be a contract right and as such, shall
run to the benefit of any agent of the Corporation while this Article VIII is in
effect. Any repeal or amendment of this Article VIII shall be prospective only
and shall not limit the rights of any such agent or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such agent in any of the foregoing capacities prior to any such repeal or
amendment to this Article VIII.
Section 3. Successful Defense. To the extent that an agent has been
------------------
successful on the merits of any proceeding, the Corporation shall indemnify the
agent for expenses (including attorneys' fees) and costs actually and reasonably
incurred.
Section 4. Advancing Expenses. An agent shall have the right to be
------------------
paid by the Corporation expenses incurred in
5
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investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Texas Business Corporation
Act, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense is not permitted under the
Texas Business Corporation Act, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its board
of directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible.
Section 5. Indemnity Not Exclusive. The rights conferred under this
-----------------------
Article VIII shall not be exclusive of any
6
<PAGE>
other right which any agent may have or hereafter acquire under any statute, by-
law, resolution of stockholders or directors, agreement, or otherwise.
Section 6. Negligent Acts by Agent. Without limiting the generality
-----------------------
of this Article VIII, to the extent permitted by then applicable law, the grant
of mandatory indemnification pursuant to this Article VIII shall extend to
proceedings involving negligence (but not willful or grossly negligent conduct)
of such agent.
Section 7. Insurance Indemnification. The Corporation shall have the
-------------------------
power to purchase and maintain insurance on behalf of any agent of the
corporation against any liability asserted against or incurred by the agent in
that capacity or arising out of the agent's status as such, whether or not the
Corporation would have the power to indemnify the agent against that liability.
Section 8. Employee Benefit Plans. For purposes of this Article VIII,
----------------------
the Corporation is deemed to have requested a director to serve an employee
benefit plan whenever the performance by him/her of his/her duties to the
Corporation also imposes duties on or otherwise involves services by him/her to
the plan or participants or beneficiaries of the plan. Excise taxes assessed on
a director with respect to an employee benefit plan pursuant to applicable law
are deemed fines. Action taken or omitted by him/her with respect to an employee
benefit plan in the performance of his/her duties for a purpose reasonably
believed by him/her to be in the interest of the participants and
7
<PAGE>
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the Corporation and is subject to indemnification under
this Article.
Section 9. Continuation of Indemnification and Advancement of Expenses.
-----------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII 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, and further, the provisions of this Article
VIII shall continue to be applicable for matters occurring prior to the
revocation or amendment of this Article VIII if it is revoked or amended to
eliminate or reduce the effect of this Article VIII. Nothing herein is intended
to require or shall be construed as requiring the Corporation to do or fail to
do any act in violation of applicable law. The provisions hereof shall be
severable such that if any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall nevertheless
indemnify the applicable officer, director, employee or other person to the full
extent permitted by any applicable portion hereof that shall not have been
invalidated, and the balance of this Article VIII not so invalidated shall be
enforceable in accordance with its terms.
IN WITNESS WHEREOF, these Restated Articles of Incorporation of the
Corporation have been executed by the undersigned officer of the Corporation as
of the 26th day of July 1993.
8
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ARTICLE THREE
-------------
Each amendment to the existing Articles of Incorporation effective
hereby has been effected in conformity with the provisions of the Texas Business
Corporation Act.
ARTICLE FOUR
------------
This instrument accurately copies the Articles of Incorporation as
amended and supplemented to date and as further amended by such Restated
Articles of Incorporation and contains no other change in any provision thereof.
ARTICLE FIVE
------------
The sole shareholder of the Corporation adopted the above amendments and
approved the restatement of the Articles of Incorporation, as amended, by a
Consent action dated as of the 26th day of July, 1993.
ARTICLE SIX
-----------
Forty Six Thousand Seven Hundred Sixty Nine (46,769) shares of Common
Stock, par value $10.00 per share, of the Corporation ("Common Stock") were
issued and outstanding at the time of such adoption. The number of shares
entitled to vote thereon was 46,769.
9
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ARTICLE SEVEN
-------------
The holder of all the shares outstanding and entitled to vote on said
amendments has signed a consent in writing adopting said amendments.
ARTICLE EIGHT
-------------
There is no exchange, reclassification or cancellation of issued shares
effected by this Amendment.
ARTICLE NINE
------------
Such Amendment does not effect a change in the amount of the stated
capital of the Corporation.
IN WITNESS WHEREOF, these Articles of Amendment setting forth the
Restated Articles of Incorporation of the Corporation have been executed by the
undersigned officer of the Corporation as of the 26th day of July 1993.
LOOMIS ARMORED INC.
By: /s/ JAMES B. MATTLY
----------------------------------
JAMES B. MATTLY
President and Chief Operating
Officer
By: /s/ JAY I. APPLEBAUM
----------------------------------
JAY I. APPLEBAUM
Secretary
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<PAGE>
EXHIBIT 3.6
RESTATED
BYLAWS
OF
LOOMIS ARMORED INC.
-------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. OFFICES..................................................... 1
ARTICLE II. SHAREHOLDERS................................................ 1
Section 1. Annual Meeting......................................... 1
Section 2. Special Meetings....................................... 2
Section 3. Place of Meeting....................................... 2
Section 4. Notice of Meeting...................................... 3
Section 5. Closing of Transfer Books or
Fixing of Record Date.................................. 3
Section 6. Voting Lists........................................... 4
Section 7. Quorum................................................. 5
Section 8. Proxies................................................ 5
Section 9. Voting of Shares....................................... 6
Section 10. Voting of Shares by Certain Holders.................... 6
Section 11. Order of Business and Rules of Procedure............... 7
Section 12. Inspectors of Election................................. 8
ARTICLE III. BOARD OF DIRECTORS.......................................... 8
Section 1. General Powers......................................... 8
Section 2. Number, Tenure and Qualifications...................... 9
Section 3. Regular Meetings....................................... 9
Section 4. Special Meetings....................................... 9
Section 5. Notice................................................. 10
Section 6. Quorum................................................. 10
Section 7. Manner of Acting....................................... 11
Section 8. Vacancies.............................................. 11
Section 9. Compensation........................................... 11
Section 10. Presumption of Assent.................................. 12
ARTICLE IV. COMMITTEES.................................................. 12
Section 1. Committees............................................. 12
Section 2. Committee Vacancies.................................... 13
Section 3. Committee Meetings..................................... 13
ARTICLE V. OFFICERS.................................................... 13
Section 1. Executive Officers..................................... 13
Section 2. Other Officers......................................... 14
Section 3. Term of Office and Vacancies........................... 14
Section 4. Chairman of the Board.................................. 15
Section 5. President and Chief Operating Officer.................. 16
<PAGE>
Section 6. Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents......................... 16
Section 7. Other Officers......................................... 16
Section 8. Secretary.............................................. 17
Section 9. Treasurer.............................................. 17
Section 10. Certain Officers to Give Bonds......................... 18
ARTICLE VI. DIVISION OFFICERS........................................... 18
Section 1. Division President..................................... 18
Section 2. Other Division Officers................................ 19
Section 3. Term of Office......................................... 19
ARTICLE VII. INDEMNIFICATION............................................. 19
Section 1. Definitions............................................ 19
Section 2. Power to Indemnify..................................... 20
Section 3. Successful Defense..................................... 21
Section 4. Advancing Expenses..................................... 21
Section 5. Indemnity Not Exclusive................................ 22
Section 6. Negligent Acts by Agent................................ 22
Section 7. Insurance Indemnification.............................. 22
Section 8. Employee Benefit Plans................................. 23
Section 9. Continuation of Indemnification and
Advancement of Expenses................................ 23
ARTICLE VIII. CONTRACTS, LOANS, CHECKS AND DEPOSITS....................... 24
Section 1. Contracts.............................................. 24
Section 2. Loans.................................................. 24
Section 3. Checks, Drafts, Etc.................................... 25
Section 4. Deposits............................................... 25
ARTICLE IX. CERTIFICATES FOR SHARES AND THEIR TRANSFER.................. 25
Section 1. Certificates for Shares................................ 25
Section 2. Transfer of Shares..................................... 26
ARTICLE X. FISCAL YEAR................................................. 26
ARTICLE XI. DIVIDENDS AND RESERVES...................................... 27
ARTICLE XII. AMENDMENTS.................................................. 27
ARTICLE XIII. NOTICE AND WAIVER OF NOTICE................................. 28
ARTICLE XIV. ACTION WITHOUT A MEETING.................................... 28
Section 1. Written Consent........................................ 28
Section 2. Conference Telephone................................... 29
ii
<PAGE>
RESTATED
BYLAWS
OF
LOOMIS ARMORED INC.
ARTICLE I.
OFFICES
-------
The location of the Corporation's principal office in the state of Texas
shall be 1655 Vilbig Road, Dallas, Texas 75208, and the registered agent of the
Corporation in charge thereof is C.T. Corporation System. The Corporation may
have such other offices, either within or outside the state of Texas, as the
Board of Directors may designate or as the business of the Corporation may
require from time to time.
The registered office of the Corporation in the state of Texas may be, but
need not be, identical with the principal office in the state of Texas, and the
address of the registered office may be changed from time to time by the Board
of Directors.
ARTICLE II.
SHAREHOLDERS
------------
Section 1. Annual Meeting. The annual meeting of the Shareholders shall
--------------
be held on the fourth Thursday in the month of
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April in each year, and shall be 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. If the annual meeting of Shareholders
and election of Directors shall not be held on the day designated herein for the
annual meeting of the Shareholders, or any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as convenient.
Section 2. Special Meetings. Special meetings of the Shareholders may be
----------------
called by the majority of the members of the Board of Directors, the Chairman of
the Board, if any, or the President, and shall be called by the President at
the request of the holders of not less than one-tenth (1/10th) of all the
outstanding shares of the Corporation entitled to vote at the meeting for any
purpose or purposes, unless otherwise prescribed by statute.
Section 3. Place of Meeting. Meetings of Shareholders may be held at any
----------------
place designated in the notice or waiver of notice of the meeting, either within
or outside the state of Texas. If no designation is so made, meetings of
Shareholders shall be held at the principal office of the Corporation.
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Section 4. Notice of Meeting. Written or printed notice stating the
-----------------
place, day and hour of the meeting, and in case of a special meeting the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than forty (40) days before the date of the meeting, either
personally or by 'nail, 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 address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. The Board
--------------------------------------------------
of Directors of the Corporation may provide that the stock transfer books be
closed for a stated period not to exceed fifty (50) days for the purpose of
determining Shareholders entitled to notice of or to vote at any meeting of
Shareholders entitled to notice of or to vote at any meeting of Shareholders or
any adjournment thereof, or Shareholders entitled to receive payment of any
dividend, or in order to make a determination of Shareholders for any other
proper purpose. If the stock transfer books are closed as set forth in this
Section, the books shall be closed for at least ten (10) days immediately
preceding the meeting. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance a date as the record date for any such
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<PAGE>
determination of Shareholders, the date to be not more than fifty (50)days, and
in case of a meeting of Shareholders not less than ten (10) days, prior to the
date on which the particular action requiring determination of Shareholders is
to be taken. If the stock transfer books are not closed and no record date is
fixed for determination of Shareholders entitled to notice of or to vote at a
meeting of Shareholders, or Shareholders entitled to receive payment of a
dividend, 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 determination of
Shareholders. When a determination of Shareholders entitled to vote at any
meeting of Shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof except where the
determination has been made by closing the stock transfer books and the stated
period of closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
------------
transfer books of the Corporation shall make a complete alphabetical list of
Shareholders entitled to vote at such meeting, or any adjournment thereof, their
addresses and the number of shares held by each, which list shall be kept on
file at the registered office of the Corporation for a period of ten (10) days
prior to such meeting and shall be subject to inspection by any Shareholder at
any time during usual business hours. The Shareholder list shall also be
produced and kept open at the time and
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<PAGE>
place of the meeting and shall be subject to the inspection of any Shareholder
during the entire meeting. The original stock transfer books shall be prima
facie evidence as to Shareholders entitled to examine such list or transfer
books or to vote at any meeting of Shareholders.
Section 7. Quorum. The holders of a majority of the outstanding shares of
------
the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders unless otherwise provided in
the Articles of Incorporation. If the holders of less than a majority of the
issued and outstanding shares are represented at a meeting, the holders of a
majority of the shares so represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The Shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less than a
quorum.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder may
-------
vote by proxy executed in writing by the Shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy will be valid after
eleven (11)
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<PAGE>
months from the date of its execution, unless otherwise provided in the proxy.
Section 9. Voting of Shares. Each outstanding share entitled to vote
----------------
shall be entitled to one vote on each matter for which it is entitled to vote
unless a contrary number or percentage of votes for such share is specifically
set forth in the Articles of Incorporation of the Corporation.
Section 10. Voting of Shares by Certain Holders. Shares standing in the
-----------------------------------
name of another corporation may be voted by an officer, agent, or proxy as
designated in the bylaws of such corporation, or in the absence of such
designation, as the board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian, or conservator may be voted
by him, either in person or by proxy, without a transfer of such shares into his
name. Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without transfer of such shares into his name. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
ot a receiver may be voted by such receiver without the transfer into his name
if authority to do so 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
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<PAGE>
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred. Shares standing in the name of the Corporation or held by it in a
fiduciary capacity 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.
Section 11. Order of Business and Rules of Procedure. At all annual and
----------------------------------------
special meetings of Shareholders, the following order of business may be used to
the extent the chairman of the meeting determines the order to be helpful:
(1) Call to order;
(2) Election of a Chairman and appointment of a Secretary of the meeting
(3) Presentation of proof of due calling and notice at the meeting;
(4) Presentation and examination of proxies;
(5) Ascertainment and announcement of presence at quorum;
(6) Approval of or waiver of approval of prior minutes;
(7) Reports of officers;
(8) Nomination of Directors;
(9) Receipt of motions and resolutions;
(10) Discussion of election of Directors, motions and resolutions;
(11) Vote on Directors, motions and resolutions;
(12) Any other unfinished business;
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(13) Any other new business;
(14) Adjournment.
Section 12. Inspectors of Election. In advance of any meeting of
----------------------
Shareholders, the Board of Directors may appoint one (1) or more inspectors of
election. If an appointment of election inspectors is made and any appointed
person fails to serve, the Chairman of the meeting may appoint a replacement.
If an inspector of election is appointed, he shall: (a) determine the number
of shares outstanding, the voting power of each share, the number of shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies; (b) receive votes, assents and consents, and
hear and determine all challenges and questions in any way arising in connection
with a vote; (c) count and tabulate all votes, assents and consents, and
determine and announce results; and (d) do all other acts as may be proper to
conduct elections or votes with fairness to all Shareholders.
ARTICLE III.
BOARD OF DIRECTORS
------------------
Section 1. General Powers. The Board of Directors shall manage the
--------------
business and affairs of the Corporation, retain ultimate policy-making
responsibility for the corporation, approve overall operational guidelines, and
review, modify, and approve annual operational, expense and capital budgets of
the Corporation.
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<PAGE>
Section 2. Number, Tenure and Qualifications. The number of Directors
---------------------------------
which shall constitute the whole Board shall be fixed from time to time by the
Board of Directors or Shareholders, but in no event shall the number be less
than three (3). Each Director shall hold office until the next annual meeting of
Shareholders or until his successor shall have been duly elected and qualified.
Any Director, or the entire Board of Directors, may be removed at any time, with
or without cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of Directors or by the unanimous consent action
of Shareholders as provided in Article XIV of these Bylaws. Directors need not
be residents of the state of Texas or Shareholders of the Corporation.
Section 3. Regular Meetings. A regular meeting at the Board of Directors
----------------
shall be held without notice immediately after, and at the same place as, the
annual meeting of Shareholders. By resolution, the Board of Directors may
provide the time and place, either within or outside the state of Texas, for
the holding of additional regular meetings without notice other 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 Director. The person
or persons authorized to call special meetings of the Board of Directors may fix
any place,
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<PAGE>
either within or without the state of Texas, as the place for holding any
special meeting of the Board of Directors called by them.
Section 5. Notice. Notice of any special meeting, effective upon delivery
------
in accordance herewith, shall be given at least one (1) day prior thereto by
oral or written notice delivered personally, or by written notice mailed to each
Director at his business address or by telegram. If mailed, the notice shall be
deemed to be delivered three (3) days following its deposit in the United States
mail so addressed, with postage thereon prepaid. If notice is given by
telegram, it shall be deemed to be delivered when delivered to the telegraph
company. The attendance of a Director at a meeting shall constitute a waiver of
such 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 of such meeting.
Section 6. Quorum. At all meetings of the Board of Directors the
------
presence of a majority of the directors then in office, but in no case less than
two (2) directors, shall be necessary to constitute a quorum and be sufficient
for the transaction of business, and any act of a majority of the directors
present at a meeting at which there is a quorum shall be the act of the Board
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<PAGE>
of Directors, except as may otherwise be provided specifically by statute, the
Certificate of Incorporation of the Corporation, as from time to time amended,
or these By-Laws.
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.
Section 8. Vacancies. Any vacancy occurring in the Board of Directors
---------
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors. A Director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
Directors shall be filled by election at an annual meeting or at a special
meeting of Shareholders called for that purpose or by the Board of Directors for
a term of office continuing only until the next election of one or more
Directors by the Shareholders; provided that the Board of Directors may not fill
more than two such directorships during the period between any two successive
annual meetings of Shareholders.
Section 9. Compensation. By resolution of the Board Directors, the
------------
Directors may be paid a fixed sum and/or their expenses of attendance, if any,
at each meeting of the Board a Directors, or may be paid a stated salary for
acting as a Director.
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<PAGE>
No such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director who is present at a meeting
---------------------
of the Board of Directors shall be presumed to have assented to any action taken
thereat 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 secretary of
the meeting before adjournment thereof or shall forward his dissent by
registered mail to the Secretary of the Corporation immediately after
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
ARTICLE IV.
COMMITTEES
Section 1. Committees. By resolution adopted by the affirmative vote of a
----------
majority of the whole Board of Directors, the Board may appoint one or more
committees, which must include one or more of its members, as the Board may from
time to time consider desirable, and such committees shall have such powers and
duties as the Board may properly determine; provided, however, that the power
-------- -------
and duties of any such committee whose members shall include non-directors
shall be limited to making recommendations to the Board of Directors.
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<PAGE>
Section 2. Committee Vacancies. Any member of a committee appointed
-------------------
pursuant to this Article IV shall serve at the pleasure of the Board of
Directors, which Board shall have the power at any time to change the membership
of such committee, to fill vacancies in it or to dissolve it; but subject to
such change or dissolution, members of a committee shall hold office until
following the annual meeting of stockholders next succeeding their appointment
and until their successors are appointed.
Section 3. Committee Meetings. Meetings of a committee shall be held at
------------------
such times and places within or outside the state of Texas as may from time to
time be determined by the Board of Directors or the committee, and no notice of
such regular meetings shall be required. Notice of a special meeting of any
committee shall be given to each member thereof by mailing the same at least
forty-eight (48) hours, or by delivering, telegraphing or telephoning the same
at least twelve (12) hours, before the time of the meeting. A majority of the
members of a committee shall constitute a quorum for the transaction of
committee business, and the act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the committee.
ARTICLE V.
OFFICERS
--------
Section 1. Executive Officers. At the annual meeting of
------------------
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<PAGE>
the Board of Directors following the annual meeting of stockholders, the Board
shall elect as executive officers of the Corporation a Chairman of the Board, a
President and Chief Operating Officer, one or more Executive Vice Presidents,
Senior Vice Presidents, Divisional Vice Presidents and/or Vice Presidents, a
Secretary and a Treasurer ("Executive Officers"). The Board of Directors may
from time to time elect or appoint such other officers and agents as the
interest of the Corporation may require and may fix their duties and terms of
office. To the extent permitted by law, any number of offices may be held by
the same person.
Section 2. Other Officers. In addition to the Executive Officers elected
--------------
by the Board of Directors pursuant to Section 1 of this Article V, the Chairman
of the Board and the President and Chief Operating Officer each may from time to
time appoint such other officers of the Corporation as the interests of the
Corporation may require ("Other Officers"). All such appointments shall be in
writing and shall set forth the duties of the Other Officers being appointed
and, subject to Section 3 of this Article V, his term of office.
Section 3. Term of Office and Vacancies. Each Executive Officer shall
----------------------------
hold office until the meeting of the Board of Directors following the annual
meeting of stockholders next succeeding his election and/or appointment and
until his earlier death, resignation or removal. Each Other Officer shall hold
office for a
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<PAGE>
term to be decided by the appointing Chairman of the Board President and Chief
Operating Officer, as the case may be. In no event, however, shall such term be
for a period longer than the appointing person's own term of office. Any
Executive or Other Officer of the Corporation may be removed from office with or
without cause at any time by the affirmative vote of a majority of all the
members of the Board of Directors. Other Officers appointed pursuant to Section
2 of this Article V also may be removed from office with or without cause at any
time by the Chairman of the Board and/or the President and Chief Operating
officer of the Corporation. A vacancy in any Executive Office arising from any
cause may be filled for the unexpired portion of the term by the Board of
Directors.
Section 4. Chairman of the Board. The Board of Directors may elect a
---------------------
person to be the Chairman of the Board. The Chairman of the Board, if elected,
may be a member of the Board of Directors, shall be the chief executive officer
of the Corporation and shall have general charge and control of the business and
affairs of the Corporation. He shall preside at all meetings of the stockholders
of the Corporation and, if a member of the Board of Directors, at all meetings
of the Board of Directors at which he is present. He shall perform all other
duties and enjoy all other powers which are commonly incident to his office of
Chairman of the Board and status as chief executive officer or are delegated to
-15-
<PAGE>
him by the Board of Directors, or are or may at any time be authorized or
required by law.
Section 5. President and Chief Operating Officer. The President and Chief
-------------------------------------
Operating Officer shall be the Chief Operating Officer of the Corporation
responsible for directing, administering and coordinating the business
operations of the Corporation in accordance with policies, goals and objectives
established by the Board of Directors and the Chairman of the Board, and shall
have such other powers and perform such other duties as may be assigned to him
by the Board of Directors or the Chairman of the Board. If no Chairman of the
Board is designated, the President shall also have the powers and duties of the
Chairman of the Board set forth in Article V, Section 4 hereof.
Section 6. Executive Vice Presidents, Senior Vice Presidents and Vice
----------------------------------------------------------
Presidents. The Executive Vice Presidents, Senior Vice Presidents and Vice
- ----------
Presidents of the Corporation, if there by any, shall have such powers and
perform such duties as may be assigned to them by the Board of Directors, the
Chairman of the Board or the President and Chief Operating Officer.
Section 7. Other Officers. The Other Officers of the Corporation shall
--------------
have such powers and perform such duties as may be assigned to them by the Board
of Directors, the Chairman of the Board or the President and Chief Operating
Officer.
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<PAGE>
Section 8. Secretary. The Secretary shall attend all meetings of the
---------
stockholders of the Corporation and of the Board at Directors and shall record
all the proceedings of such meetings in a book or books to be kept for that
purpose. He shall attend to the giving and serving of all notices on behalf of
the Corporation, shall have custody of the records and the Seal of the
Corporation and, when so ordered by the Board of Directors, shall affix the seal
to any instrument which requires the seal of the Corporation. He shall, in
general, perform all the duties and functions incident to the office of
Secretary and shall also perform such other duties as may be assigned to him by
the Board of Directors, the Chairman of the Board or the President and Chief
Operating Officer.
Section 9. Treasurer. The Treasurer shall have custody and control of all
---------
funds and securities of the Corporation, except as otherwise provided by the
Board of Directors. He shall keep full and accurate accounts of all receipts
and disbursements of the Corporation in books to be kept for that purpose and
shall deposit all monies 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 and shall render to the Board of Directors, the
Chairman of the board and the President and Chief Operating Officer, whenever
any of them may require it, an account of all his transactions as Treasurer and
an account of the financial condition of the Corporation. He shall also perform
such
-17-
<PAGE>
other duties as from time to time may be assigned to him by the Board of
Directors, the Chairman of the Board or the President and Chief Operating
Officer.
Section 10. Certain Officers to Give Bonds. Every officer, agent or
------------------------------
employee of the Corporation who may receive, handle or disburse money for its
account or who may have any of the Corporation's property in his custody or be
responsible for its safety or preservation may be required in the discretion of
the Board of Directors to give bond, in such sum and with such sureties and n
such form 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 the event of his death, resignation or removal from
office, of all books, papers, vouchers, monies and other property of whatever
kind in his custody belonging to the Corporation.
ARTICLE VI.
DIVISION OFFICERS
------------------
Section 1. Division President. In case any of the business or affairs
------------------
of the Corporation are carried on by the Corporation as a division of the
Corporation, the Board of Directors may appoint a Division President who shall
have such powers, authorities, functions and responsibilities with respect to
the business
-18-
<PAGE>
and affairs of such division as may be delegated to him by the Board of
Directors, the Chairman of the Board or the President and Chief Operating
Officer.
Section 2. Other Division Officers. In case a Division President is
-----------------------
appointed in accordance with Section 1 of this Article VI, such Division
President may designate one or more other officers for his respective division.
Each such division officer shall have an exercise such powers, authorities,
functions and responsibilities with respect to the business and affairs of such
division as may be delegated to him by the Division President.
Section 3. Term of Office. A division officer, who shall not be an
--------------
Executive Officer of the Corporation unless specifically elected as such by the
Board of Directors, shall be subject to removal at any time with or without
cause by the Board of Directors and, if such division officer is not a Division
President, by the Chairman of the Board, the President and Chief Operating
Officer or the Division President of the division of which he is an officer.
ARTICLE VII.
INDEMNIFICATION
---------------
Section 1. Definitions. For the purposes of this section, "agent" means
-----------
any person who is or was a director, officer,
-19-
<PAGE>
or other authorized agent of this Corporation, and any person, who is or was
serving as a director, officer or authorized agent of another corporation,
partnership, joint venture, trust or other enterprise controlled by this
Corporation and at the request of this Corporation; "proceeding" means any
threatened, pending, or completed action or proceeding, whether civil, criminal,
administrative, or investigative; and "expenses" include, but are not limited
to, attorneys' fees and any expenses of establishing a right to indemnification
under this section.
Section 2. Power to Indemnify. The Corporation shall indemnify any person
------------------
who was, is, or is threatened to be made a party to a proceeding by reason of
the fact that he or she is or was an agent of this Corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding, to the fullest extent
permitted under the Texas Business Corporation Act, as the same exists or may
hereafter be amended. Such right shall be a contract right and as such, shall
run to the benefit of any agent of the Corporation while this Article VII is in
effect. Any repeal or amendment of this Article VII shall be prospective only
and shall not limit the rights of any such agent or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such agent in any of the foregoing capacities prior to any such repeal or
amendment to this Article VII.
-20-
<PAGE>
Section 3. Successful Defense. To the extent that an agent has been
------------------
successful on the merits of any proceeding, the Corporation shall indemnify the
agent for expenses (including attorneys' fees) and costs actually and reasonably
incurred.
Section 4. Advancing Expenses. An agent shall have the right to be paid
------------------
by the Corporation expenses incurred in investigating or defending any such
proceeding in advance of its final disposition to the maximum extent permitted
under the Texas Business Corporation Act, as the same exists or may hereafter be
amended. If a claim for indemnification or advancement of expenses hereunder is
not paid in full by the Corporation within sixty (60) days after a written claim
has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall also be entitled to
be paid the expenses of prosecuting such claim. It shall be a defense to any
such action that such indemnification or advancement of costs of defense is not
permitted under the Texas Business Corporation Act, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, stockholders) to have made its determination prior to the commencement
of such action that indemnification of, or advancement costs of defense to the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including
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<PAGE>
its Board of Directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification
or advancement is not permissible.
Section 5. Indemnity Not Exclusive. The rights conferred under this
-----------------------
Article VII shall not be exclusive of any other right which any agent may have
or hereafter acquire under any statute, by-law, resolution of stockholders or
directors, agreement, or otherwise.
Section 6. Negligent Acts by Agent. Without limiting the generality of
-----------------------
this Article VII, to the extent permitted by then applicable law, the grant of
mandatory indemnification pursuant to this Article VII shall extend to
proceedings involving negligence (but not willful or grossly negligent conduct)
of such agent.
Section 7. Insurance Indemnification. The Corporation shall have the
-------------------------
power to purchase and maintain insurance on behalf of any agent of the
corporation against any liability asserted against or incurred by the agent in
that capacity or arising out or the agent's status as such, whether or not the
Corporation would have the power to indemnify the agent against that liability.
-22-
<PAGE>
Section 8. Employee Benefit Plans. For purposes of this Article VII, the
----------------------
Corporation is deemed to have requested a director to serve an employee benefit
plan whenever the performance by him/her of his/her duties to the Corporation
also imposes duties on or otherwise involves services by him/her to the plan or
participants or beneficiaries of the plan. Excise taxes assessed on a director
with respect to an employee benefit plan pursuant to applicable law are deemed
fines. Action taken or omitted by him/her with respect to an employee benefit
plan in the performance of his/her duties for a purpose reasonably believed by
him/her to be in the interest of the participants and beneficiaries of the plan
is deemed to be for a purpose which is not opposed to the best interests of the
Corporation and is subject to indemnification under this Article.
Section 9. Continuation of Indemnification and Advancement of Expenses.
-----------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VII 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, and further, the provisions of this Article
VII shall continue to be applicable for matters occurring prior to the
revocation or amendment of this Article VII if it is revoked or amended to
eliminate or reduce the effect of this Article VII. Nothing herein is intended
to require or shall be construed as requiring the Corporation to do or fail to
do any act
-23-
<PAGE>
in violation of applicable law. The provisions hereof shall be severable such
that if any portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless indemnify the
applicable officer, director, employee or other person to the full extent
permitted by any applicable portion hereof that shall not have been invalidated,
and the balance of this Article VII not so invalidated shall be enforceable in
accordance with its terms.
ARTICLE VIII.
LOANS, CHECKS AND DEPOSITS
--------------------------
Section 1. Contracts. The Board of Directors may authorize any officer,
---------
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. This authorization may be
general or confined to specific instances.
-24-
<PAGE>
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
-------------------
the payment of monies, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer, 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 to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may select from time
to time.
ARTICLE IX.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
------------------------------------------
Section 1. Certificates for Shares. Certificates representing shares of
-----------------------
the Corporation shall be in the form as shall be determined by the Board of
Directors. The certificates shall be signed by or in the name of the
Corporation by the Chairman of the Board, the President and Chief Operating
Officer or a Vice-President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary certifying the number of shares of stock of
the Corporation owned by such shareholders. All Certificates for shares shall
be consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date
-25-
<PAGE>
of issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in the
case of a lost, destroyed, or mutilated certificate a new one may be issued
there-for upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the Corporation
------------------
shall be made only on the stock transfer books of the Corporation, by the holder
of record thereof or by his legal representative or his attorney-in fact
authorized by power of attorney, or such other evidence of authority as may be
appropriate, duly executed and filed with the Secretary of the Corporation, and
upon surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes.
ARTICLE X.
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be a calendar year.
-26-
<PAGE>
ARTICLE XI.
DIVIDENDS AND RESERVES
----------------------
The Board of Directors may, from time to time, determine whether any, and,
if any, what part of the net profits of the Corporation, or of its net assets in
excess of its capital, available therefor pursuant to law and to the Certificate
of Incorporation of the Corporation, as from time to time amended, shall be
declared by it as dividends on the stock of the Corporation. The Board of
Directors may, in its discretion, in lieu of declaring any such dividend, use
and apply any of such net profits or net assets as a reserve for working
capital, to meet contingencies, for the purpose of maintaining or increasing the
property or business of the Corporation or for any other lawful purpose which it
may think conducive to the best interests of the Corporation.
ARTICLE XII.
AMENDMENTS
----------
The power to alter, amend, or repeal these Bylaws and to adopt new Bylaws
is delegated to the Board of Directors, which amendment shall only be effected
by unanimous vote of the Board of Directors, but any Bylaws so adopted, altered,
or amended by the Board of Directors may be altered or repealed by a majority
vote of the Shareholders.
-27-
<PAGE>
ARTICLE XIII.
NOTICE AND WAIVER OF NOTICE
---------------------------
Whenever any notice is required to be given under the provisions of these
Bylaws, and unless otherwise provided hereunder, said notice shall be deemed to
be sufficient if deposited in a Post Office Box, sealed in a postpaid envelope
addressed to the person entitled thereto at his address as it appears on the
books of the Corporation, and that notice shall be deemed to have been delivered
three (3) days following the date it was mailed. A waiver of notice shall be
deemed equivalent to receipt of notice when it has been signed by the person or
persons entitled to said notice, whether before or after the time stated
therein. Neither the business to be transacted at, nor the purposes of, any
regular or special meeting of the Board of Directors or Shareholders need be
specified in the waiver of notice of the meeting.
ARTICLE XIV.
ACTION WITHOUT A MEETING
------------------------
Section 1. Written Consent. Any action required or permitted to be taken
---------------
at a meeting of the Shareholders, Board of Directors, or any committee may be
taken without a meeting if a written consent setting forth the action so taken
is signed by all the Shareholders, Directors, or committee members, as the case
may be, and such action shall have the same force and effect as if it were
-28-
<PAGE>
approved by a unanimous vote at a meeting thereof, duly and regularly called.
Section 2. Conference Telephone. Shareholders, Directors, or members of
--------------------
any committee may participate in and hold a meeting thereof by means of a
conference telephone or similar communications equipment whereby all persons
participating in the meeting can hear each other, and participation in this
manner at a meeting shall constitute presence in person at the meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened. Minutes of any meeting involving participation by
conference telephone or similar communications equipment shall be prepared and
kept in the same manner as minutes of any other meetings.
The undersigned attests that these Bylaws
were approved by unanimous vote of the Board of
Directors on July 26, 1993.
/s/ Jay I. Applebaum
-------------------------------------------------
Secretary of
LOOMIS ARMORED INC.
-29-
<PAGE>
EXHIBIT 3.7
[SEAL OF THE STATE OF TEXAS APPEARS HERE]
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
LFC ARMORED OF TEXAS INC.
FORMERLY:
WELLS FARGO ARMORED SERVICE CORPORATION OF TEXAS
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Amendment for the above named entity have been received in
this office and are found to conform to law.
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Amendment.
Dated: January 24, 1997
Effective: January 24, 1997
[SEAL OF THE STATE OF TEXAS APPEARS HERE]
/s/ ANTONIO O. GARZA, JR. dlm
-----------------------------------
Antonio O. Garza, Jr.
Secretary of State
<PAGE>
FILED
In the Office of the
Secretary of State of Texas
JAN 24 1997
Corporations Section
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WELLS FARGO ARMORED SERVICE CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation
ARTICLE ONE: The name of the Corporation is Wells Fargo Armored Service
Corporation of Texas (the "Corporation").
ARTICLE TWO: The following Amendment to the Articles of Incorporation (the
"Amendment") was adopted by the Sole Shareholder of the Corporation on January
---------
24, 1997. The Amendment has been adopted to change the name of the Corporation
to LFC Armored of Texas Inc.
The Amendment amends ARTICLE ONE of the original Articles of Incorporation,
-----------
which, as amended, shall read as follows:
ARTICLE ONE
-----------
The name of the Corporation is LFC Armored of Texas Inc.
ARTICLE THREE: The holders of all of the shares of capital stock
outstanding are entitled to vote on the Amendment and have signed a Written
Consent adopting the Amendment. The number of shares of capital stock of the
Corporation outstanding at the time of such adoption was 100 and the number of
shares of capital stock entitled to vote thereon was 100.
<PAGE>
IN WITNESS WHEREOF, the undersigned Corporation has executed these Articles
of Amendment as of this 24th day of January, 1997.
WELLS FARGO ARMORED SERVICE
CORPORATION OF TEXAS
By: /s/ JAMES K. JENNINGS, JR.
---------------------------
James K. Jennings, Jr.
Vice President, Chief Financial
Officer and Treasurer
2
<PAGE>
[SEAL OF THE STATE OF TEXAS APPEARS HERE]
CERTIFICATE OF INCORPORATION
OF
WELLS FARGO AMORED SERVICE CORPORATION OF TEXAS
CHAPTER NUMBER 01136662
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS, HEREBY
CERTIFIES THAT ARTICLES OF INCORPORATION FOR THE ABOVE CORPORATION, DULY SIGNED
AND VERIFIED HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM OF LAW.
ACCORDINGLY THE UNDERSIGNED, AS SUCH SECRETARY OF STATE, AND BY VIRTUE
OF THE AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE
OF INCORPORATION AND ATTACHES HERETO A COPY OF THE ARTICLES OF INCORPORATION.
ISSUANCE OF THIS CERTIFICATE OF INCORPORATION DOES NOT AUTHORIZE THE USE
OF A CORPORATE NAME IN THIS STATE IN VIOLATION OF THE RIGHTS OF ANOTHER UNDER
THE FEDERAL TRADEMARK ACT OF 1946, THE TEXAS TRADEMARK LAW, THE ASSUMED BUSINESS
OR PROFESSIONAL NAME ACT OR THE COMMON LAW.
DATED DEC. 20, 1989
/s/ GEORGE S. BAYORD, JR.
-----------------------------
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
WELLS FARGO ARMORED SERVICE CORPORATION OF TEXAS
The undersigned, being of the age of eighteen (18) years or more, does
hereby make and acknowledge these Articles of Incorporation for the purpose of
forming a business corporation under and by virtue of the laws of the state of
Texas, pursuant to Article 3.02 of the Texas Business Corporation Act (Volume
3A, Vernon's Texas Civil Statutes), and to that end do hereby set forth:
ARTICLE I
---------
The name of the corporation is Wells Fargo Armored Service Corporation of
Texas.
ARTICLE II
----------
The period of duration of the Corporation shall be perpetual.
ARTICLE III
-----------
The purpose for which the Corporation is organized is: To engage in any
lawful act or activity for which corporations may be organized under Article
3.02 of the Texas Business Corporation Act (Volume 3A, Vernon's Texas Civil
Statutes).
ARTICLE IV
----------
The aggregate number of shares which the corporation shall have authority
to issue is one thousand (1000) shares of Common Stock and the par value of each
such share is One Dollar ($1.00).
ARTICLE V
---------
The minimum amount of consideration for its shares to be received by the
corporation before it shall commence business is One Thousand Dollars
($1,000.00).
ARTICLE VI
----------
The address of the initial registered office of the corporation is c/o C T
Corporation System 1601 Elm Street, Dallas, Texas 75201 and the name of the
initial registered agent at such address is C T Corporation System.
ARTICLE VII
-----------
The number of directors constituting the initial board of directors shall
be one (1); and the name and address of the person who is to serve as the sole
director until the first
<PAGE>
meeting of shareholders or until his successor is selected and qualified is:
Name Address
---- -------
Bob E. Moree 5550 77 Center Drive
Charlotte, North Carolina 28210
ARTICLE VIII
------------
The name and address of the sole incorporator is:
Name Address
---- -------
Paul L. Rathblott 1633 Littleton Road
Parsippany, New Jersey 07054
ARTICLE IX
----------
In addition to the general powers granted corporations under the laws of
the state of Texas, the board of directors of the corporation shall have full
power and authority to make, alter or repeal the by-laws of the corporation.
Unless and except to the extent that the by-laws of the corporation shall
so require, the election of directors of the corporation need not be by written
ballot.
IN TESTIMONY WHEREOF, I have hereunto set my hand this the 19th day of
December, A.D. 1989.
/s/ Paul L. Rathblott
-------------------------------
Paul L. Rathblott
-2-
<PAGE>
EXHIBIT 3.8
BY-LAWS
OF
WELLS FARGO ARMORED SERVICE CORPORATION OF TEXAS
- --------------------------------------------------------------------------------
ARTICLE I
Stockholders
------------
Section 1.1. Annual Meetings. An annual meeting of stockholders
---------------
shall be held for the election of directors, unless otherwise designated by the
Board of Directors or the stockholders, during the month of April in each year,
at such time and place either within or without the State of Texas as may be
designated by the Board of Directors from time to time. Any other proper
business may be transacted at the Annual Meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may be
----------------
called at any time by the President, Secretary, the Board of Directors, or the
holders of not less than one-tenth of the shares entitled to vote at such
meeting, to be held at such date, time and place either within or without the
State of Texas as may be stated in the notice of the meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
------------------
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
------------
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the orginal meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting
<PAGE>
shall be given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
------
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend.
Section 1.6. Organization. Meetings of stockholders shall be
------------
presided over by the President, or in the absence of the foregoing person by a
chairman designated by the Board of Directors. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
---------------
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after eleven months from its date, unless the proxy provides for a longer period
not to exceed that period provided by law. A duly executed proxy shall be
irrevocable if it states that this is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A stockholder may revoke any proxy which is not irrevocable by attending
the meeting and voting in person; or by filing an instrument in writing revoking
the proxy or another duly executed proxy bearing a later date with the Secretary
of the Corporation. Voting at meetings of stockholders need not be conducted by
inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy at such
meeting shall so determine. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. All other
elections and questions shall, unless otherwise provided by law or by the
certificate of incorporation or these by-laws, be decided by the vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote thereon present in person or by proxy at the meeting, provided that
(except as otherwise required by law or by the certificate of incorporation) the
Board of Directors may require a larger vote upon any election or question.
-2-
<PAGE>
Section 1.8. Fixing Date for Determination of Stockholders of Record.
---------------------------------------------------------
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
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, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is held
and (2) the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to voter at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
----------------------------------------
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
ARTICLE II
Board of Directors
------------------
Section 2.1. Powers; Number. The business and affairs of the
--------------
Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the certificate of
incorporation. The Board shall consist of at least one Director, the exact
number of which shall be fixed from time to time by the Stockholder or by the
Board of Directors.
-3-
<PAGE>
Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies.
---------------------------------------------------------
Directors shall be elected by a plurality of the votes cast at Annual Meetings
of the Stockholders, and each director so elected shall hold office until the
next annual meeting of stockholders and until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Secretary. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein, no
acceptance of such resignation shall be necessary to make it effective. Unless
otherwise provided in the certificate of incorporation or these by-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director.
Section 2.3. Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held at such places within or without the State of Texas and at
such times as the Board of Directors may from time to time determine, and if so
determined notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
----------------
Directors may be held at any time or place within or without the State of Texas
whenever called by the President or the Board of Directors. Reasonable notice
thereof shall be given by the person or persons calling the meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
-----------------------------
restricted by the certificate of incorporation or these by-laws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board of Directors or of such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating pursuant to this by-law shall constitute
presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
--------------------------------
Board of Directors a majority of the entire Board of Directors shall constitute
a quorum for the transaction of business. The vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors unless the certificate of incorporation or these by-laws
shall require a vote of a greater number. If, at any meeting of the Board of
Directors, a quorum shall not be present, the members of the Board of Directors
present may adjourn the meeting from time to time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall
------------
be presided over by the President, or in his absence by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his absence
the
-4-
<PAGE>
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.8. Informal Action by Directors. Unless otherwise restricted
----------------------------
by the certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or of such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
ARTICLE III
Committees
----------
Section 3.1. Committees. The Board of Directors may, by resolution
----------
passed by a majority of the whole Board designate one or more committees, each
committee to consist of one or more of the directors of the Corporation, except
that any executive or similar committee shall consist of two or more directors.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these by-laws; and, unless the resolution
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
---------------
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a provision
by the Board of Directors or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members if a quorum is then present shall be the act of such
committee, and in other respects each committee shall conduct its business in
-5-
<PAGE>
the same manner as the Board of Directors conducts its business pursuant to
Article II of these by-laws.
ARTICLE IV
Officers
--------
Section 4.1. Officers; Election; Qualification; Term of Office;
----------------------------------------------------
Resignation; Removal; Vacancies. As soon as practicable after the annual
- -------------------------------
meeting of stockholders in each year, the Board of Directors shall elect a
President and a Secretary. The Board of Directors may also elect an Executive
Vice President, one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, a Treasurer, one or more
Assistant Treasurers, a Controller and one or more Assistant Controllers and may
give any of them such further designations or alternate titles as it considers
desirable. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his
election, and until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the President. Such resignation shall take effect at the time specified
therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The President or the Board
of Directors may remove any officer with or without cause at any time. Any such
removal shall be without prejudice to the contractual rights of such officer, if
any, with the Corporation, but the election or appointment of an officer shall
not of itself create contractual rights. Any number of offices may be held by
the same person. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term by the Board of Directors at any regular or special meeting.
Section 4.2. Chairman of the Board. The Chairman of the Board of
---------------------
Directors shall have such powers and perform such duties as may be assigned to
him by the Board of Directors or the President or as may be provided by law.
Section 4.3. President. The President shall have general and active
---------
management and general charge and supervision of the business of the
Corporation, and shall see that all orders and policies of the Board of
Directors are carried into effect. The President shall preside at all meetings
of the Board of Directors at which he shall be present. He shall perform such
other duties as, from time to time, may be assigned to him by the Board of
Directors or as may be provided by law.
Section 4.4. Executive Vice President. The Executive Vice
------------------------
President shall have such powers and perform such duties as may be assigned to
him by the Board of Directors or the President or as may be provided by law.
-6-
<PAGE>
Section 4.5. Vice Presidents. The Vice President or Vice Presidents
---------------
shall have such powers and perform such duties as may be assigned to him or them
by the Board of Directors or the President or as may be provided by law.
Section 4.6. Secretary. The Secretary shall have the duty to record
----------
the proceedings of the meetings of the stockholders and the Board of Directors
and of any committee in a book to be kept for that purpose; he shall see that
all notices are duly given in accordance with the provisions of these by-laws or
as required by law; he shall be custodian of the stockholder list and
certificates and other records of the Corporation; he may affix the corporate
seal to any document the execution of which, on behalf of the Corporation, is
duly authorized, and when so affixed may attest the same; and, in general, he
shall perform all duties incident to the office of secretary of a corporation,
and such other duties as, from time to time, may be assigned to him by the Board
of Directors, the President or as may be provided by law.
Section 4.7. Treasurer. The Treasurer shall have charge of and be
---------
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors; if required by the Board of Directors, he
shall give a bond for the faithful discharge of his duties, with such surety or
sureties as the Board of Directors may determine; and, in general, he shall
perform all the duties incident to the office of treasurer of a corporation, and
such other duties as may be assigned to him by the Board of Directors, or the
President or as may be provided by law.
Section 4.8. Controller. The Controller shall keep or cause to be
kept full and accurate records of all receipts and disbursements in books of the
Corporation; and, in general, he shall perform all the duties incident to the
office of Controller of a corporation, and such other duties as may be assigned
to him by the Board of Directors, or the President or as may be provided by law.
Section 4.9. Other Officers. The Board of Directors may from time
--------------
to time elect such other officers, agents or employees, and may delegate to them
such powers and duties, as it may deem desirable.
ARTICLE V
Stock
-----
Section 5.1. 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 President or
-7-
<PAGE>
a Vice President and by the Treasurer, its Assistant Treasurer, Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation. If such certificate is manually signed by one officer or
manually countersigned by a transfer agent or by a registrar, any other
signature on the 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 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
----------------------------------------------------------
New Certificates. The Corporation may issue a new certificate of stock in
- ----------------
the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
-----------
be the calendar year unless otherwise determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
----
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors
---------------------------------------------------------
and Committees. Whenever notice is required to be given by law or under any
- --------------
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business 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 stockholders,
directors, or members of a committee of directors need be
-8-
<PAGE>
specified in any written waiver of notice unless so required by the certificate
of incorporation or these by-laws.
Section 6.4. Indemnification of Directors, Officers, Employees, and
------------------------------------------------------
Agents
- ------
6.4.1. Indemnification of Directors, Officers, and Employees. To the
--------------------------------------------------------
extent permitted by Texas law from time to time in effect, the Corporation shall
indemnify any person who is or was 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 (whether or not by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee of the Corporation, or any subsidiary, joint venture or
partnership of which the Corporation owns, directly or indirectly, greater than
50 percent of the voting securities, 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 court costs and attorneys' fees), judgments, penalties (including
excise and similar taxes), fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding.
6.4.2. Permissive Indemnification of Directors, Officers, Employees and
-----------------------------------------------------------------
Agents. To the extent permitted by Texas law from time to time in effect,
- ------
the Corporation may indemnify any person who is or was 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 (whether or
not 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 any subsidiary,
joint venture or partnership of which the Corporation owns, directly or
indirectly, greater than 50 percent of the voting securities, 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, court costs and attorneys' fees),
judgments, penalties (including excise and similar taxes), fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding to the extent authorized at any time or from
time to time by the Board of Directors.
6.4.3. Successful Defense. If a director, officer, employee or
------------------
agent has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsection 6.4.1 or subsection 6.4.2. of this
Section 6.4., or with respect to any claim, issue or matter therein (to the
extent that a portion of his expenses can be reasonably allocated thereto), he
shall be indemnified against expenses (including, court costs and attorneys'
fees) actually and reasonably incurred by him in connection therewith.
-9-
<PAGE>
6.4.4. Advances. To the extent permitted by Texas law from time
--------
to time in effect, expenses incurred by a director, officer or employee of the
Corporation or any subsidiary, joint venture or partnership of which the
Corporation owns, directly or indirectly, greater than 50 percent of the voting
securities, in defending any action, suit or proceeding, whether civil,
criminal, administrative or investigative or threat thereof, shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person 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 6.4. To the
extent permitted by Texas law from time to time in effect, expenses incurred by
an agent of the Corporation or any subsidiary, joint venture or partnership of
which the Corporation owns, directly or indirectly, greater than 50 percent of
the voting securities, in defending a civil, criminal, administrative or
investigative action, suit or proceeding, or threat thereof, 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, upon receipt of an
undertaking by or on behalf of such person 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 6.4.
6.4.5. Provisions Not Exclusive. To the extent permitted by Texas law
------------------------
from time to time in effect, the indemnification and advancement of expenses
provided by this Section 6.4. shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under any agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office
and, shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
6.4.6. Contract With the Corporation. The provisions of Section 6.4.
-----------------------------
shall be deemed to be a contract between the Corporation and each person who
serves in any of the capacities referred to in subsection 6.4.1. of this Section
6.4 at any time while this Section 6.4. and the relevant provisions of the
Business Corporation Act of the State of Texas or other applicable laws, if any,
are in effect, and any repeal or modification of any such law or of this Section
6.4. shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
6.4.7. Insurance. The Corporation may purchase and maintain insurance
---------
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation or any
-10-
<PAGE>
Corporation, joint venture or partnership of which the Corporation owns,
directly or indirectly, any of the voting securities, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Section 6.4. or of Section 2.02 of the Business Corporation
Act of the State of Texas.
Section 6.5. Interested Directors; Quorum. No contract or transaction
----------------------------
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contracts or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.
Section 6.6. Form of Records. Any records maintained by the
---------------
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be amended or
--------------------
repealed, and new by-laws adopted, by a majority of the whole Board of
Directors, but the stockholders
-11-
<PAGE>
entitled to vote may adopt additional by-laws and may amend or repeal any by-law
whether or not adopted by them.
-12-
<PAGE>
EXHIBIT 3.9
SECRETARY OF STATE
CORPORATION SECTION DATE: 01/24/97
JAMES K. POLK BUILDING, SUITE 1800 REQUEST NUMBER: 3277-0693
NASHVILLE, TENNESSEE 37243-0306 TELEPHONE CONTACT: (615) 741-0537
FILE DATE/TIME: 01/24/97 1054
EFFECTIVE DATE/TIME: 01/24/97 1054
CONTROL NUMBER: 0033914
TO:
TSIO
P.O. BOX 120598
NASHVILLE, TN 37212
RE:
LOOMIS, FARGO & CO. OF PUERTO RICO
CHARTER AMENDMENT
THIS WILL ACKNOWLEDGE THE FILING OF THE ATTACHED DOCUMENT WITH AN EFFECTIVE DATE
AS INDICATED ABOVE.
WHEN CORRESPONDING WITH THIS OFFICE OR SUBMITTING DOCUMENTS FOR FILING, PLEASE
REFER TO THE CORPORATION CONTROL NUMBER GIVEN ABOVE.
PLEASE BE ADVISED THAT THIS DOCUMENT MUST ALSO BE FILED IN THE OFFICE OF THE
REGISTER OF DEEDS IN THE COUNTY WHEREIN A CORPORATION HAS ITS PRINCIPAL OFFICE
IF SUCH PRINCIPAL OFFICE IS IN TENNESSEE.
================================================================================
FOR: CHARTER AMENDMENT ON DATE: 01/24/97
FEES
FROM: RECEIVED: $10.00 $10.00
HARKAVY SHAINBERG KOSTEN & PINSTEIN, PA
SUITE 350 TOTAL PAYMENT RECEIVED: $20.00
530 OAK COURT DR.
MEMPHIS, TN 38117-0000 RECEIPT NUMBER: 00002058339
ACCOUNT NUMBER: 00000107
[SEAL OF THE STATE OF /s/ RILEY C. DARNELL
TENNESSEE APPEARS HERE] ---------------------------------
RILEY C. DARNELL
SECRETARY OF STATE
<PAGE>
ARTICLES OF AMENDMENT TO THE CHARTER
CORPORATE CONTROL NUMBER (IF KNOWN) FILING FEE: $10.00
JANUARY 24, 1997 10:54AM
-------------------------
PURSUANT TO THE PROVISIONS OF SECTION 48-20-106 OF THE TENNESSEE BUSINESS
------------------
CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES
---------------
OF AMENDMENT TO ITS CHARTER:
PLEASE MARK THE BLOCK THAT APPLIES:
[X] AMENDMENT IS TO BE EFFECTIVE WHEN FILED BY THE SECRETARY OF STATE.
[_] AMENDMENT IS TO BE EFFECTIVE.
----------------------------------------------
MONTH DAY YEAR
(NOT TO BE LATER THAN 90TH DAY AFTER THE DATE THIS DOCUMENT IS FILED.) IF
NEITHER BLOCK IS CHECKED, THE AMENDMENT WILL BE EFFECTIVE AT THE TIME OF
FILING.
1. PLEASE INSERT THE NAME OF THE CORPORATION AS IT APPEARS ON RECORD:
WELLS FARGO ARMORED SERVICE CORPORATION OF PUERTO RICO
IF CHANGING THE NAME, INSERT THE NEW NAME ON THE LINE BELOW:
LOOMIS, FARGO & CO. OF PUERTO RICO
------------------------------------------------------------------------
2. PLEASE INSERT ANY CHANGES THAT APPLY:
A. PRINCIPAL ADDRESS:
--------------------------------------------------
STREET ADDRESS
--------------------------------------------------------------------
CITY STATE ZIP CODE
B. REGISTERED AGENT:
---------------------------------------------------
C. REGISTERED ADDRESS: TN
--------------------------------------------------------------------
CITY STATE ZIP CODE COUNTY
D. OTHER CHANGES:
3. THE CORPORATION IS FOR PROFIT.
4. THE MANNER (IF NOT SET FORTH IN THE AMENDMENT) FOR IMPLEMENTATION OF ANY
EXCHANGE. RECLASSIFICATION, OR CANCELLATION OF ISSUED SHARES IS AS
FOLLOWS:
5. THE AMENDMENT WAS DULY ADOPTED ON JANUARY 24, 1997 BY:
----------------
MONTH DAY YEAR
(NOTE: PLEASE MARK THE BLOCK THAT APPLIES)
[_] - THE INCORPORATORS.
[_] - THE BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL, AS SUCH IS NOT
REQUIRED.
[XX] - THE SHAREHOLDERS.
LOOMIS, FARGO & CO.
EXECUTIVE VICE PRESIDENT BY: /s/ JAMES K. JENNINGS, JR.
- ------------------------------- ------------------------------
SIGNER'S CAPACITY SIGNATURE
JAMES K. JENNINGS, JR.
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(Pursuant the Sections 48-20-106 and 48-20-107 of the Tennessee Business
Corporation Act)
We, Hugh E. Sawyer and Paul L. Rathblott, President and Secretary,
respectively of Wells Fargo Armored Service Corporation of Puerto Rico, a
corporation existing under the laws of the State of Tennessee (the
"Corporation"), do hereby certify as follows:
1. The name of the corporation is WELLS FARGO ARMORED SERVICE CORPORATION
OF PUERTO RICO.
2. The corporation was originally incorporated under the name "Armored
Service of Puerto Rico, Inc." and the original Certificate of Incorporation of
the Corporation was filed with the Secretary of State of Tennessee on December
31, 1955. Article I of the Certificate of Incorporation of the Corporation was
thereafter amended to change the name of the Corporation to "Wells Fargo Armored
Service Corporation of Puerto Rico" and a Certificate of Amendment evidencing
such change of name was filed with the Secretary of State of Tennessee on
December 18, 1969.
3. This amendment to and restatement of the Certificate of Incorporation
of the Corporation effected by this Certificate has been duly adopted by The
Board of Directors of the Corporation, in accordance with the provisions of
Sections 48-20-106 and 48-20-107 of the Tennessee Business Corporation Act (the
"TBCA") in a Consent of Directors to Action Without a Meeting, dated June 23,
1992, pursuant to Section 48-18-202, and by the holder of all of the outstanding
capital stock of the Corporation, pursuant to Section 48-17-104 of the TBCA.
4. Effective the date of filing with the Secretary of State, the
Corporation hereby amends and restates its Certificate of Incorporation as
follows:
FIRST: The name of the Corporation is Wells Fargo Armored Service
Corporation of Puerto Rico (hereinafter called the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Tennessee is 530 Gay Street, Knoxville, Tennessee 37902. The name of
its registered agent at
<PAGE>
the address is C T Corporation System.
THREE: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under Section 48-13-101 of
the Tennessee Business Corporation Act, including but not limited to armored car
services, guard, patrol, alarm and other security and transportation type
services and services related to the foregoing.
FOUR: The maximum number of shares of stock which this Corporation is
authorized to have outstanding at any time is five hundred (500) shares of
common stock without nominal or par value.
FIVE: The amount of capital with which this corporation will begin
business shall be One Thousand Dollars ($1,000.00); and when such amount so
fixed shall have been subscribed for, all subscriptions of the stock of this
Corporation shall be enforceable and it may proceed to do business in the same
manner and as fully as though the maximum number of shares authorized under the
provisions of the preceding section hereof shall have been subscribed for.
SIX: The time of existence of this Corporation shall be perpetual.
IN WITNESS WHEREOF, we have hereunto signed our hands and affirm that the
statements made herein are true under the penalties of perjury, this 23rd day of
June, 1992.
/s/ HUGH E. SAWYER
--------------------------------
Hugh E. Sawyer
President
ATTEST: /s/ PAUL L. RATHBLOTT
--------------------------------
Paul L. Rathblott
Secretary
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(Pursuant to Sections 48-20-106 and 48-20-107 of the Tennessee Business
Corporation Act)
We, Hugh E. Sawyer and Paul L. Rathblott, President and Secretary,
respectively of Wells Fargo Armored Service Corporation of Puerto Rico, a
corporation existing under the laws of the State of Tennessee (the
"Corporation"), do hereby certify as follows:
1. The name of the corporation is WELLS FARGO ARMORED SERVICE CORPORATION
OF PUERTO RICO.
2. The corporation was originally incorporated under the name "Armored
Service of Puerto Rico, Inc." and the original Certificate of Incorporation of
the Corporation was filed with the Secretary of State of Tennessee on December
31, 1955. Article I of the Certificate of Incorporation of the Corporation was
thereafter amended to change the name of the Corporation to "Wells Fargo Armored
Service Corporation of Puerto Rico" and a Certificate of Amendment evidencing
such change of name was filed with the Secretary of State of Tennessee on
December 18, 1969.
3. This amendment to and restatement of the Certificate of Incorporation
of the Corporation effected by this Certificate has been duly adopted by The
Board of Directors of the Corporation, in accordance with the provisions of
Sections 48-20-106 and 48-20-107 of the Tennessee Business Corporation Act (the
"TBCA") in a Consent of Directors to Action Without a Meeting, dated June 23,
1992, pursuant to Section 48-18-202, and by the holder of all of the outstanding
capital stock of the Corporation, pursuant to Section 48-17-104 of the TBCA.
4. Effective the date of filing with the Secretary of State, the
Corporation hereby amends and restates its Certificate of Incorporation as
follows:
FIRST: The name of the Corporation is Wells Fargo Armored Service
Corporation of Puerto Rico (hereinafter called the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Tennessee is 530 Gay Street, Knoxville, Tennessee 37902. The name of
its registered agent at that address is C T Corporation System.
<PAGE>
THREE: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under Section 48-13-101 of the
Tennessee Business Corporation Act, including but not limited to armored car
services, guard, patrol, alarm and other security and transportation type
services and services related to the foregoing.
FOUR: The maximum number of shares of stock which this Corporation is
authorized to have outstanding at any time is five hundred (500) shares of
common stock without nominal or par value.
FIVE: The amount of capital with which this corporation will begin
business shall be One Thousand Dollars ($1,000.00); and when such amount so
fixed shall have been subscribed for, all subscriptions of the stock of this
Corporation shall be enforceable and it may proceed to do business in the same
manner and as fully as though the maximum number of shares authorized under the
provisions of the preceding section hereof shall have been subscribed for.
SIX: The time of existence of this Corporation shall be perpetual.
IN WITNESS WHEREOF, we have hereunto signed our hands and affirm that the
statements made herein are true under the penalties of perjury, this 23rd day of
June, 1992.
/s/ HUGH E. SAWYER
------------------
Hugh E. Sawyer
President
ATTEST: /s/ PAUL L. RATHBLOTT
---------------------
Paul L. Rathblott
Secretary
<PAGE>
Secretary of State ISSUANCE DATE: 07/10/1992
Corporations Section REQUEST NUMBER: 2501-0725
James K. Polk Building, Suite 1800
Nashville, Tennessee 37243-0306 CHARTER/QUALIFICATION DATE: 12/31/1955
STATUS: ACTIVE
CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0033914
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
BAKER INDUSTRIES, INC. BAKER INDUSTRIES, INC.
VALERIE A. LEAHY VALERIE A. LEAHY
1633 LITTLETON RD 1633 LITTLETON RD
PARSIPPANY, NY 07054 PARSIPPANY, NY 07054
I, BRYANT MILLSAPS, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
- --------------------------------------------------------------------------------
"WELLS FARGO ARMORED SERVICE CORPORATION OF PUERTO RICO"
- --------------------------------------------------------------------------------
WAS INCORPORATED OR QUALIFIED TO DO BUSINESS IN THE STATE OF TENNESSEE ON THE
ABOVE DATE, AND THAT THE ATTACHED DOCUMENT(S) WAS/WERE FILED IN OFFICE ON THE
DATE(S) AS BELOW INDICATED:
REFERENCE NUMBER DATE-FILED FILING TYPE FIELD CHANGED
2501-0723 07/10/92 AMD RESTATE CHT
================================================================================
FOR: REQUEST FOR COPIES ON DATE:
FEE TAX
FROM:
RECEIVED: $0.00 $0.00
TOTAL PAYMENT: $0.00
RECEIPT NUMBER:
ACCOUNT NUMBER:
[SEAL OF THE STATE OF /s/ BRYANT MILLSAPS
TENNESSEE APPEARS HERE] ----------------------------------
BRYANT MILLSAPS
SECRETARY OF STATE
<PAGE>
EXHIBIT 3.10
EFFECTIVE 4/27/83
BY-LAWS
OF
WELLS FARGO ARMORED SERVICE CORPORATION OF PUERTO RICO
- --------------------------------------------------------------------------------
ARTICLE I
Stockholders
------------
Section 1.1. Annual Meetings. An annual meeting of stockholders shall be
---------------
held for the election of directors, unless otherwise designated by the Board of
Directors or the stockholders, during the month of April in each year, at such
time and unless contrary to law, at such place either within or without the
State as may be designated by the Board of Directors from time to time. Any
other proper business may be transacted at the Annual Meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may be
----------------
called at any time by the President, the Board of Directors, the Secretary or
the holders of not less than one-tenth of the shares entitled to vote at such
meeting, to be held at such date, time and place either within or without the
State as may be stated in the notice of the meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
------------------
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any
meeting shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
------------
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
<PAGE>
Section 1.5. Quorum. At each meeting of stockholders, except where
------
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes
or series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend.
Section 1.6. Organization. Meetings of stockholders shall be presided
------------
over by the President, or in the absence of the foregoing person by a chairman
designated by the Board of Directors. The Secretary shall act as secretary of
the meeting, but in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
---------------
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after eleven months from its date, unless the proxy provides for a longer
period, not to exceed that period provided by law. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. Unless contrary to law, a stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person; or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. Voting at meetings of
stockholders need not be conducted by inspectors unless the holders of a
majority of the outstanding shares of all classes of stock entitled to vote
thereon present in person or by proxy at such meeting shall so determine. Except
as otherwise provided by law, at all meetings of stockholders for the election
of directors a plurality of the votes cast shall be sufficient to elect. All
other elections and questions shall, unless otherwise provided by law or by the
certificate of incorporation or these by-laws, be decided by the vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote thereon present in person or by proxy at the meeting, provided that
(except as otherwise required by law or by the certificate of incorporation) the
Board of Directors may require a larger vote upon any election or question.
Section 1.8. Fixing Date for Determination of Stockholders of Record. In
-------------------------------------------------------
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting
-2-
<PAGE>
of stockholders or any adjournment thereof, 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, which shall not be more than fifty nor less than ten
days before the date of such meeting, nor more than fifty days prior to any
other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the next preceding the day
on which notice is given, or where required by law on the date such notice is
mailed; or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held and (2) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to voter at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
-------------------------------------
prepare and make, and where required by law, certify; at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held, or where required by law at the registered office of the
Corporation in the State. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof and may be inspected by
any stockholder who is present.
ARTICLE II
Board of Directors
------------------
Section 2.1. Powers; Number. The business and affairs of the
--------------
Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the certificate of
incorporation. The Board shall consist of one Director unless otherwise stated
in the certificate of incorporation, or prohibited by law, in which event(s) the
Board shall consist of three directors. The number of directors may be changed
from time to time either by the Shareholders or by the Board of Directors.
-3-
<PAGE>
Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies.
---------------------------------------------------------
Except as otherwise provided by law, Directors shall be elected by a
plurality of the votes cast at Annual Meetings of the Stockholders. Each
director so elected shall hold office until the next annual meeting of
stockholders and until his successor is elected and qualified or until his
earlier resignation or removal. Any director may resign at any time upon
written notice to the Secretary. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein, no acceptance of such
resignation shall be necessary to make it effective. Unless otherwise
provided in the certificate of incorporation or these by-laws, and except as
otherwise required by law, vacancies and newly created directorships resulting
from any increase in the authorized number of directors or from any other
cause may be filled by a majority of the directors then in office, although less
than a quorum, or by the sole remaining director. Directors may be removed with
or without cause at any time by the Stockholders. Where required by law, such
removal shall be authorized at a Stockholder's meeting expressly called for such
purpose, by a vote of a majority of the Stockholders entitled to vote at an
election of directors.
Section 2.3. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held at such places within or without the State an date and at such times
as the Board may from time to time determine, and if so determined notice
thereof need not be given unless such notice is otherwise required by law.
Section 2.4. Special Meetings. Special meetings of the Board of Directors
----------------
may be held at any time or place within or without the State whenever called by
the President or the Board of Directors. Reasonable notice thereof shall be
given by the person or persons calling the meeting, which is no event shall be
less than that required by law.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise restricted
-----------------------------
by the certificate of incorporation or these by-laws, members of the Board of
Directors, or any committee designated by the Board, may participate in a
meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
--------------------------------
Board of Directors a majority of the entire Board shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation, the law of this State, or these by-laws shall
require a vote of a greater number. If, at any meeting of the Board, a quorum
shall not be present, the members of the Board present may adjourn the meeting
from time to time until a quorum shall attend.
-4-
<PAGE>
Section 2.7. Organization. Meetings of the Board of Directors shall be
------------
presided over by the President or in his absence by chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise restricted by the
----------------------------
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or of such
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
ARTICLE III
Committees
----------
Section 3.1. Committees. The Board of Directors may, by resolution passed
----------
by a majority of the whole Board, designate or elect an executive committee to
consist of two or more of the directors of the Corporation where the Board
consists of more than one director; and, unless contrary to law, such other
committees as the Board shall deem appropriate, to consist of two or more
directors where the Board comprises two or more directors. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors, removing officers or
members of any committee, filling vacancies on the Board or any committee, or
amending these by-laws; and, unless the resolution expressly so provides and
such provision is permitted by law; no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
---------------
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such
-5-
<PAGE>
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum is then present shall be the act of such committee, and in other respects
each committee shall conduct its business in the same manner as the Board
conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
Officers
--------
Section 4.1. Officers; Election; Qualification; Term of Office;
--------------------------------------------------
Resignation; Removal; Vacancies. As soon as practicable after the annual
- -------------------------------
meeting of stockholders in each year, the Board of Directors shall elect a
President and a Secretary. The Board shall to the extent required by law, and
may, to the extent deemed desirable, also elect an Executive Vice President, one
or more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers and may give any of them such
further designations or alternate titles as it considers desirable. Each such
officer shall hold office until the first meeting of the Board after the
annual meeting of stockholders next succeeding his election, and until his
successor is elected and qualified or until his earlier resignation or removal.
Any officer may resign at any time upon written notice to the President. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board may remove any officer with or without cause at
any time and, unless contrary to law, the President may also remove any officer
with or without cause at any time. Any such removal shall be without prejudice
to the contractual rights of such officer, if any, with the Corporation, but the
election or appointment of an officer shall not of itself create contractual
rights. Any number of offices may be held by the same person. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the Board at
any regular or special meeting.
Section 4.2. President. The President shall have general and active
---------
management and general charge and supervision of the business of the
Corporation, and shall see that all orders and policies of the Board are carried
into to effect. The President shall preside at all meetings of the Board of
Directors at which he shall be present. He shall perform such other duties as,
from time to time, may be assigned to him by the Board or as may be provided by
law.
Section 4.3. Executive Vice President. The Executive Vice President shall
------------------------
have such powers and perform such duties as
-6-
<PAGE>
may be assigned to him by the Board or the President or as may be provided by
law.
Section 4.4. Vice Presidents. The Vice President or Vice Presidents shall
---------------
have such powers and perform such duties as may be assigned to him or them by
the Board or the President or as may be provided by law.
Section 4.5. Secretary. The Secretary shall have the duty to record the
---------
proceedings of the meetings of the stockholders and the Board of Directors and
of any committee in a book to be kept for that purpose; he shall see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law; he shall be custodian of the stockholder list and certificates
and other records of the Corporation; he may affix the corporate seal to any
document the execution of which, on behalf of the Corporation, is duly
authorized, and when so affixed may attest the same; and, in general, he shall
perform all duties incident to the office of secretary of a corporation, and
such other duties as, from time to time, may be assigned to him by the Board,
the President or as may be provided by law.
Section 4.6. Treasurer. The Treasurer shall have charge of and be
---------
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors; if required by the Board, he shall give a
bond for the faithful discharge of his duties, with such surety and sureties as
the Board may determine; and, in general, he shall perform all the duties
incident to the office of treasurer of a corporation, and such other duties as
may be assigned to him by the Board, or the President or as may be provided by
law.
Section 4.7. Controller. The Controller shall keep or cause to be kept
----------
full and accurate records of all receipts and disbursements in books of the
Corporation; and, in general, he shall perform all the duties incident to the
office of Controller of a corporation, and such other duties as may be assigned
to him by the Board, or the President or as may be provided by law.
Section 4.8. Other Officers. The Board of Directors may from time to time
--------------
elect such other officers, agents or employees, and may delegate to them such
powers and duties, as it may deem desirable.
-7-
<PAGE>
ARTICLE V
Stock
-----
Section 5.l. 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 President, and by the Treasurer or the Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the 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 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
-------------------------------------------------------------
Certificates. The Corporation may issue a new certificate of stock in the place
- ------------
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen
or destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VI
Miscellaneous
-------------
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be the
-----------
calendar year unless otherwise determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
----
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and
-----------------------------------------------------------
Committees. Whenever notice is required to be given by law or under any
- ----------
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
-8-
<PAGE>
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 6.4. Indemnification of Directors, Officers and Employees. The
----------------------------------------------------
Corporation shall indemnify to the full extent authorized by law any person made
or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer or employee of the
Corporation or any predecessor of the Corporation or serves or served any other
enterprise as a director, officer or employee at the request of the Corporation
or any predecessor of the Corporation.
Section 6.5. Interested Directors; Quorum. No contract or transaction
----------------------------
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee, and the Board or committee in good faith authorizes the
contract or transaction either by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum, or where required by law the affirmative votes of all disinterested
directors if there are more than two such disintered directors; or (2) the
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board, a committee thereof or the stockholders and, where required by law is
also reasonable. Except for purposes of authorizing indemnification to or among
themselves, common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the Corporation
---------------
in the regular course of its business, inclusing its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be con-
-9-
<PAGE>
verted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 6.7. Amendment of By-Laws. Unless otherwise provided in the
--------------------
certificate of incorporation or contrary to law, these by-laws may be amended or
repealed, and new by-laws adopted, by a majority of the whole Board of
Directors. The stockholders entitled to vote may adopt additional by-laws and
may amend or repeal any by-law whether or not adopted by them.
Section 6.8. Offices. The Corporation may maintain such office or
-------
offices within or without the State as it deems desirable, and where required by
law, shall maintain a registered office within the State.
-10-
<PAGE>
Ex 10.1
CONFORMED COPY
--------------
- --------------------------------------------------------------------------------
LOOMIS, FARGO & CO.,
a Delaware corporation
-------------------------
CREDIT AGREEMENT
dated as of January 24, 1997
-------------------------
$115,000,000
Credit Facility
------------------------
LEHMAN COMMERCIAL PAPER INC.,
as Arranger, Syndication Agent and Documentation Agent,
NATIONSBANC CAPITAL MARKETS, INC.,
as Syndication Agent,
and
NATIONSBANK OF TEXAS, N.A.,
as Arranger and as Administrative Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1. DEFINITIONS..................................................... 2
1.1 Defined Terms................................................... 2
1.2 Other Definitional Provisions................................... 16
SECTION 2. AMOUNT AND TERMS COMMITMENTS.................................... 17
2.1 Revolving Credit Commitments.................................... 17
2.2 Procedure for Revolving Credit Borrowing........................ 17
2.3 Commitment Fee.................................................. 18
2.4 Termination or Reduction of Commitments......................... 18
2.5 Repayment of Loans; Evidence of Debt............................ 19
2.6 Optional Prepayments; Mandatory Prepayments and
Reduction of Commitments...................................... 19
2.7 Conversion and Continuation Options............................. 21
2.8 Minimum Amounts and Maximum Number of Tranches.................. 21
2.9 Interest Rates and Payment Dates................................ 21
2.10 Computation of Interest and Fees................................ 22
2.11 Inability to Determine Interest Rate............................ 22
2.12 Pro Rata Treatment and Payments................................. 23
2.13 Illegality...................................................... 23
2.14 Requirements of Law............................................. 24
2.15 Taxes........................................................... 25
2.16 Indemnity....................................................... 27
2.17 Replacement of Lenders.......................................... 27
2.18 Certain Fees.................................................... 28
2.19 Change of Lending Office........................................ 28
SECTION 3. LETTERS OF CREDIT............................................... 28
3.1 L/C Commitment.................................................. 28
3.2 Procedure for Issuance of Letters of Credit..................... 29
3.3 Fees, Commissions and Other Charges............................. 29
3.4 L/C Participation............................................... 30
3.5 Reimbursement Obligation of the Borrower........................ 31
3.6 Obligations Absolute............................................ 31
3.7 Letter of Credit Payments....................................... 31
3.8 Application..................................................... 32
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................. 32
4.1 Financial Condition............................................. 32
4.2 No Change....................................................... 34
4.3 Corporate Existence; Compliance with Law........................ 34
4.4 Corporate Power; Authorization; Enforceable Obligations......... 34
4.5 No Legal Bar.................................................... 34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
4.6 No Material Litigation.......................................... 34
4.7 No Default...................................................... 35
4.8 Ownership of Property; Liens.................................... 35
4.9 Intellectual Property........................................... 35
4.10 Taxes........................................................... 35
4.11 Federal Regulations............................................. 35
4.12 ERISA........................................................... 36
4.13 Investment Company Act; Other Regulations....................... 36
4.14 Subsidiaries.................................................... 36
4.15 Purpose of Loans................................................ 36
4.16 Environmental Matters........................................... 36
4.17 Collateral Documents............................................ 37
4.18 Accuracy and Completeness of Information........................ 37
4.19 Solvency........................................................ 38
4.20 Labor Matters................................................... 38
4.21 Contribution Agreement.......................................... 38
SECTION 5. CONDITIONS PRECEDENT............................................ 38
5.1 Conditions to Initial Loans..................................... 38
5.2 Conditions to Each Extension of Credit.......................... 41
SECTION 6. AFFIRMATIVE COVENANTS........................................... 42
6.1 Financial Statements............................................ 42
6.2 Certificates; Other Information................................. 43
6.3 Payment of Obligations.......................................... 44
6.4 Conduct of Business and Maintenance of Existence................ 44
6.5 Maintenance of Property; Insurance.............................. 44
6.6 Inspection of Property; Books and Records; Discussions.......... 44
6.7 Notices......................................................... 45
6.8 Environmental Laws.............................................. 45
6.9 Further Assurances.............................................. 46
6.10 Additional Collateral........................................... 46
6.11 Interest Rate Protection........................................ 46
6.13 Foreign Jurisdictions........................................... 48
SECTION 7. NEGATIVE COVENANTS.............................................. 48
7.1 Financial Condition Covenants................................... 48
7.2 Limitation on Indebtedness...................................... 51
7.3 Limitation on Liens............................................. 52
7.4 Limitation on Guarantee Obligations............................. 53
7.5 Limitation on Fundamental Changes............................... 54
7.6 Limitation on Sale of Assets.................................... 54
7.7 Limitation on Leases............................................ 55
7.8 Limitation on Dividends......................................... 55
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.9 Limitation on Capital Expenditures.............................. 56
7.10 Limitation on Investments, Loans and Advances................... 56
7.11 Limitation on Optional Payments and Modifications
of Debt Instruments........................................... 57
7.12 Limitation on Transactions with Affiliates...................... 57
7.13 Limitation on Sales and Leasebacks.............................. 58
7.14 Limitation on Changes in Fiscal Year............................ 58
7.15 Limitation on Negative Pledge Clauses........................... 58
7.16 Limitation on Lines of Business................................. 58
SECTION 8. EVENTS OF DEFAULT............................................... 58
SECTION 9. THE AGENTS; THE ARRANGERS....................................... 61
9.1 Appointment..................................................... 61
9.2 Delegation of Duties............................................ 61
9.3 Exculpatory Provisions.......................................... 62
9.4 Reliance by Agents.............................................. 62
9.5 Notice of Default............................................... 62
9.6 Non-Reliance on Agents and Other Lenders........................ 62
9.7 Indemnification................................................. 63
9.8 Agents, in Their Individual Capacities.......................... 63
9.9 Successor Administrative Agent.................................. 63
9.10 The Arrangers................................................... 64
SECTION 10. MISCELLANEOUS................................................... 64
10.1 Amendments and Waivers.......................................... 64
10.2 Notices......................................................... 65
10.3 No Waiver; Cumulative Remedies.................................. 67
10.4 Survival of Representations and Warranties...................... 67
10.5 Payment of Expenses and Taxes................................... 67
10.6 Successors and Assigns; Participation and Assignments........... 68
10.7 Adjustments; Set-off............................................ 70
10.8 Counterparts.................................................... 70
10.9 Severability.................................................... 71
10.10 Integration..................................................... 71
10.11 GOVERNING LAW................................................... 71
10.12 Submission To Jurisdiction; Waivers............................. 71
10.13 Acknowledgements................................................ 71
10.14 WAIVERS OF JURY TRIAL........................................... 72
10.15 Confidentiality................................................. 72
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Note
Exhibit B Form of Guarantee and Collateral Agreement
Exhibit C Form of Mortgage
Exhibit D Form of Legal Opinion of Weil Gotshal & Manges LLP
Exhibit E Form of Borrowing Certificate
Exhibit F Form of Certificate of Non-U.S. Lender
Exhibit G Form of Assignment and Acceptance
SCHEDULES
Schedule I Lenders and Commitments
Schedule II Pricing Grid
Schedule III Management Group
Schedule IV Real Property to be Mortgaged
Schedule V Contribution Documents
Schedule VI IRB Related Transactions
Schedule 4.4 Required Consents
Schedule 4.6 Material Litigation
Schedule 4.8 Real Property
Schedule 4.9 Intellectual Property Claims
Schedule 4.10 Taxes
Schedule 4.14 Subsidiaries
Schedule 4.17(b) Filing Jurisdictions
Schedule 7.2(g) Existing Indebtedness
Schedule 7.3(f) Existing Liens
Schedule 7.4 Existing Guarantee Obligations
Schedule 7.10(d) Officers
Schedule 7.10(g) Existing Investments
</TABLE>
-iv-
<PAGE>
CREDIT AGREEMENT, dated as of January 24, 1997, among LOOMIS, FARGO &
CO., a Delaware corporation (the "Borrower"), the several lenders from time to
--------
time parties hereto (the "Lenders"), LEHMAN COMMERCIAL PAPER INC. ("LCPI") and
------- ----
NATIONSBANK OF TEXAS, N.A. ("NationsBank"), as arrangers (in such capacity, the
-----------
"Arrangers"), LCPI and NATIONSBANC CAPITAL MARKETS, INC., as syndication agents
---------
(in such capacity, the "Syndication Agents"), LCPI, as documentation agent (in
------------------
such capacity, the "Documentation Agent") and NationsBank, as administrative
-------------------
agent for the Lenders (in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower is a party to the Contribution Agreement, dated
as of November 28, 1996 (the "Contribution Agreement"), by and among Borg-Warner
----------------------
Security Corporation, a Delaware corporation ("Borg-Warner"), Wells Fargo
-----------
Armored Service Corporation, a Delaware corporation and wholly-owned subsidiary
of Borg-Warner ("Wells Fargo"), the Borrower, Loomis Holding Corporation, a
-----------
Delaware corporation ("Loomis"), Loomis Armored Inc., a Texas corporation and
------
wholly-owned subsidiary of Loomis ("Loomis Armored"), and the Loomis
--------------
Stockholders Trust, a Delaware business trust (the "Loomis Stockholders Trust");
-------------------------
WHEREAS, pursuant to the Contribution Agreement, on the Closing Date
(i) the Loomis Stockholders Trust will contribute to the Borrower the capital
stock of Loomis (the "Loomis Contribution") and (ii) Wells Fargo will contribute
-------------------
to the Borrower substantially all of the assets and certain liabilities of Wells
Fargo (the "Wells Fargo Contribution"; together with the Loomis Contribution,
------------------------
the "Business Combination");
--------------------
WHEREAS, the consideration for the Loomis Contribution will be (i)
5,100,000 shares of common stock of the Borrower to be issued to the Loomis
Stockholders Trust, (ii) a cash payment of $7.2 million to be delivered to a
grantor trust established for the purpose of administering casualty and employee
claims of Loomis incurred prior to the Closing Date (the "Loomis Casualty and
-------------------
Employee Claims Trust"), (iii) a cash payment of approximately $5.4 million to
- ---------------------
be made to an indemnity trust to be established to satisfy indemnity claims of
the Borrower (the "Loomis Indemnity Trust"), (iv) a cash payment of
----------------------
approximately $2.6 million to be made to the Loomis Stockholders Trust or the
Loomis Casualty and Employee Claims Trust, and (v) a promissory note to be
issued to the Loomis Stockholders Trust in the original principal amount of $6.0
million (the "NOL Note");
--------
WHEREAS, the consideration for the Wells Fargo Contribution will be
(i) 4,900,000 shares of common stock of the Borrower to be issued to Wells Fargo
and (ii) a cash payment to be made to Wells Fargo and related entities equal to
approximately $105.6 million (as adjusted based upon a formula set forth in the
Contribution Agreement);
WHEREAS, on the Closing Date, immediately following the Loomis
Contribution and the Wells Fargo Contribution, the Borrower will: (i) file a
certificate of amendment to the certificate of incorporation of Loomis changing
its name to LFC Holding Corporation (the "Intermediate Holding Company"); (ii)
----------------------------
file articles of amendment to the articles of incorporation of Loomis Armored
changing its name to Loomis, Fargo & Co., a Texas corporation, (the "Operating
---------
Subsidiary"); and (iii) contribute all of the assets acquired from Wells Fargo
- ----------
in the Wells Fargo Contribution to the Intermediate Holding Company, and the
Intermediate Holding Company will contribute all of such assets to the Operating
Subsidiary;
<PAGE>
2
WHEREAS, the Borrower has requested the Lenders to extend credit to
it (i) to finance a portion of the cash consideration to be paid in connection
with the Business Combination and (ii) for working capital and general corporate
purposes of the Borrower and its Subsidiaries after the Closing Date; and
WHEREAS, the Lenders are willing to extend such credit to the
Borrower upon and subject to the terms and conditions hereafter set forth;
NOW, THEREFORE, parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings:
"Adjustment Date": (a) the fifth day following the receipt by the
---------------
Administrative Agent of the financial statements for the most recently
completed fiscal period furnished pursuant to subsection 6.1(a) or (b), as
the case may be, and the compliance certificate with respect to such
financial statements furnished pursuant to subsection 6.2(c). For purposes
of determining the Applicable Margin and the Commitment Fee Rate, the first
"Adjustment Date" shall mean the date on which the financial statements for
the fiscal quarter ended September 30, 1997 furnished pursuant to
subsection 6.1(b) and the related compliance certificate furnished pursuant
to subsection 6.2(c) are delivered to the Administrative Agent pursuant to
subsection 6.1(b) and 6.2(c), respectively.
"Affiliate": as to any Person, any other Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 20% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agents": the collective reference to the Syndication Agents, the
------
Documentation Agent and the Administrative Agent.
"Aggregate Outstanding Extensions of Credit": as to any Lender at
------------------------------------------
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Loans made by such Lender then outstanding and (b) such Lender's
Commitment Percentage of the L/C Obligations then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Applicable Margin": at any time, the rates per annum set forth on
-----------------
Schedule II under the relevant column heading opposite the level of the
Debt Ratio most recently determined; provided that (a) the Applicable
--------
Margin commencing on the Closing Date shall be that set forth in Schedule
II opposite a Debt Ratio captioned "greater than or equal to 5.00" until
the first Adjustment Date, (b) the Applicable Margin determined for any
Adjustment Date (including the first Adjustment Date) shall remain in
effect until a subsequent Adjustment Date
<PAGE>
3
for which the Debt Ratio falls within a different level and (c) if the
financial statements and related compliance certificate for any fiscal
period are not delivered by the date due pursuant to subsections 6.1 and
6.2, the Applicable Margin shall be (i) for the first 35 days subsequent to
such due date, the Applicable Margin in effect prior to such due date and
(ii) thereafter, that set forth opposite a Debt Ratio captioned "greater
than or equal to 5.00", in either case, until the date of delivery of such
financial statements and compliance certificate.
"Application": an application, in such form as the Issuing Lender
-----------
may specify from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Asset Sale": any sale, sale-leaseback, or other disposition by the
----------
Borrower or any Subsidiary thereof of any of its property or assets,
including the stock of any Subsidiary of the Borrower, except sales and
dispositions permitted by subsection 7.6 other than subsection 7.6(b) or
(e).
"Assignee": as defined in subsection 10.6(c).
--------
"Available Commitment": as to any Lender, at any time, an amount
--------------------
equal to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Aggregate Outstanding Extensions of Credit.
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
----------
shall mean the rate of interest per annum publicly announced from time to
time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; and "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 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 Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
---------------
based upon the Base Rate.
"Borg-Warner": as defined in the recitals to this Agreement.
-----------
"Borg-Warner Principals": Borg-Warner and the Management Group.
----------------------
"Borrowing Date": any Business Day specified in a notice pursuant to
--------------
subsection 2.2 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Business": as defined in subsection 4.16.
--------
"Business Combination": as defined in the recitals to this Agreement.
--------------------
<PAGE>
4
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in Dallas, Texas or New York City are authorized or
required by law to close.
"Capital Expenditures" shall mean, for any fiscal period, the
--------------------
aggregate of all expenditures that, in conformity with GAAP, are or are
required to be included as additions during such period to property, plant
or equipment reflected on the consolidated balance sheet of the Borrower
and its Subsidiaries, excluding the Business Combination; provided that for
any calculation of Capital Expenditures for any fiscal period ending during
the first three full fiscal quarters following the Closing Date, Capital
Expenditures shall be deemed to be Capital Expenditures from February 1,
1997 to the last day of such period multiplied by a fraction the numerator
of which is 365 and the denominator of which is the number of days from
February 1, 1997 to the last day of such period.
"Capital Lease Obligations": of any Person as of the date of
-------------------------
determination, the aggregate liability of such Person under Financing
Leases reflected on a balance sheet of such Person under GAAP.
"Capital Stock": any and all shares, interests, participation or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
----------------
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and time deposits with maturities of one year or less from the date
of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $100,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 90 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-2 by Standard and Poor's Rating Group ("S&P") or P-
---
2 by Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent
-------
rating by a nationally recognized rating agency if both of S&P and Moody's
cease publishing ratings of investments, (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by
Moody's, (f) securities with maturities of one year or less from the date
of acquisition backed by standby letters of credit issued by any Lender or
any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition, (h) money market accounts or funds with or
issued by Qualified Issuers, and (i) demand deposit accounts maintained in
the ordinary course of business with any Lender or with any bank that is
not a Lender not in excess of $100,000 in the aggregate on deposit with any
such bank.
"Change of Control": the occurrence of any of the following events:
-----------------
<PAGE>
5
(i) the Principals or their Related Parties, as a whole, shall
at any time cease to own, directly or indirectly, 51% of the Capital
Stock of the Borrower, determined on a fully diluted basis; or
(ii) the Principals or their Related Parties, as a whole, shall
at any time cease to own, determined on a fully diluted basis,
sufficient shares of the Capital Stock of the Borrower, determined on
a fully diluted basis, to elect a majority of the Board of Directors
of the Borrower or otherwise cease to have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the Board of Directors of the Borrower; or
(iii) any Person (other than the Principals and/or their Related
Parties, as a whole), whether singly or in concert with one or more
Persons, shall, directly or indirectly, have acquired, or acquired the
power to vote or direct the voting of, more than 33% of the voting
stock of the Borrower; or
(iv) a "Change of Control" shall have occurred under the
Indenture.
"CIT Indemnity" the obligations of the Administrative Agent to The CIT
-------------
Group/Business Credit, Inc., in connection with the repayment and
termination by Loomis Armored of its outstanding credit facility with The
CIT Group/Business Credit, Inc., to indemnify The CIT Group/Business
Credit, Inc. for uncollected checks and other obligations arising under
lockbox and similar arrangements related to such credit facility.
"Closing Date": the date on which the conditions precedent set forth
------------
in subsection 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all assets of the Credit Parties, now owned or
----------
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the obligation of such Lender to make
----------
Loans to and/or issue or participate in Letters of Credit issued on behalf
of the Borrower hereunder in an aggregate principal and/or face amount at
any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule I.
"Commitment Letter": the Commitment Letter, dated as of December 20,
-----------------
1996, among Wells Fargo, Loomis Armored, Loomis, the Borrower, LCPI,
NationsBanc Capital Markets, Inc. and NationsBank, as the same may be
amended, supplemented or otherwise modified from time to time.
"Commitment Fee Rate": at any time, the rates per annum set forth on
-------------------
Schedule II under the relevant column heading opposite the level of the
Debt Ratio most recently determined; provided that (a) the Commitment Fee
--------
Rate commencing on the Closing Date shall be that set forth in Schedule II
opposite a Debt Ratio captioned "greater than or equal to 5.00" until the
first Adjustment Date, (b) the Commitment Fee Rate determined for any
Adjustment Date (including the first Adjustment Date) shall remain in
effect until a subsequent Adjustment Date for which the Debt Ratio falls
within a different level and (c) if the financial statements and related
compliance certificate for any fiscal period are not delivered by the
<PAGE>
6
date due pursuant to subsections 6.1 and 6.2, the Commitment Fee Rate shall
be (i) for the first 35 days subsequent to such due date, the Commitment
Fee Rate in effect prior to such due date and (ii) thereafter, that set
forth opposite a Debt Ratio captioned "greater than or equal to 5.00", in
either case, until the date of delivery of such financial statements and
compliance certificate.
"Commitment Percentage": as to any Lender at any time, the percentage
---------------------
which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender's
Aggregate Outstanding Extensions of Credit constitutes of the aggregate
amount of the Aggregate Outstanding Extensions of Credit of all Lenders).
"Commitment Period": the period from and including the date hereof to
-----------------
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Cash Interest Expense": for any fiscal period, the
----------------------------------
aggregate amount of interest in respect of Consolidated Total Debt payable
in cash during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Debt Service": for any fiscal period, the sum, for the
-------------------------
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of (a) all regularly scheduled
payments of principal of Indebtedness (other than principal payments in
respect of the Loans) during such period plus (b) Consolidated Cash
Interest Expense for such period; provided that for any calculation of
--------
Consolidated Debt Service for any fiscal period ending during the first
three full Fiscal quarters following the Closing Date, Consolidated Debt
Service shall be deemed to be Consolidated Debt Service from February 1,
1997 to the last day of such period multiplied by a fraction the numerator
of which is 365 and the denominator of which is the number of days from
February 1, 1997 to the last day of such period.
"Consolidated EBITDA": for any fiscal period, Consolidated Net Income
-------------------
(excluding without duplication, (x) extraordinary gains and losses in
accordance with GAAP, (y) gains and losses in connection with asset
dispositions whether or not constituting extraordinary gains and losses and
(z) gains or losses on discontinued operations) for such period, plus (i)
Consolidated Interest Expense for such period, plus (ii) to the extent
deducted in computing such Consolidated Net Income, the sum of income
taxes, depreciation and amortization; provided that for any calculation of
--------
Consolidated EBITDA for any fiscal period ending during the first three
full fiscal quarters following the Closing Date, Consolidated EBITDA shall
be deemed to be Consolidated EBITDA from February 1, 1997 to the last day
of such period multiplied by a fraction the numerator of which is 365 and
the denominator of which is the number of days from the February 1, 1997 to
the last day of such period.
<PAGE>
7
"Consolidated Interest Expense": for any fiscal period, the amount of
-----------------------------
interest expense of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Lease Expense": for any fiscal period, the aggregate
--------------------------
rental obligations of the Borrower and its Subsidiaries determined on a
consolidated basis payable in respect of such period under leases of real
and/or personal property (net of income from sub-leases thereof, but
including taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of said leases), whether or not
such obligations are reflected as liabilities or commitments on a
consolidated balance sheet of the Borrower and its Subsidiaries or in the
notes thereto, excluding, however, obligations under Financing Leases.
"Consolidated Net Income": for any fiscal period, net income of the
-----------------------
Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that for any calculation of Consolidated Net
--------
Income for any fiscal period ending during the first three full fiscal
quarters following the Closing Date, Consolidated Net Income shall be
deemed to be Consolidated Net Income from February 1, 1997 to the last day
of such period multiplied by a fraction the numerator of which is 365 and
the denominator of which is the number of days from February 1, 1997 to the
last day of such period.
"Consolidated Net Worth": at any date, cumulative Consolidated Net
----------------------
Income from February 1, 1997 to such date; provided that Consolidated Net
--------
Worth shall be computed without giving effect to depreciation and
amortization of purchase accounting adjustments (computed on an after-tax
basis) (x) arising from the Business Combination or (y) recorded on the
books of Loomis prior to the Business Combination.
"Consolidated Total Debt": at any date, all Indebtedness of the
-----------------------
Borrower and its Subsidiaries outstanding on such date for borrowed money
or the deferred purchase price of property, including, without limitation,
Indebtedness in respect of the NOL Note and in respect of Financing Leases
but excluding Indebtedness permitted pursuant to subsection 7.2(j).
"Consolidated Working Capital": at any date, the excess of (a) the
----------------------------
sum of all amounts (other than cash and cash equivalents) that would, in
accordance with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date over (b) all amounts that would,
in accordance with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries on such date (excluding, to the extent it
would otherwise be included under current liabilities, any short-term
Consolidated Total Debt and the current portion of any long-term
Consolidated Total Debt).
"Contribution Agreement": as defined in the recitals to this
----------------------
Agreement.
"Contribution Documents": the Contribution Agreement, the Schedules
----------------------
thereto and the documents set forth on Schedule V.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
<PAGE>
8
"Credit Documents": this Agreement, the Notes and the Applications
----------------
and the Security Documents.
"Credit Parties": the Borrower, Wells Fargo, the Loomis Stockholders
--------------
Trust, and each Subsidiary of the Borrower which is a party to a Credit
Document.
"Debt Ratio": as at the last day of any fiscal quarter, the ratio of
----------
(a) Consolidated Total Debt on such date to (b) Consolidated EBITDA for the
four consecutive fiscal quarters ended on such date.
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Environmental Laws": any and all laws, rules, orders, regulations,
------------------
statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirement (including, without limitation, common law) of any
foreign government, the United States, or any state, local, municipal or
other governmental authority, regulating, relating to or imposing liability
or standards of conduct concerning protection of the environment or of
human health as affected by the environment as has been, is now, or may at
any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
---------------------
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency 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 as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined by
the Administrative Agent to be the arithmetic mean (rounded to the nearest
1/100th of 1%) of the offered rates for deposits in Dollars with a term
comparable to such Interest Period that appears on the Telerate British
Bankers Assoc. Interest Settlement Rates Page (as defined below) at
approximately 11:00 A.M., London time, on the second full Business Day
preceding the first day of such Interest Period; provided, however, that if
-------- -------
there shall at any time no longer exist a Telerate British Bankers Assoc.
Interest Settlement Rates Page, "Eurodollar Base Rate" shall mean, with
respect to each day during each Interest Period pertaining to a Eurodollar
Loan, the rate per annum equal to the rate at which NationsBank is offered
Dollar deposits at or about 9:00 A.M., Dallas, Texas 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
<PAGE>
9
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. "Telerate
--------
British Bankers Assoc. Interest Settlement Rates Page" shall mean the
-----------------------------------------------------
display designated as Page 3750 on the Telerate System Incorporated Service
(or such other page as may replace such page on such service for the
purpose of displaying the rates at which Dollar deposits are offered by
leading banks in the London interbank deposit market).
"Eurodollar Loans": Loans the rate of interest applicable to which is
----------------
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
----------------
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess
----------------
of (a) the sum, without duplication, of (i) Consolidated Net Income
(excluding utilization of net operating losses relating to the NOL Note)
for such fiscal year, (ii) the net decrease, if any, in Consolidated
Working Capital during such fiscal year, (iii) to the extent deducted in
computing such Consolidated Net Income, non-cash interest expense,
depreciation and amortization for such fiscal year, (iv) extraordinary non-
cash losses during such fiscal year subtracted in the determination of
Consolidated Net Income for such fiscal year, (v) deferred income tax
expense of the Borrower for such fiscal year, (vi) non-cash losses in
connection with asset dispositions whether or not constituting
extraordinary losses, and (vii) non-cash ordinary losses over (b) the sum,
----
without duplication, of (i) the aggregate amount of permitted cash Capital
Expenditures made by the Borrower and its Subsidiaries during such fiscal
year, (ii) the net increase, if any, in Consolidated Working Capital during
such fiscal year, (iii) the aggregate amount of payments of principal in
respect of any Indebtedness not prohibited hereunder during such fiscal
year (other than (A) prepayments of Revolving Credit Loans not accompanied
by reductions of the Commitments, (B) repayments of the NOL Note and (C)
mandatory prepayments pursuant to subsection 2.5(b)(i), (ii) and (iii)),
(iv) deferred income tax credit of the Borrower for such fiscal year, (v)
extraordinary non-cash gains during such fiscal year added in the
determination of Consolidated Net Income for such fiscal year, (vi) non-
cash gains in connection with asset dispositions whether or not
constituting extraordinary gains and (vii) non-cash ordinary gains.
"Excess Cash Flow Payment Date": in respect of any fiscal year, the
-----------------------------
date on which the Borrower is required to deliver audited financial
statements for such fiscal year to each Lender pursuant to subsection
6.1(a).
"Financing Lease": any lease of property, real or personal, the
---------------
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
<PAGE>
10
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
--------
however, that the term Guarantee Obligation shall not include endorsements
-------
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement, substantively in the form of Exhibit B, to be executed and
delivered by the Borrower and its Subsidiaries, as the same may be amended,
supplemented or otherwise modified.
"Indebtedness": of any Person at any date, (a) all indebtedness of
------------
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices and accrued expenses incurred in the ordinary course of
business), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of acceptances issued or created for the account of such Person and
(e) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof.
"Indenture": the Indenture between the Borrower and Marine Midland
---------
Bank, as trustee, pursuant to which the Subordinated Notes are issued.
<PAGE>
11
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
---------------------
of each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an interest
period longer than three months, each day which is three months or a whole
multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(v) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(vi) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month.
"Interest Rate Agreement": any interest rate swap agreement, interest
-----------------------
rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"Interest Rate Agreement Obligations": the obligations of the
-----------------------------------
Borrower or any of its Subsidiaries to make payments to counterparties
under Interest Rate Agreements in the event of the occurrence of a
termination event thereunder.
"Intermediate Holding Company": as defined in the recitals to this
----------------------------
Agreement.
<PAGE>
12
"IRB Related Transactions": the transactions referred to in Schedule
------------------------
VI.
"Issuing Lender": NationsBank of Texas, N.A., in its capacity as
--------------
issuer of any Letter of Credit.
"L/C Commitment": (a) during the period from the Closing Date to the
--------------
first anniversary of the Closing Date, $40,000,000, (b) during the period
from the first anniversary of the Closing Date to the second anniversary of
the Closing Date, $45,000,000 and (c) thereafter, $50,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
--------------------
and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to subsection 3.5.
"L/C Participants": the collective reference to all the Lenders other
----------------
than the Issuing Lender.
"Letters of Credit": as defined in subsection 3.1.
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loomis": as defined in the recitals to this Agreement.
------
"Loomis Armored": as defined in the recitals to this Agreement.
--------------
"Loomis Casualty and Employee Claims Trust": as defined in the
-----------------------------------------
recitals to this Agreement.
"Loomis Indemnity Trust": as defined in the recitals to this
----------------------
Agreement.
"Loomis Stockholders Trust": as defined in the recitals to this
-------------------------
Agreement.
"Management Group": the individuals listed as such on Schedule III.
----------------
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, assets, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or (b)
the validity or enforceability of this or any of the other Credit Documents
or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
<PAGE>
13
"Materials of Environmental Concern": any hazardous or toxic
----------------------------------
substances, materials or wastes, defined or regulated as such in or under,
or that could give rise to liability under, any applicable Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls,
urea-formaldehyde insulation, gasoline or petroleum (including crude oil or
any fraction thereof) or petroleum products.
"Mortgages": the collective reference to the mortgages and deeds of
---------
trust to be executed and delivered by the Borrower or the appropriate
Subsidiary, substantially in the form of Exhibit C (with such changes
therein as may be required to reflect different laws and practices in the
various jurisdictions in which the Mortgages are to be recorded), covering
the parcels of real property identified in Schedule IV, as the same may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by the Borrower
------------
or any of its Subsidiaries in respect of:
(a) any issuance by the Borrower or any of its Subsidiaries of
Indebtedness after the Closing Date;
(b) any Asset Sale; and
(c) any cash payments received in respect of promissory notes
delivered to the Borrower or such Subsidiary in respect of an Asset
Sale;
in each case net of (without duplication) (A), in the case of an Asset
Sale, the amount required to repay any Indebtedness (other than the Loans)
secured by a Lien on any assets of the Borrower or a Subsidiary of the
Borrower that are sold or otherwise disposed of in connection with such
Asset Sale, (B) the reasonable expenses (including legal fees and brokers'
and underwriters' commissions, lenders fees, credit enhancement fees,
accountants' fees, investment banking fees, survey costs, title insurance
premiums and other customary fees, in any case, paid to third parties or,
to the extent permitted hereby, Affiliates) incurred in effecting such
issuance or sale and (C) any taxes reasonably attributable to such sale and
reasonably estimated by the Borrower or such Subsidiary to be actually
payable.
"NOL Note": as defined in the recitals to this Agreement.
--------
"Non-Excluded Taxes": as defined in subsection 2.15.
------------------
"Non-U.S. Lender": as defined in subsection 2.15(b).
---------------
"Note": as defined in subsection 2.5(e).
----
"Obligations": as defined in the Guarantee and Collateral Agreement.
-----------
"Operating Subsidiary": as defined in the recitals to this Agreement.
--------------------
"Participant": as defined in subsection 10.6(b).
-----------
<PAGE>
14
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA.
"Permitted Liens": Liens permitted to exist under subsection 7.3.
---------------
"Permitted Restricted Payments": (a) the issuance by the Borrower of
-----------------------------
shares of Capital Stock as dividends on issued and outstanding Capital
Stock of the same class of the Borrower or pursuant to any dividend
reinvestment plan, (b) the issuance by the Borrower of options or other
equity securities of the Borrower to outside directors, members of
management or employees of the Borrower, and the repurchase of such equity
securities in an amount not exceeding $250,000 per year, (c) the issuance
of equity securities as dividends on equity securities of the same class
permitted hereunder and under the Security Documents, (d) the issuance to
the Borrower by the Intermediate Holding Company of its Capital Stock or
the issuance to the Borrower or the Intermediate Holding Company by any
Subsidiary of any of their respective Capital Stock, in each case with
respect to this clause (d) to the extent such Capital Stock is pledged to
the Administrative Agent pursuant to the relevant Pledge Agreement, and (e)
cash payments made in lieu of issuing fractional shares of Borrower common
stock or preferred stock, in an aggregate amount not to exceed $50,000.
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Principals": the collective reference, without duplication, to the
----------
Borg-Warner Principals and the Wingate Principals.
"Pro Forma Balance Sheet": as defined in subsection 4.1(e).
-----------------------
"Properties": as defined in subsection 4.17.
----------
"Qualified Issuer": any commercial bank (a) which has capital and
----------------
surplus in excess of $100,000,000 and (b) the outstanding long-term debt
securities of which are rated at least A-2 by S&P or at least P-2 by
Moody's, or carry an equivalent rating by a nationally recognized rating
agency if both of S&P and Moody's cease publishing ratings of investments.
"Register": as defined in subsection 10.6(d).
--------
"Regulation U": Regulation U of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the Issuing Lender pursuant to subsection 3.5 for amounts drawn
under Letters of Credit.
<PAGE>
15
"Related Party": with respect to either the Wingate Principals or the
-------------
Borg-Warner Principals, (a) any controlling stockholder, 80% (or more)
owned Subsidiary, or spouse or immediate family member (in the case of an
individual) of such principal or (b) a trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist
of the Borg-Warner Principals, the Wingate Principals and/or such other
Persons referred to in the immediately preceding clause (a).
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S)
2615.
"Required Lenders": at any time, Lenders the Commitment Percentages
----------------
of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president or
-------------------
vice president of the Borrower or, with respect to financial matters, the
chief financial officer or vice president-finance of the Borrower.
"Revolving Credit Loans": as defined in subsection 2.1(a).
----------------------
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of
the Borrower hereunder and under any of the other Credit Documents or to
secure any guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Stockholders Agreement": the Stockholders Agreement, dated as of
----------------------
January 24, 1997, by and among the Borrower, Wells Fargo, the Loomis
Stockholders Trust, Wingate Partners, L.P. and any other party that may
from time to time become a party thereto as provided therein, as the same
may be amended, supplemented or otherwise modified from time to time.
"Subordinated Debt": indebtedness outstanding under the Subordinated
-----------------
Notes.
"Subordinated Debt Documents": the Indenture and the Subordinated
---------------------------
Notes.
<PAGE>
16
"Subordinated Notes": the Borrower's 10% Senior Subordinated Notes,
------------------
due 2004 (the "Initial Subordinated Notes"), issued on the Closing Date,
--------------------------
and the subordinated notes of the Borrower, having the same terms as the
Initial Subordinated Notes, issued in exchange for the Initial Subordinated
Notes as contemplated by the Initial Subordinated Notes.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Termination Date": the earlier of (i) January 24, 2002 and (ii) such
----------------
other earlier date on which the Commitments shall terminate hereunder.
"Tranche": the collective reference to Eurodollar Loans the then
-------
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified as
"Eurodollar Tranches".
--------------------
"Transferee": as defined in subsection 10.6(h).
----------
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication
No. 500, as the same may be amended from time to time.
"U.S. Taxes": any tax, assessment, or other charge or levy and any
----------
liabilities with respect thereto, including any penalties, additions to
tax, fines or interest thereon, imposed by or on behalf of the United
States or any taxing authority thereof.
"Wells Fargo": as defined in the recitals to this Agreement.
-----------
"Wingate Principals": Wingate Partners, L.P., Wingate Affiliates,
------------------
L.P. and the Management Group.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP; provided that, if the Borrower
--------
notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Administrative Agent notifies the Borrower that
<PAGE>
17
the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrower from time to time during the
----------------------
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Commitment Percentage of the then outstanding
L/C Obligations, does not exceed the amount of such Lender's Commitment. During
the Commitment Period the Borrower may use the Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be
(i) Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with subsections 2.2 and 2.7, provided that no Revolving Credit Loan
--------
shall be made as a Eurodollar Loan after the day that is one month prior to the
Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
----------------------------------------
borrow under the Commitments during the Commitment Period on any Business Day,
provided that the Borrower shall give the Administrative Agent irrevocable
- --------
notice (which notice must be received by the Administrative Agent prior to
(a) 12:00 P.M., Noon, Dallas, Texas time, three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans or (b) 10:00 A.M., Dallas, Texas
time, on the requested Borrowing Date, otherwise), specifying (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if
the borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of such Type of Loan and the respective lengths of the initial Interest
Periods therefor. Each borrowing under the Commitments shall be in an amount
equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple of
$250,000 in excess thereof (or, if the then Available Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$3,000,000 or a whole multiple of $250,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account of
the Borrower at the office of the Administrative Agent specified in subsection
10.2 prior to 11:00 A.M., Dallas, Texas time (in the case of Eurodollar Loans)
or 2:00 P.M., Dallas, Texas time (in the case of
<PAGE>
18
Base Rate Loans), on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the account
of the Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent. All notices given by the Borrower under
this subsection 2.2 may be made by telephonic notice promptly confirmed in
writing.
2.3 Commitment Fee. The Borrower agrees to pay to the Administrative
--------------
Agent for the account of each Lender a commitment fee for the period from and
including the first day of the Commitment Period to and including the
Termination Date, computed at the Commitment Fee Rate on the average daily
amount of the Available Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Termination Date, commencing on the
first of such dates to occur after the date hereof.
2.4 Termination or Reduction of Commitments. (a) The Borrower shall
---------------------------------------
have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments provided that no such termination or
--------
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the aggregate
principal amount of the Loans then outstanding, when added to the then
outstanding L/C Obligations, would exceed the Commitments then in effect. Any
such reduction shall be in an amount equal to $500,000 or a whole multiple of
$100,000 in excess thereof and shall reduce permanently the Commitments then in
effect.
(b) The total amount of the Commitments on the Closing Date shall be
$115,000,000, and shall be reduced on each of the dates specified below by the
amount set forth opposite such date or such lesser amount equal to the aggregate
Commitments then in effect on such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 1998 2,500,000
June 30, 1998 2,500,000
September 30, 1998 2,500,000
December 31, 1998 2,500,000
March 31, 1999 3,750,000
June 30, 1999 3,750,000
September 30, 1999 3,750,000
December 31, 1999 3,750,000
March 31, 2000 4,375,000
June 30, 2000 4,375,000
September 30, 2000 4,375,000
December 31, 2000 4,375,000
March 31, 2001 4,375,000
June 30, 2001 4,375,000
September 30, 2001 31,875,000
January 31, 2002 31,875,000
</TABLE>
<PAGE>
19
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan of such Lender on the
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section 8). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Loans from time to time outstanding from the
date hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 2.9.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 10.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each 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 Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.5(b) 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 Lender 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 Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Loans of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to date
and principal amount (a "Note"). A Note and the Obligation evidenced thereby
----
may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer of such Note and the Obligation
evidenced thereby in the Register (and each Note shall expressly so provide).
Any assignment or transfer of all or part of an Obligation evidenced by a Note
shall be registered in the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Obligation, duly endorsed by
(or accompanied by a written instrument of assignment or transfer duly executed
by) the holder thereof, and thereupon one or more new Notes shall be issued to
the designated Assignee and the old Note shall be returned by the Administrative
Agent to the Borrower marked "cancelled." No assignment of a Note and the
Obligation evidenced thereby shall be effective unless it shall have been
recorded in the Register by the Administrative Agent as provided in this
subsection 2.5(e).
2.6 Optional Prepayments; Mandatory Prepayments and Reduction of
------------------------------------------------------------
Commitments. (a) The Borrower may on the last day of any Interest Period with
- -----------
respect thereto, in the case of Eurodollar Loans, or at any time and from time
to time, in the case of Base Rate Loans, prepay the Loans, in whole or in part,
without premium or penalty, upon irrevocable notice to the Administrative Agent
prior to 10:00 A.M., Dallas, Texas time, three Business Days prior to the date
of prepayment,
<PAGE>
20
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, Base Rate Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to subsection 2.16. Partial prepayments shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
(b)(i) If, subsequent to the Closing Date, the Borrower or any of its
Subsidiaries shall incur or permit the incurrence of any Indebtedness (other
than Indebtedness permitted pursuant to subsection 7.2) and the Debt Ratio
calculated as of the last day of the most recently ended fiscal quarter and
after giving pro forma effect to such incurrence of Indebtedness shall exceed
--- -----
3.00 to 1.00, 100% of the Net Proceeds thereof shall be promptly applied toward
the prepayment of the Loans and permanent reduction of the Commitments as set
forth in clause (iv) of this subsection 2.6(b), provided that the aggregate Net
--------
Proceeds so applied pursuant to this subsection 2.6(b)(i) shall not exceed
$75,000,000 in the aggregate. Nothing in this paragraph (b) shall be deemed to
permit any Indebtedness not permitted by subsection 7.2.
(ii) If, subsequent to the Closing Date, the Borrower or any of its
Subsidiaries shall receive Net Proceeds from any Asset Sale, such Net Proceeds
shall be promptly applied toward the prepayment of the Loans and permanent
reduction of the Commitments as set forth in clause (iv) of this
subsection 2.6(b); provided that Net Proceeds from any Asset Sales shall not be
--------
required to be so applied to the extent that such Net Proceeds are used to
acquire assets to be employed in the business of the Borrower or its
Subsidiaries within 365 days of receipt thereof, but if such Net Proceeds are
not so used, such Net Proceeds shall be applied toward the prepayment of the
Loans and the permanent reduction of the Commitments as set forth in clause
(iv) of this subsection 2.6(b) on the earlier of (x) the 366th day after receipt
of such Net Proceeds and (y) the date on which the Borrower has determined that
such Net Proceeds shall not be so used.
(iii) If there is Excess Cash Flow for fiscal year 1997, the lesser
of (A) 50% of such Excess Cash Flow and (B) $5,000,000, shall be applied toward
the prepayment of the Loans and the permanent reduction of the Commitments as
set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow
Payment Date for such fiscal year. If there is Excess Cash Flow for any fiscal
year after 1997 and the Debt Ratio as of the last day of such fiscal year is
greater than 4.0 to 1.0, 75% of such Excess Cash Flow shall be applied toward
the prepayment of the Loans and the permanent reduction of the commitments as
set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow
Payment Date for such fiscal year. If there is Excess Cash Flow for any fiscal
year after 1997 and the Debt Ratio as of the last day of such fiscal year is
greater than 3.0 to 1.0 but less than 4.0 to 1.0, 50% of such Excess Cash Flow
shall be applied toward the prepayment of the Loans and the permanent reduction
of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the
Excess Cash Flow Payment Date for such fiscal year.
(iv) Commitment reductions made pursuant to subsections 2.6(b)(i),
(ii) and (iii), shall be applied toward scheduled Commitment reductions under
subsection 2.4(b) pro rata according to the amounts of such scheduled reductions
--- ----
and shall reduce permanently the Commitments.
(v) If after giving effect to any reduction of the Commitments
under subsection 2.4 or 2.5 the aggregate outstanding principal amount of Loans
plus the aggregate outstanding amount of L/C Obligations shall exceed the
aggregate amount of the Commitments, such reduction shall be accompanied by
prepayment of the Loans in the amount of such excess (together with any amounts
<PAGE>
21
payable under subsection 4.16)) provided that if the aggregate principal amount
--------
of Loans then outstanding is less than the amount of such excess (because
Letters of Credit constitute a portion of such excess), the Borrower shall
immediately, without notice or demand, to the extent of the balance of such
excess, replace outstanding Letters of Credit and/or deposit an amount in cash
collateral account satisfactory to the Administrative Agent established for the
benefit of the Lenders.
2.7 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to Base Rate Loans, by giving the
Administrative Agent at least one Business Day's prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
--------
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Loans
shall specify the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and Base Rate Loans may be converted as provided herein, provided that
--------
(i) no Loan may be converted into a Eurodollar Loan when any Event of Default
has occurred and is then continuing and the Administrative Agent has or the
Required Lenders have determined that such a conversion is not appropriate and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date. All notices given by Borrower under this
subsection 2.7 may be made by telephonic notice promptly confirmed in writing.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
--------
Loan may be continued as such (i) when any Event of Default has occurred and is
then continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Termination Date and provided, further, that if
-------- -------
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
2.8 Minimum Amounts and Maximum Number of Tranches. All borrowings,
----------------------------------------------
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $3,000,000 or
a whole multiple of $250,000 in excess thereof. In no event shall there be more
than 10 Eurodollar Tranches outstanding at any time.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any
<PAGE>
22
such overdue interest, commitment fee or other amount shall bear interest at a
rate per annum which is (x) in the case of principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of any such overdue interest, commitment
fee or other amount, the rate described in paragraph (b) of this subsection plus
2%, in each case from the date of such non-payment until such overdue principal,
interest, commitment fee or other amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date and on the Termination Date, provided that interest accruing pursuant to
--------
paragraph (c) of this subsection shall be payable from time to time on demand.
2.10 Computation of Interest and Fees. (a) Interest on Base Rate
--------------------------------
Loans shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed; and, otherwise, all fees and interest
shall be calculated on the basis of a 360-day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 2.9(a) or (c).
2.11 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
shall be converted to or continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn in writing by the
Administrative Agent (which the Administrative Agent agrees to do when the
Administrative Agent has determined, or has been instructed by the Required
Lenders that, the circumstances that prompted the delivery of such notice no
longer exist), no further Eurodollar Loans
<PAGE>
23
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans to Eurodollar Loans.
2.12 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee hereunder and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Loans shall be made pro rata according to the
respective outstanding principal amounts of the Loans then held by the Lenders.
All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, Reimbursement Obligations, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, Dallas, Texas time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Administrative Agent's office
specified in subsection 10.2, in Dollars and in immediately available funds.
The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent on such
Borrowing Date, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error. If
such Lender's Commitment Percentage of such borrowing is not made available to
the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrower. The failure of any Lender to make any
Loan to be made by it shall not relieve any other Lender of its obligation
hereunder to make its Loan on such Borrowing Date.
2.13 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and
(b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law; provided that before making any such demand, each
--------
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, in its reasonable discretion, in any legal, economic or
regulatory manner) to designate a different lending office if the making of such
a designation would allow the Lender or its lending office to continue to
perform its obligations to make Eurodollar Loans and avoid the need for, or
materially reduce the amount of,
<PAGE>
24
such increased cost. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 2.16. If circumstances subsequently change so
that any affected Lender shall determine that it is no longer so affected, such
Lender will promptly notify the Borrower and the Administrative Agent, and upon
receipt of such notice, the obligations of such Lender to make or continue
Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans shall be
reinstated.
2.14 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-
Excluded Taxes covered by subsection 2.15 and changes in the rate of net
income taxes or franchise taxes (imposed in lieu of net income taxes) of
such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender
upon written demand such additional amount or amounts as will compensate such
Lender for such increased cost or reduced amount receivable, provided that
--------
before making any such demand, each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, in its reasonable
discretion, in any legal, economic or regulatory manner) to designate a
different Eurodollar lending office if the making of such designation would
allow the Lender or its Eurodollar lending office to continue to perform its
obligations to make Eurodollar Loans or to continue to fund or maintain
Eurodollar Loans and avoid the need for, or materially reduce the amount of,
such increased cost. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower,
through the Administrative Agent, of the event by reason of which it has become
so entitled. If the Borrower so notifies the Administrative Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section, the Borrower may convert
all Eurodollar Loans of such Lender then outstanding into Base Rate Loans in
accordance with the terms hereof. Each Lender shall notify the Borrower within
90 days after it becomes aware of the imposition of such costs provided that if
--------
such Lender fails to so notify the Borrower within such 90-day period, such
Lender shall not be entitled to claim any additional amounts pursuant to this
subsection for any period ending on a date which is prior to 90 days before such
notification.
<PAGE>
25
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
prompt written request therefor, the Borrower shall promptly pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower (with a copy
to the Administrative Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.15 Taxes. (a) Except as provided in this subsection 2.15, all
-----
payments made by the Borrower under this Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Agent or any Lender as a result of a present or former connection between
any Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from such Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any Note). If any such non-
excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
------------------
payable to any Agent or any Lender hereunder or under any Note, the amounts so
payable to such Agent or such Lender shall be increased to the extent necessary
to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
-------- -------
not be required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the relevant Agent
for its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the relevant Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agents and the Lenders for any incremental taxes, interest or
penalties that may become payable by any Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
<PAGE>
26
(b) Each Lender, Assignee and Participant that is not a citizen or
resident of the United States of America, a corporation, partnership created or
organized in or under the laws of the United States of America, any estate that
is subject to U.S. federal income taxation regardless of the source of its
income or any trust which is subject to the supervision of a court within the
United States and the control of a United States fiduciary as described in
Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
---------------
Borrower and the Administrative Agent, and if applicable, the assigning Lender
(or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) on or before the date on which it
becomes a party to this Agreement (or, in the case of a Participant, on or
before the date on which such Participant purchases the related participation)
either:
(A) (x) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling
it to a complete exemption from withholding of U.S. Taxes on all amounts to
be received by such Non-U.S. Lender pursuant to this Agreement and the
other Credit Documents) or Form 4224 (relating to all amounts to be
received by such Non-U.S. Lender pursuant to this Agreement and the other
Credit Documents), or successor and related applicable forms, as the case
may be, and (y) two duly completed and signed copies of Internal Revenue
Service Form W-8 or W-9, or successor and related applicable forms, as the
case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that does not comply with
the requirements of clause (A) hereof, (x) a statement in the form of
Exhibit F (or such other form of statement as shall be reasonably requested
by the Borrower from time to time) to the effect that such Non-U.S. Lender
is eligible for a complete exemption from withholding of U.S. Taxes under
Code Section 871(h) or 881(c), and (y) two duly completed and signed copies
of Internal Revenue Service Form W-8 or successor and related applicable
form (it being understood and agreed that no Participant and, without the
prior written consent of the Borrower described in clause (B) of the
proviso to the first sentence of subsection 10.6(c), no Assignee shall be
entitled to deliver any forms or statements pursuant to this clause (B),
but rather shall be required to deliver forms pursuant to clause (A) of
this subsection 2.15(b)).
Further, each Non-U.S. Lender agrees (i) to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Forms 1001,
4224, W-8 or W-9, as the case may be, or successor and related applicable forms,
on or before the date that any such form expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) previously delivered by it to the Borrower (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) in accordance with applicable U.S. laws and regulations and (ii) in
the case of a Non-U.S. Lender that delivers a statement in the form of Exhibit F
(or such other form of statement as shall have been requested by the Borrower),
to deliver to the Borrower and the Administrative Agent, and if applicable, the
assigning Lender, such statement on an annual basis on the anniversary of the
date on which such Non-U.S. Lender became a party to this Agreement and to
deliver promptly to the Borrower and the Administrative Agent, and if
applicable, the assigning Lender, such additional statements and forms as shall
be reasonably requested by the Borrower from time to time unless, in any such
case, any change in law or regulation has occurred subsequent to the date such
Lender became a party to this Agreement (or in the case of a Participant, the
date on which such Participant purchased the related participation) which
renders all such forms inapplicable or which would prevent such Lender (or
Participant) from properly completing and executing any such form with respect
to it
<PAGE>
27
and such Lender promptly notifies the Borrower and the Administrative Agent (or,
in the case of a Participant, the Lender from which the related participation
shall have been purchased) if it is no longer able to deliver, or if it is
required to withdraw or cancel, any form or statement previously delivered by it
pursuant to this subsection 2.15(b). Each Non-U.S. Lender agrees to indemnify
and hold harmless the Borrower from and against any taxes, penalties, interest
or other costs or losses (including, without limitation, reasonable attorneys'
fees and expenses) incurred or payable by the Borrower as a result of the
failure of the Borrower to comply with its obligations to deduct or withhold any
U.S. Taxes from any payments made pursuant to this Agreement to such Non-U.S.
Lender or the Administrative Agent which failure resulted from the Borrower's
reliance on any form, statement, certificate or other information provided to it
by such Non-U.S. Lender pursuant to clause (B) or clause (ii) of this subsection
2.15(b). The Borrower hereby agrees that for so long as a Non-U.S. Lender
complies with this subsection 2.15(b), the Borrower shall not withhold any
amounts from any payments made pursuant to this Agreement to such Non-U.S.
Lender, unless the Borrower reasonably determines that it is required by law to
withhold or deduct any amounts from any payments made to such Non-U.S. Lender
pursuant to this Agreement. A Non-U.S. Lender shall not be required to deliver
any form or statement pursuant to the immediately preceding sentences in this
subsection 2.15(b) that such Non-U.S. Lender is not legally able to deliver (it
being understood and agreed that the Borrower shall withhold or deduct such
amounts from any payments made to such Non-U.S. Lender that the Borrower
reasonably determines are required by law and that payments resulting from a
failure to comply with this paragraph (b) shall not be subject to payment or
indemnity by the Borrower pursuant to subsection 2.15(a)). If any Credit Party
other than the Borrower makes any payment to any Non-U.S. Lender under any
Credit Document, the foregoing provisions of this subsection 2.15 shall apply to
such Non-U.S. Lender and such Credit Party as if such Credit Party were the
Borrower (but a Non-U.S. Lender shall not be required to provide any form or
make any statement to any such Credit Party unless such Non-U.S. Lender has
received a request to do so from such Credit Party and has a reasonable time to
comply with such request).
2.16 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto (but excluding
loss of margin). Such indemnification under this subsection 2.16 may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.17 Replacement of Lenders. If at any time (a) the Borrower becomes
----------------------
obligated to pay additional amounts described in subsections 2.13, 2.14 or 2.15
as a result of any condition described in such subsections or any Lender ceases
to make Eurodollar Loans pursuant to subsection 2.13, (b) any Lender becomes
insolvent and its assets become subject to a receiver, liquidator,
<PAGE>
28
trustee, custodian or other Person having similar powers or (c) any Lender
becomes a "Nonconsenting Lender" (hereinafter defined), then the Borrower may,
on ten Business Days' prior written notice to the Administrative Agent and such
Lender, replace such Lender by causing such Lender to (and such Lender shall)
assign pursuant to subsection 10.6 all of its rights and obligations under this
Agreement to a Lender or other entity selected by the Borrower and acceptable to
the Administrative Agent for a purchase price equal to the outstanding principal
amount of such Lender's Loans and all accrued interest and fees and other
amounts payable hereunder (including amounts payable under subsection 2.16 as
though such Loans were being paid instead of being purchased); provided that
--------
(i) the Borrower shall have no right to replace the Administrative Agent,
(ii) neither the Administrative Agent nor any Lender shall have any obligation
to the Borrower to find a replacement Lender or other such entity, (iii) in the
event of a replacement of a Nonconsenting Lender or a Lender to which the
Borrower becomes obligated to pay additional amounts pursuant to this subsection
2.17, in order for the Borrower to be entitled to replace such a Lender, such
replacement must take place no later than 180 days after (A) the date the
Nonconsenting Lender shall have notified the Borrower and the Administrative
Agent of its failure to agree to any requested consent, waiver or amendment or
(B) the Lender shall have demanded payment of additional amounts under one of
the subsections described in this subsection 2.17, as the case may be, and (iv)
in no event shall the Lender hereby replaced be required to pay or surrender to
such replacement Lender or other entity any of the fees received by such Lender
hereby replaced pursuant to this Agreement. In the case of a replacement of a
Lender to which the Borrower becomes obligated to pay additional amounts
pursuant to this subsection 2.17, the Borrower shall pay such additional amounts
to such Lender prior to such Lender being replaced and the payment of such
additional amounts shall be a condition to the replacement of such Lender. In
the event that (x) the Borrower or the Administrative Agent has requested the
Lenders to consent to a departure or waiver of any provisions of the Credit
Documents or to agree to any amendment thereto, (y) the consent, waiver or
amendment in question requires the agreement of all Lenders in accordance with
the terms of subsection 10.1 and (z) the Required Lenders have agreed to such
consent, waiver or amendment, then any Lender who does not agree to such
consent, waiver or amendment shall be deemed a "Nonconsenting Lender."
--------------------
2.18 Certain Fees. The Company agrees to pay to the Administrative
------------
Agent, for its own account, a non-refundable administration fee in an amount
previously agreed to with the Administrative Agent, payable in advance on the
Closing Date and annually in advance on each anniversary thereof prior to the
Termination Date and the payment in full of all amounts owing under this
Agreement.
2.19 Change of Lending Office. Each Lender agrees that if it makes
------------------------
any demand for payment under subsection 2.14 or 2.15(a), or if any adoption or
change of the type described in subsection 2.13 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 2.14 or
2.15(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.13.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
--------------
hereof, the Issuing Lender, in reliance on the agreements of the other Lenders
set forth in subsection 3.4(a), agrees to issue letters of credit ("Letters of
----------
Credit") for the account of the Borrower on any Business Day
- ------
<PAGE>
29
during the Commitment Period in such form as may be approved from time to time
by the Issuing Lender; provided that the Issuing Lender shall have no obligation
--------
to issue any Letter of Credit if, after giving effect to such issuance, (i) the
L/C Obligations would exceed the L/C Commitment or (ii) the Available Commitment
of all Lenders would be less than zero.
(b) Each Letter of Credit shall (i) be denominated in Dollars, (ii)
be (x) a standby letter of credit issued to support obligations of the Borrower
or any of its Subsidiaries, contingent or otherwise, or to finance the working
capital and business needs of the Borrower or any of its Subsidiaries in the
ordinary course of business or (y) a commercial letter of credit issued in
respect of the purchase of goods or services by the Borrower and its
Subsidiaries in the ordinary course of business and (iii) expire no later than
the earlier of (x) the date that is 12 months after the date of its issuance and
(y) the fifth Business Day prior to the Termination Date; provided that any
--------
Letter of Credit with an expiration date occurring up to twelve months after
such Letter of Credit's date of issuance may be automatically renewable for
subsequent 12-month periods (but in no event later than the fifth Business Day
prior to the Termination Date).
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may
-------------------------------------------
from time to time request that the Issuing Lender issue a Letter of Credit at
any time prior to the fifth Business Day prior to the Termination Date by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay
-----------------------------------
to the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit fee with respect to each Letter of Credit,
computed for the period from and including the date of issuance of such Letter
of Credit to the expiration date of such Letter of Credit at a rate per annum
equal to the Applicable Margin then in effect for Eurodollar Loans, of the
aggregate face amount of Letters of Credit outstanding, payable in arrears on
each L/C Fee Payment Date and on the Termination Date. Such fee shall be
payable to the Administrative Agent to be shared ratably among the Lenders in
accordance with their respective Commitment Percentages. In addition, the
Borrower shall pay to the Administrative Agent, for the account of the Issuing
Lender, a fee equal to (x) if the Debt Ratio (as calculated for the most
recently ended fiscal quarter) shall exceed 3.00 to 1.00, 0.1875% per annum of
the aggregate face amount of outstanding Letters of Credit and (y) if the Debt
Ratio (as calculated for most recently ended fiscal quarter) shall be less than
or equal to 3.00 to 1.00,
<PAGE>
30
0.1250% per annum of the aggregate face amount of outstanding Letters of Credit
payable quarterly in arrears on each L/C Fee Payment Date and on the Termination
Date.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
3.4 L/C Participation. (a) The Issuing Lender irrevocably agrees to
-----------------
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage from time to time in effect in the Issuing
Lender's obligations and rights under each Letter of Credit issued hereunder and
the amount of each draft paid by the Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Lender that,
if a draft is paid under any Letter of Credit for which the Issuing Lender is
not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's then Commitment Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed; provided that, if such demand
--------
is made prior to 12:00 Noon, Dallas, Texas time, on a Business Day, such L/C
Participant shall make such payment to the Issuing Lender prior to the end of
such Business Day and otherwise such L/C Participant shall make such payment on
the next succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to paragraph 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal funds rate, as quoted by the Issuing Lender, during the period from and
including the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.4(a) is not in fact made available to the
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Lender shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans hereunder. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender
<PAGE>
31
will, if such payment is received prior to 12:00 Noon, Dallas, Texas time, on a
Business Day, distribute to such L/C Participant its pro rata share thereof
prior to the end of such Business Day and otherwise the Issuing Lender will
distribute such payment on the next succeeding Business Day; provided, however,
-------- -------
that in the event that any such payment received by the Issuing Lender and
distributed to the L/C Participants shall be required to be returned by the
Issuing Lender, each such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
----------------------------------------
agrees to reimburse the Issuing Lender on the same Business Day on which the
Issuing Lender notifies the Borrower of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Lender. The Issuing Lender
shall provide notice to the Borrower on each Business Day on which a draft is
presented and paid by the Issuing Lender indicating the amount of (i) such draft
so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection from the date a draft presented under any
Letter of Credit is paid by the Issuing Lender until payment in full (i) at the
rate which would be payable on any Loans that are Base Rate Loans at such time
until such payment is required to be made pursuant to subsection 3.5(a), and
(ii) thereafter, at the rate which would be payable on any Loans that are Base
Rate Loans at such time which were then overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under
--------------------
subsection 3.5(a) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
L/C Participant or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under subsection 3.5(a) shall not be affected by, among other
things, (i) the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or (ii) any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or (iii) any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.
(c) Neither the Issuing Lender nor any L/C Participant shall be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender or any L/C Participant
to the Borrower.
<PAGE>
32
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower and the Administrative Agent of the date and amount thereof. If any
draft shall be presented for payment under any Letter of Credit, the
responsibility of the Issuing Lender to the Borrower in connection with such
draft shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment appear on their face to be in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of any Application
-----------
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents, the Issuing Lender and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Agents, the Issuing
Lender and each Lender that:
4.1 Financial Condition. (a) The consolidated audited balance
-------------------
sheets of Wells Fargo and its consolidated Subsidiaries as at December 31, 1993,
December 31, 1994 and December 31, 1995 and the related consolidated statements
of operations and of cash flows for the fiscal year ended on each such date,
audited by Deloitte & Touche LLP, copies of which have heretofore been furnished
to each Lender, present fairly in accordance with GAAP the consolidated
financial condition of Wells Fargo and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. All such financial statements have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants and as disclosed
therein). Neither Wells Fargo nor any of its consolidated Subsidiaries had, at
the date of each balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
material interest rate or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto or
expressly permitted to be incurred hereunder. During the period from December
31, 1995 to and including the date hereof there has been no sale, transfer or
other disposition by Wells Fargo or any of its consolidated Subsidiaries of any
material part of its business or property (except as disclosed in the
Contribution Documents) other than pursuant to the Business Combination and no
purchase or other acquisition of any business or property (including any capital
stock of any other Person) material in relation to the consolidated financial
condition of Wells Fargo and its consolidated Subsidiaries at December 31, 1995.
(b) The consolidated audited balance sheets of Loomis and its
consolidated Subsidiaries as at June 30, 1994, June 30, 1995 and June 30, 1996
and the related consolidated statements of operations and of cash flows for the
fiscal year ended on each such date, audited by Ernst & Young LLP, copies of
which have heretofore been furnished to each Lender, present fairly in
accordance with GAAP the consolidated financial condition of Loomis and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended.
All such financial statements have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither Loomis nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee
<PAGE>
33
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
material interest rate or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto or
expressly permitted to be incurred hereunder. During the period from June 30,
1996 to and including the date hereof, there has been no sale, transfer or other
disposition (other than the Business Combination) by Loomis or any of its
consolidated Subsidiaries of any material part of its business or property other
than pursuant to the Business Combination and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of Loomis and its
consolidated Subsidiaries at June 30, 1996.
(c) The unaudited consolidated balance sheet of Wells Fargo and its
consolidated Subsidiaries as at September 30, 1996, certified by a Responsible
Officer of Wells Fargo, copies of which have heretofore been furnished to each
Lender, presents fairly in all material respects in accordance with GAAP the
financial position of Wells Fargo and its consolidated Subsidiaries as at such
date (subject to normal year end audit adjustments and the absence of schedules
and notes). Such balance sheet has been prepared in accordance with GAAP
(except as approved by such Responsible Officer and disclosed therein) (subject
to normal year end audit adjustments and the absence of schedules and notes).
Wells Fargo and its consolidated Subsidiaries did not have at the date of such
balance sheet, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
exchange transaction, which is not reflected in such balance sheets. During the
period from September 30, 1996 to the Closing Date, except in connection with
the Business Combination and the transactions related thereto, no dividends or
other distributions have been declared, paid or made upon the Capital Stock of
Wells Fargo or any of its consolidated Subsidiaries nor has any of the Capital
Stock of Wells Fargo or any of its consolidated Subsidiaries been redeemed,
retired, purchased or otherwise acquired for value by Wells Fargo or any of its
consolidated Subsidiaries, respectively.
(d) The unaudited consolidated balance sheet of Loomis and its
consolidated Subsidiaries as at September 30, 1996, certified by a Responsible
Officer of Loomis, copies of which have heretofore been furnished to each
Lender, presents fairly in all material respects in accordance with GAAP the
financial position of Loomis and its consolidated Subsidiaries as at such date
(subject to normal year end audit adjustments and the absence of schedules and
notes). Such balance sheet has been prepared in accordance with GAAP (except as
approved by such Responsible Officer and disclosed therein) (subject to normal
year end audit adjustments and the absence of schedules and notes). Loomis and
its consolidated Subsidiaries did not have at the date of such balance sheet,
any material Guarantee Obligation, contingent liability or liability for taxes,
or any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency exchange transaction,
which is not reflected in such balance sheets. During the period from September
30, 1996 to the Closing Date, except in connection with the Business Combination
and the transactions related thereto, no dividends or other distributions have
been declared, paid or made upon the Capital Stock of Loomis or any of its
consolidated Subsidiaries nor has any of the Capital Stock of Loomis or any of
its consolidated Subsidiaries been redeemed, retired, purchased or otherwise
acquired for value by Loomis or any of its consolidated Subsidiaries,
respectively.
(e) The unaudited consolidated pro forma balance sheet of the
--- -----
Borrower and its consolidated Subsidiaries, as at September 30, 1996, certified
by a Responsible Officer (the "Pro Forma Balance Sheet"), copies of which have
-----------------------
been furnished to each Lender, is the unaudited balance sheet of the Borrower
and its consolidated Subsidiaries as at September 30, 1996, adjusted to give
<PAGE>
34
effect (as if such events had occurred on such date) to (i) the Business
Combination and each of the transactions contemplated by the Contribution
Agreement, (ii) the incurrence of the Loans and the issuance of the Letters of
Credit to be incurred or issued, as the case may be, on the Closing Date and
(iv) the incurrence of the Subordinated Debt and all other Indebtedness that the
Borrower and its consolidated Subsidiaries expect to incur, and the payment of
all amounts the Borrower and its consolidated Subsidiaries expect to pay, in
connection with the Business Combination. The Pro Forma Balance Sheet was
prepared based on good faith assumptions in accordance with GAAP and is based on
the best information available to the Borrower, as of the date of delivery
thereof, and reflects on a pro forma basis the financial position of the
--- -----
Borrower and its consolidated Subsidiaries, as at September 30, 1996, as
adjusted, as described above, assuming that the events specified in the
preceding sentence has actually occurred as at September 30, 1996.
4.2 No Change. Since December 31, 1995 there has been no development
---------
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the Borrower
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is, or will be on or before the
date set forth in subsection 6.13, duly qualified as a foreign corporation and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to so qualify could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect and (d)
is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each of
-------------------------------------------------------
the Borrower and its Subsidiaries has the corporate power and authority, and the
legal right, to make, deliver and perform the Credit Documents to which it is a
party and, in the case of the Borrower, to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and to authorize the execution, delivery and
performance of the Credit Documents. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of the Credit
Documents to which the Borrower and each other Credit Party is a party, except
those set forth on Schedule 4.4. This Agreement has been, and each other Credit
Document will be, duly executed and delivered on behalf of the Borrower and each
other Credit Party. This Agreement constitutes, and each other Credit Document
to which it is a party when executed and delivered will constitute, a legal,
valid and binding obligation of each Credit Party thereto enforceable against
each such Credit Party, as the case may be, in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
4.5 No Legal Bar. The execution, delivery and performance of each
------------
Credit Document, the borrowing and use of the proceeds of the Loans and the
consummation of the transactions contemplated by the Contribution Agreement, the
Credit Documents and the Subordinated Debt Documents, (a) will not violate any
Requirement of Law or any Contractual Obligation applicable to or binding upon
each of the Borrower or any Subsidiary of the Borrower or any of their
<PAGE>
35
respective properties or assets and (b) will not result in the creation or
imposition of any Lien on any of its properties or assets pursuant to any
Requirement of Law applicable to it or any of its Contractual Obligations,
except for the Liens arising under the Security Documents.
4.6 No Material Litigation. Except as set forth on Schedule 4.6, no
----------------------
litigation by, investigation by, or proceeding of or before any arbitrator or
any Governmental Authority is pending or, to the knowledge of the Borrower,
overtly threatened by or against the Borrower or any of its Subsidiaries or
against any of its or their respective properties or revenues (including after
giving effect to the Business Combination) with respect to any Credit Document
or any of the transactions contemplated hereby or which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries (i) has good record and indefeasible title in fee simple to all the
real property listed on Part A to Schedule 4.8, (ii) within 30 days of the
Closing Date, shall have good record and indefeasible title in fee simple to all
the real property listed on Part B to Schedule 4.8, (iii) has good record and
indefeasible title in fee simple to, or a valid leasehold interest in, all its
other real property, (iv) has good title to, or a valid leasehold interest in,
all its other property and (v) none of such property in clauses (i) through (iv)
is or shall be subject to any Lien except as permitted by subsection 7.3. The
Borrower expects to dispose of, within one year after the Closing Date, each
property listed in Schedule 4.8 which (i) has a book or appraised value in
excess of $250,000 and (ii) is not listed on Schedule IV.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
------------
Property"). To the best of the Borrower's knowledge, and except as set forth on
- --------
Schedule 4.9, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim which could reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
4.10 Taxes. Except as set forth on Schedule 4.10, each of the
-----
Borrower and its Subsidiaries has filed or caused to be filed all tax returns
which, to the knowledge of the Borrower, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other material taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or its
Subsidiaries, as the case may be); no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.
<PAGE>
36
4.11 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by any Lender or the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-1 or FR Form U-1 referred to in said Regulation G or Regulation U, as the case
may be.
4.12 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Single Employer Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code (except that with respect to any Multiemployer
Plan, such representation is deemed made only to the knowledge of the Borrower).
No termination of a Single Employer Plan has occurred, and no Lien in favor of
the PBGC or a Plan has arisen, during such five-year period. The present value
of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits.
Neither the Borrower nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan for which there is any
outstanding liability, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any liability under ERISA if the Borrower or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made in an amount which would be
reasonably likely to have a Material Adverse Effect. No such Multiemployer Plan
is in Reorganization or Insolvent.
4.13 Investment Company Act; Other Regulations. The Borrower is not
-----------------------------------------
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
4.14 Subsidiaries. After giving effect to the consummation of the
------------
Business Combination, the Subsidiaries of the Borrower and their jurisdiction of
incorporation shall be as set forth on Schedule 4.14.
4.15 Purpose of Loans. The proceeds of the Loans shall be used by
----------------
the Borrower (i) to finance a portion of the Business Combination and related
fees and expenses in an aggregate amount not to exceed $80,000,000 and (ii) for
working capital purposes in the ordinary course of business of the Borrower and
its Subsidiaries.
4.16 Environmental Matters.
---------------------
Except insofar as any exception to any of the following, or any
aggregation of such exceptions, is not reasonably likely to result in a Material
Adverse Effect:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and
----------
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations which (i) constitute or
<PAGE>
37
constituted a violation of, or (ii) could reasonably be expected to give
rise to liability under, any applicable Environmental Law.
(b) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower have knowledge or reason to believe that any such
notice will be received or is being threatened.
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could reasonably be expected to give rise to liability
under, any applicable Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on
or under any of the Properties in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any applicable
Environmental Law.
(d) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party or with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business.
(e) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could reasonably give rise to liability
under any applicable Environmental Laws.
(f) The Properties and all operations at the Properties are in
compliance, and have in the last 3 years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
applicable Environmental Law with respect to the Properties or the business
operated by the Borrower or any of its Subsidiaries (the "Business") which
--------
could materially interfere with the continued operation of the Properties
or materially impair the fair saleable value thereof.
4.17 Collateral Documents. (a) Upon execution and delivery thereof
--------------------
by the parties thereto, the Guarantee and Collateral Agreement will be effective
to create in favor of the Administrative Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in the pledged stock
described therein and, when stock certificates representing or constituting the
pledged stock described therein are delivered to the Administrative Agent, such
security interest shall constitute a perfected first lien on, and security
interest in, all right, title and interest of the pledgor party thereto in the
pledged stock described therein.
(b) Upon execution and delivery thereof by the parties thereto, the
Guarantee and Collateral Agreement will be effective to create in favor of the
Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and
enforceable security interest in the collateral described therein. Uniform
Commercial Code financing statements have been filed in each of the
jurisdictions
<PAGE>
38
listed on Schedule 4.17(b), or arrangements have been made for such filing in
such jurisdictions, and upon such filing, and upon the taking of possession by
the Administrative Agent of any such collateral the security interests in which
may be perfected only by possession, such security interests will, subject to
the existence of Permitted Liens, constitute perfected first priority liens on,
and security interests in, all right, title and interest of the debtor party
thereto in the collateral described therein, except to the extent that a
security interest cannot be perfected therein by the filing of a financing
statement or the taking of possession under the Uniform Commercial Code of the
relevant jurisdiction.
4.18 Accuracy and Completeness of Information. No fact is known to
----------------------------------------
the Borrower or any of its Subsidiaries (other than general economic conditions,
which conditions are commonly known and affect businesses generally) which has
had or could reasonably be expected to have a Material Adverse Effect, which has
not been disclosed to the Lenders by the Borrower or such Subsidiary in writing
prior to the date hereof. No document furnished or statement made in writing to
the Lenders by the Borrower, any Subsidiary or any party to the Contribution
Agreement in connection with the negotiation, preparation or execution of this
Agreement or any of the other Credit Documents (but excluding all projections
and pro forma financial statements which shall have been prepared in good faith
and based upon reasonable assumptions) contains any untrue statement of a
material fact or omits to state any such material fact necessary in order to
make the statements contained therein not misleading in the context in which
such statements are made.
4.19 Solvency. On the Closing Date and after giving effect to the
--------
borrowings hereunder on such date and to all other Indebtedness and Guarantee
Obligations being incurred on such date, (a) the property, at a fair valuation,
of the Borrower will exceed the Borrower's debts, (b) the present fair salable
value of the assets of the Borrower is not less than the amount that will be
required to pay the probable liabilities of the Borrower as such debts become
absolute and matured, and (c) the Borrower does not intend to, and does not
believe it will, incur debts or liabilities beyond the Borrower's ability to pay
as such debts and liabilities mature. For purposes of this subsection, "debt"
means "liability on a claim" and "claim" means any (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 right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured.
4.20 Labor Matters. There are no strikes pending or, to the
-------------
Borrower's knowledge, overtly threatened against the Borrower or any of its
Subsidiaries which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. The hours worked and payments made
to employees of the Borrower and each of its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law, except to the extent such violations could not, or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
4.21 Contribution Agreement. The representations and warranties
----------------------
contained in the Contribution Documents, taken as a whole, are true and correct
in all material respects as of the Closing Date. On the Closing Date, the
Business Combination will have been consummated in accordance with the
Contribution Documents.
<PAGE>
39
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans. The agreement of each Lender to
---------------------------
make the initial extension of credit requested to be made by it is subject to
the satisfaction, immediately prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Credit Documents. The Administrative Agent shall have received
----------------
(i) this Agreement, executed and delivered by a duly authorized officer of
the Borrower, with a counterpart for each Lender and (ii) the Guarantee and
Collateral Agreement, executed and delivered by a duly authorized officer
of each party thereto, with a counterpart or a conformed copy for each
Lender.
(b) Related Agreements. The Administrative Agent shall have
------------------
received, with a copy for each Lender, true and correct copies, certified
as to authenticity by the Borrower, of the Contribution Agreement, the
Stockholders Agreement, the Subordinated Debt Documents and such other
documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower or its Subsidiaries may be a party (after giving effect to the
Business Combination).
(c) Business Combination. The Business Combination shall have been
--------------------
consummated pursuant to the Contribution Agreement, and no material
provision of the Contribution Agreement shall have been amended,
supplemented, waived or otherwise modified without the prior written
consent of the Agents. The Agents shall have received evidence reasonably
satisfactory to them that the aggregate amount of fees and expenses payable
by the Borrower and its Subsidiaries in connection with the transactions
contemplated hereby will not exceed $8,000,000.
(d) Capitalization; Capital Structure (i) After giving effect to
---------------------------------
the Business Combination, the Borrower shall have the capital structure set
forth in the Pro Forma Balance Sheet.
(ii) The Subordinated Debt Documents shall have been executed and
delivered by the parties thereto (and shall be in form and substance
satisfactory to the Lenders) shall be in full force and effect and none of
the provisions thereof shall have been amended, waived, supplemented or
otherwise modified without the prior written consent of the Agents; and the
Borrower shall have issued the Subordinated Debt in a principal amount of
$85,000,000.
(iii) The NOL Note, in form and substance satisfactory to the
Agents, shall have been issued to the Loomis Stockholders Trust.
(e) Fees. The Agents, the Arrangers and the Lenders shall have
----
received all fees, expenses and other consideration required to be paid on
or before the Closing Date.
(f) Lien Searches. The Administrative Agent shall have received the
-------------
results of a search of Uniform Commercial Code, tax and judgment filings
made with respect to each of the Borrower and its Subsidiaries (after
giving effect to the Business Combination) and, without duplication, Wells
Fargo and Loomis-Armored, in the jurisdictions set forth on Schedule
4.18(b) together with copies of financing statements disclosed by such
searches, and
<PAGE>
40
such searches shall disclose no Liens on any assets encumbered by any
Security Document, except for Liens permitted hereunder or, if unpermitted
Liens are disclosed, the Administrative Agent shall have received
satisfactory evidence of the release of such Liens.
(g) Consents, Authorizations and Filings, etc. Except for the
------------------------------------------
financing statements contemplated by the Security Documents, all consents,
authorizations and filings, if any, required in connection with the
execution, delivery and performance by the Credit Parties, and the validity
and enforceability against the Credit Parties, of the Credit Documents to
which any of them is a party, shall have been obtained or made, and such
consents, authorizations and filings shall be in full force and effect,
except such consents, authorizations and filings, the failure to obtain
which would not have a Material Adverse Effect.
(h) Insurance. The Lenders shall have received (i) a satisfactory
---------
schedule describing all insurance maintained by the Borrower and its
Subsidiaries (after giving effect to the Business Combination) pursuant to
subsection 6.5, and (ii) binders (or other customary evidence as to the
obtaining and maintenance by the Borrower of such insurance) for each
policy set forth on such schedule insuring against casualty and other usual
and customary risks.
(i) Litigation. On the Closing Date, there shall be no actions,
----------
suits or proceedings pending or threatened against any Credit Party (a)
with respect to this Agreement or any other Credit Document or the
transactions contemplated hereby or thereby (including the Business
Combination) or (b) which the Agents or the Required Lenders shall
determine could reasonably be expected to have a Material Adverse Effect.
(j) Borrowing Certificate. The Administrative Agent shall have
---------------------
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit D,
with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(k) Corporate Proceedings of the Borrower. The Administrative Agent
-------------------------------------
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of the Credit Documents to which it is
a party, (ii) the borrowings contemplated hereunder and (iii) the granting
by it of the Liens created pursuant to the Security Documents, certified by
the Secretary or an Assistant Secretary of the Borrower as of the Closing
Date, which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(l) Borrower Incumbency Certificate. The Administrative Agent shall
-------------------------------
have received, with a counterpart for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of the Borrower executing any Credit Document satisfactory in form
and substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(m) Corporate Proceedings of Subsidiaries. The Administrative Agent
-------------------------------------
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Subsidiary of the
<PAGE>
41
Borrower which is a party to a Credit Document authorizing (i) the
execution, delivery and performance of the Credit Documents to which it is
a party and (ii) the granting by it of the Liens created pursuant to the
Security Documents to which it is a party, certified by the Secretary or an
Assistant Secretary of each such Subsidiary as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(n) Subsidiary Incumbency Certificates. The Administrative Agent
----------------------------------
shall have received, with a counterpart for each Lender, a certificate of
each Subsidiary of the Borrower which is a Credit Party, dated the Closing
Date, as to the incumbency and signature of the officers of such
Subsidiaries executing any Credit Document, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of each such
Subsidiary.
(o) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a counterpart for each Lender, true and complete copies of
the certificate of incorporation and by-laws of each Credit Party,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of the such Credit Party.
(p) Legal Opinions. The Administrative Agent shall have received,
--------------
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Weil, Gotshal & Manges
LLP, counsel to the Borrower and the other Credit Parties,
substantially in the form of Exhibit D; and
(ii) the executed legal opinions of each of Weil, Gotshal &
Manges LLP and Prickett, Jones, Elliott, Kristol & Schnee, counsel to
Loomis, and Davis Polk & Wardwell, counsel to Wells Fargo, delivered
pursuant to the Contribution Agreement, each accompanied by a reliance
letter in favor of the Lenders;
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agents may reasonably
require.
(q) Pledged Stock; Stock Powers. The Administrative Agent shall have
---------------------------
received the certificates representing the shares pledged pursuant to each
of the Security Documents together with an undated stock power for each
such certificate executed in blank by a duly authorized officer of the
pledgor thereof.
(r) Actions to Perfect Liens. The Administrative Agent shall have
------------------------
received evidence in form and substance reasonably satisfactory to it that
all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on
form UCC-1, necessary or, in the opinion of the Administrative Agent,
desirable to perfect the Liens created by the Security Documents shall have
been completed.
(s) Solvency Opinion. The Administrative Agent shall have received,
----------------
with a counterpart for each Lender, a solvency opinion reasonably
satisfactory to the Agents from an independent valuation firm reasonably
satisfactory to the Agents which shall document the solvency of the
Borrower and its Subsidiaries after giving effect to the Business
Combination,
<PAGE>
42
the making of the Loans, the issuance of the Subordinated Debt
and the other transactions contemplated hereby.
(t) Environmental Report. The Administrative Agent shall have
--------------------
received an environmental report prepared by Robert B. Kitchen Associates
dated December 6, 1996 regarding the Borrower and its Subsidiaries, and a
letter that entitles the Administrative Agent, the other Agents and the
Lenders to rely on such report as if prepared for and addressed to each of
them.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any Loan extension of credit requested to be made by it on any
date (including, without limitation, its initial Loan) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower and each Credit Party in or pursuant to the
Credit Documents shall be true and correct in all material respects on and
as of such date as if made on and as of such date, except for any
representation and warranty which is expressly made as of an earlier date,
which representation and warranty shall have been true and correct in all
material respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Credit Documents
shall be satisfactory in form and substance to the Agents, and the
Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by, and Letter of Credit issued on behalf of, the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in this subsection have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or any Agent hereunder or under any
other Credit Document, the Borrower shall and (except in the case of delivery of
financial information, reports and notices) shall cause each of its Subsidiaries
to:
6.1 Financial Statements. Furnish to each Lender:
--------------------
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or
<PAGE>
43
like qualification or exception, or qualification arising out of the scope
of the audit, by independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(c) as soon as practicable, and in any event within 30 days after the
end of each calendar month of each year (other than a month the last day of
which coincides with the last day of any fiscal quarter), commencing with
the first full month ended following the Closing Date, the unaudited
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and retained earnings and of cash flows
of the Borrower and its Consolidated Subsidiaries for such month and for
the portion of the fiscal year of the Borrower through such date setting
forth in each case in comparative form the consolidated figures for the
corresponding month of, and year to date portion of, the previous year and
the figures for such periods in the budget prepared by the Borrower and
furnished to the Administrative Agent, certified by a Responsible Officer
of the Borrower as being fairly stated in all material respects;
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default relating to the covenants contained in
subsection 7.1, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a Responsible
Officer stating that, to the best of such Officer's knowledge, during such
period (i) no Subsidiary has been formed or acquired (or, if any such
Subsidiary has been formed or acquired, the Borrower has complied with the
requirements of subsection 6.10 with respect thereto), (ii) neither the
Borrower nor any of its Subsidiaries has changed its name, its principal
place of business, its chief executive office or the location of any
material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto and (iii) such Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate;
<PAGE>
44
(c) concurrently with the delivery of financial statements pursuant
to subsection 6.1(a) or (b), a certificate of the chief financial officer
of the Borrower setting forth, in reasonable detail, the computations, as
applicable, of (i) the Debt Ratio, (ii) Excess Cash Flow and (iii) the
financial covenants set forth in subsection 7.1, as of such last day or for
the fiscal period then ended, as the case may be;
(d) not later than 30 days after the end of each fiscal year of the
Borrower, a copy of the projections by the Borrower of the operating budget
and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(e) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be; provided that,
--------
notwithstanding the foregoing, the Borrower and each of its Subsidiaries shall
have the right to pay any such obligation and in good faith contest, by proper
legal actions or proceedings, the invalidity or amount of such claims.
6.4 Conduct of Business and Maintenance of Existence. Except as
------------------------------------------------
provided in subsection 7.5, continue to engage in business of the same general
type as now conducted by it (after giving effect to the Business Combination)
and preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except if (i) in
the reasonable business judgment of the Borrower or such Subsidiary, as the case
may be, it is in its best economic interest not to preserve and maintain such
rights, privileges or franchises, and (ii) such failure to preserve and maintain
such privileges, rights or franchises would not materially adversely affect the
rights of the Lenders hereunder or the value of the Collateral, and except as
otherwise permitted pursuant to subsection 7.5; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep all property useful and
----------------------------------
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, cargo loss and business interruption) as are
usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to each Lender, upon written request,
full information as to the insurance carried except to the
<PAGE>
45
extent that the failure to do any of the foregoing with respect to any such
property could not reasonably be expected to materially adversely affect the
value or usefulness of such property.
6.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time on a Business Day and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants, provided
--------
that the Administrative Agent or such Lender shall notify the Borrower prior to
any contact with such accountants and give the Borrower the opportunity to
participate in such discussions; provided, further, that the Borrower shall
-------- -------
notify the Administrative Agent of any such visits, inspections or discussions
prior to each occurrence thereof.
6.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $1,500,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
45 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan (other than a Multiple Employer Plan), a failure to make any
required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization
or Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or Insolvency of,
any Single Employer Plan or Multiemployer Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 Environmental Laws. (a)(i) Comply with all Environmental Laws
------------------
applicable to it, and obtain, comply with and maintain any and all Environmental
Permits necessary for its operations as conducted and as planned; and (ii) take
all reasonable efforts to ensure that all of its
<PAGE>
46
tenants, subtenants, contractors, subcontractors, and invitees comply with all
Environmental Laws, and obtain, comply with and maintain any and all
Environmental Permits, applicable to any of them except to the extent that
failure to do so could not be reasonably expected to have a Material Adverse
Effect. Notwithstanding the foregoing, upon learning of any actual or suspected
noncompliance, the Borrower and each of its Subsidiaries shall promptly
undertake all reasonable efforts to achieve material compliance.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
6.9 Further Assurances. Upon the request of the Administrative
------------------
Agent, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to maintain in favor of the Administrative Agent, for
the benefit of the Lenders, Liens on the Collateral that are duly perfected in
accordance with all applicable Requirements of Law.
6.10 Additional Collateral. (a) Subject to subsection 6.12 with
---------------------
respect to the mortgages, with respect to any assets acquired after the Closing
Date by the Borrower or any of its Subsidiaries that are intended to be subject
to the Lien created by any of the Security Documents but which are not so
subject (other than (x) any assets described in paragraph (b) of this subsection
and (y) immaterial assets a Lien on which cannot be perfected by filing UCC-1
financing statements), promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the Administrative Agent such
amendments to the relevant Security Documents or such other documents as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a Lien on such assets,
(ii) take all actions necessary or advisable to cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Administrative Agent, and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately preceding,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary, promptly: (i) execute and deliver to the Administrative
Agent, for the benefit of the Lenders, such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent shall deem necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower or
any of its Subsidiaries, (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement, in each case pursuant
to documentation which is in form and substance satisfactory to the
Administrative Agent, and (B) to take all actions necessary or advisable to
cause the Lien created by the Guarantee and Collateral Agreement to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of
<PAGE>
47
financing statements in such jurisdictions as may be requested by the
Administrative Agent and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.11 Interest Rate Protection. Within 180 days after the Closing
------------------------
Date, obtain interest rate protection for a period through January 31, 1999 for
a notional amount of at least $30,000,000 on terms and conditions satisfactory
to the Agents.
6.12 Mortgages; Legal Opinions; Fixture Filings. (a) As promptly as
------------------------------------------
practicable, but in any event within 120 days following the Closing Date,
deliver to the Administrative Agent (i) each Mortgage, each executed and
delivered by a duly authorized officer of the mortgagor party thereto, with a
counterpart or a conformed copy for each Lender and (ii) legal opinions from
local counsel in the jurisdictions of such Mortgage relating to such Mortgage
and the perfection of Liens created by the Security Documents on personal
property located in such jurisdiction, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Agents.
(b) As promptly as practicable, but in any event within 120 days
following the Closing Date, deliver to the Administrative Agent and the title
insurance company issuing the policy referred to in subsection 6.12(c) (the
"Title Insurance Company") maps or plats of an as-built survey of the sites of
-----------------------
the property covered by each Mortgage certified to the Administrative Agent and
the Title Insurance Company in a manner satisfactory to them, dated a date
satisfactory to the Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor satisfactory to the
Administrative Agent and the Title Insurance Company, which maps or plats and
the surveys on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1962, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following: (i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map.
(c) As promptly as practicable, but in any event within 120 days
following the Closing Date, deliver to the Administrative Agent in respect of
each parcel covered by each Mortgage a mortgagee's title policy (or policies) or
marked up unconditional binder for such insurance dated a date satisfactory to
the Administrative Agent. Each such policy shall (i) be in an amount
satisfactory to the Administrative Agent; (ii) be issued at ordinary rates;
(iii) insure that the Mortgage insured thereby creates a valid first Lien on
such parcel free and clear of all defects and encumbrances, except such as may
be approved by the Administrative Agent; (iv) name the Administrative Agent for
the benefit of the Lenders as the insured thereunder; (v) be in the form of ALTA
Loan Policy - 1970 (Amended 10/17/70); (vi) contain such endorsements and
affirmative coverage as the Administrative Agent may request and (vii) be issued
by title companies satisfactory to the Administrative Agent (including any such
title companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received evidence
satisfactory to it that
<PAGE>
48
all premiums in respect of each such policy, and all charges for mortgage
recording tax, if any, have been paid.
(d) As promptly as practicable, but in any event within 120 days
following the Closing Date, if required pursuant to Regulation H of the Board of
Governors of the Federal Reserve System ("Regulation H"), deliver to the
------------
Administrative Agent (i) a policy of flood insurance which (A) covers any parcel
of improved real property which is encumbered by any Mortgage, (B) is written in
an amount not less than the outstanding principal amount of the indebtedness
secured by such Mortgage which is reasonably allocable to such real property or
the maximum limit of coverage made available with respect to the particular type
of property under the National Flood Insurance Act of 1968, whichever is less,
and (C) has a term ending not earlier than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Borrower has received
the notice required pursuant to Section 208(e)(3) of Regulation H.
(e) As promptly as practicable, but in any event within 120 days
following the Closing Date, deliver to the Administrative Agent a copy of all
recorded documents referred to, or listed as exceptions to title in, the title
policy or policies referred to in subsection 6.12(c) and a copy, certified by
such parties as the Administrative Agent may deem appropriate, of all other
documents affecting the property covered by each Mortgage.
(f)(i) With respect to any parcel of real property owned in fee by the
Borrower or any Subsidiary on which fixtures having an aggregate book value
exceeding $100,000 are located, take all actions that the Administrative Agent
may reasonably require, including (if such property is not covered by a recorded
Mortgage) the filing of UCC fixture filing financing statements, to cause the
security interest created by the Guarantee and Collateral Agreement in such
fixtures to be perfected within 120 days after the Closing Date and (ii) with
respect to any parcel of real property leased by the Borrower or any Subsidiary
on which fixtures having an aggregate book value exceeding $100,000 are located,
use commercially reasonable efforts to obtain the consent of the landlord of
such property to the filing of UCC fixture filing financing statements within
120 days after the Closing Date, and make such filings if such consent is
obtained.
6.13 Foreign Jurisdictions. Within 60 days following the Closing
---------------------
Date, (i) be duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except to
the extent that the failure to so qualify could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) deliver to
the Administrative Agent certificates of good standing issued by the secretary
of state of each jurisdiction referred to in clause (i) of this subsection 6.13.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agents hereunder or under any
other Credit Document, the Borrower shall not, and (except with respect to
subsection 7.1, shall not permit any of its Subsidiaries to, directly or
indirectly:
<PAGE>
49
7.1 Financial Condition Covenants.
-----------------------------
(a) Maintenance of Net Worth. Permit Consolidated Net Worth at the
------------------------
last day of any fiscal quarter set forth below to be less than the amount
set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Amount
--------------------- ------
<S> <C>
June 30, 1997 $ 0
September 30, 1997 0
December 31, 1997 0
March 31, 1998 1,000,000
June 30, 1998 2,500,000
September 30, 1998 3,500,000
December 31, 1998 6,000,000
March 31, 1999 7,000,000
June 30, 1999 9,000,000
September 30, 1999 11,000,000
December 31, 1999 13,000,000
March 31, 2000 15,000,000
June 30, 2000 17,500,000
September 30, 2000 20,000,000
December 31, 2000 23,000,000
March 31, 2001 25,000,000
June 30, 2001 27,000,000
September 30, 2001 30,000,000
December 31, 2001 36,000,000
Termination Date 36,000,000
</TABLE>
(b) Consolidated EBITDA. Permit Consolidated EBITDA for the period of
-------------------
four consecutive fiscal quarters ending on the last day of any fiscal
quarter set forth below to be less than the amount set forth opposite such
fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Amount
--------------------- ------
<S> <C>
June 30, 1997 $23,000,000
September 30, 1997 27,500,000
December 31, 1997 30,000,000
March 31, 1998 30,000,000
June 30, 1998 30,000,000
September 30, 1998 30,000,000
December 31, 1998 32,500,000
</TABLE>
<PAGE>
50
<TABLE>
<CAPTION>
<S> <C>
March 31, 1999 32,500,000
June 30, 1999 32,500,000
September 30, 1999 35,000,000
December 31, 1999 37,500,000
March 31, 2000 37,500,000
June 30, 2000 37,500,000
September 30, 2000 40,000,000
December 31, 2000 42,500,000
March 31, 2001 42,500,000
June 30, 2001 42,500,000
September 30, 2001 45,000,000
December 31, 2001 50,000,000
Termination Date 50,000,000
</TABLE>
(c) Debt Ratio. Permit the Debt Ratio at the last day of any fiscal
----------
quarter set forth below to be greater than the ratio set forth below for
such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
June 30, 1997 6.00
September 30, 1997 5.50
December 31, 1997 5.25
March 31, 1998 5.25
June 30, 1998 5.25
September 30, 1998 4.75
December 31, 1998 4.00
March 31, 1999 4.00
June 30, 1999 4.00
September 30, 1999 3.75
December 31, 1999 3.25
March 31, 2000 3.25
June 30, 2000 3.25
September 30, 2000 2.75
December 31, 2000 2.50
March 31, 2001 2.50
June 30, 2001 2.50
September 30, 2001 2.25
December 31, 2001 2.00
Termination Date 2.00
</TABLE>
(d) Fixed Charge Coverage. Permit for any period of four consecutive
---------------------
fiscal quarters ending during any "Test Period" set forth below the ratio
of (i) Consolidated EBITDA for
<PAGE>
51
such period minus Capital Expenditures for such period to (ii) Consolidated
-----
Debt Service for such period to be less than the ratio set forth opposite
such period below (such ratio, the "Fixed Charge Coverage Ratio"):
---------------------------
<TABLE>
<CAPTION>
Test Period Fixed Charge Coverage Ratio
----------- ---------------------------
<S> <C>
4/1/97 - 6/30/97 1.00
7/1/97 - 9/30/97 1.00
10/1/97 - 12/31/97 1.00
1/1/98 - 3/31/98 1.00
4/1/98 - 6/30/98 1.00
7/1/98 - 9/30/98 1.00
10/1/98 - 12/31/98 1.00
1/1/99 - 3/31/99 1.00
4/1/99 - 6/30/99 1.00
7/1/99 - 9/30/99 1.10
10/1/99 - 12/31/99 1.25
1/1/00 - 3/31/00 1.25
4/1/00 - 6/30/00 1.25
7/1/00 - 9/30/00 1.35
10/1/00 - 12/31/00 1.50
1/1/01 - 3/31/01 1.50
4/1/01 - 6/30/01 1.50
7/1/01 - 9/30/01 1.75
10/1/01 and thereafter 2.00
</TABLE>
;provided that for purposes of calculating the Fixed Charge Coverage Ratio for
--------
any Test Period ending during 1997, annualized Capital Expenditures shall be
deemed to be reduced by $5,000,000 (not to be reduced below $0).
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to the Operating Subsidiary and of
the Operating Subsidiary to the Borrower;
(c) Indebtedness of the Borrower and the Operating Subsidiary
incurred to finance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) in an aggregate
principal amount not exceeding as to the Borrower and the Operating
Subsidiary $5,000,000 at any time outstanding;
(d) Indebtedness of a corporation which becomes a Subsidiary after
the date hereof, provided that (i) such indebtedness existed at the time
--------
such corporation became a Subsidiary
<PAGE>
52
and was not created in anticipation thereof and (ii) immediately after
giving effect to the acquisition of such corporation by the Borrower no
Default or Event of Default shall have occurred and be continuing;
(e) additional Indebtedness of the Borrower not exceeding $5,000,000
in aggregate principal amount at any one time outstanding;
(f) Indebtedness of the Borrower in respect of (x) not more than
$85,000,000 principal amount of Subordinated Debt issued on the Closing
Date and (y) the NOL Note;
(g) the Indebtedness of the Borrower and its Subsidiaries outstanding
on the Closing Date and reflected on Schedule 7.2(g), and refundings or
refinancings thereof, provided that no such refunding or refinancing shall
--------
shorten the maturity or increase the principal amount of the original
Indebtedness;
(h) Indebtedness in respect of the Interest Rate Agreements required
by subsection 6.11;
(i) Guarantee Obligations permitted by subsection 7.4;
(j) Indebtedness to any insurance company of the Borrower or any
Subsidiary in connection with insurance premiums payable in the following
twelve (12) months;
(k) Indebtedness secured by Permitted Liens; and
(l) Indebtedness incurred or assumed pursuant to the IRB Related
Transactions.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning restrictions, other restrictions
and other similar encumbrances previously or hereafter incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract
<PAGE>
53
from the value of the property subject thereto or materially interfere with
the ordinary conduct of the business of the Borrower or such Subsidiary, or
which are set forth in title insurance policies or commitments delivered to
Administrative Agent pursuant to the terms of this Agreement;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by subsection 7.2(g), provided that no such
--------
Lien is spread to cover any additional property (other than after acquired
title in or on such property and proceeds of the existing collateral in
accordance with the instrument creating such Lien) after the Closing Date
and that the amount of Indebtedness secured thereby is not increased and
extensions, renewals or replacements thereof provided that no such
extension, renewal or replacement shall shorten the fixed maturity or
increase the principal amount of the original Indebtedness; and provided,
--------
further, that the assets of the Borrower and its Subsidiaries encumbered by
-------
such Liens are existing equipment and other existing tangible assets;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by subsection 7.2(c) incurred to finance the acquisition of
fixed or capital assets, provided that (i) such Liens shall be created
--------
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness (other than after acquired title
in or on such property and proceeds of the existing collateral in
accordance with the instrument creating such Lien) and (ii) the principal
amount of Indebtedness secured by any such Lien shall at no time exceed
100% of the original purchase price of such property of such property at
the time it was acquired;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
subsection 7.2(d), provided that (i) such Liens existed at the time such
--------
corporation became a Subsidiary and were not created in anticipation
thereof, (ii) any such Lien is not spread to cover any property or assets
of such corporation after the time such corporation becomes a Subsidiary
(other than after acquired title in or on such property and proceeds of the
existing collateral in accordance with the instrument creating such Lien),
and (iii) the amount of Indebtedness secured thereby is not increased;
(i) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all Subsidiaries)
$2,500,000 in aggregate amount at any time outstanding;
(j) Liens created pursuant to the Security Documents;
(k) Liens on the property of the Borrower or any of its Subsidiaries
in favor of landlords securing licenses, subleases or leases entered into
in the ordinary course of business;
(l) licenses, leases or subleases permitted hereunder granted to
other Persons not interfering in any material respect in the business of
the Borrower or any of its Subsidiaries;
(m) so long as no Default or Event of Default shall have occurred and
be continuing under Section 8(h), attachment or judgment Liens (other than
judgment Liens paid or fully covered by insurance which are not outstanding
for more than sixty days) in an aggregate amount outstanding at any one
time not in excess of $1,000,000;
<PAGE>
54
(n) Liens arising from precautionary Uniform Commercial Code
financing statement filings with respect to operating leases or consignment
arrangements entered into by the Borrower, or any of its subsidiaries in
the ordinary course of business;
(o) Liens in favor of a banking institution arising by operation of
law encumbering deposits (including the right of set-off) held by such
banking institutions incurred in the ordinary course of business and which
are within the general parameters customary in the banking industry; and
(p) Liens incurred or assumed pursuant to the IRB Related
Transactions.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 7.4 and extensions, renewals and replacements thereof,
provided, however, that no such extension, renewal or replacement shall
-------- -------
shorten the fixed maturity or increase the principal amount of the
Indebtedness guaranteed by the original guarantee;
(b) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $4,000,000 at any one time outstanding for
the Borrower and its Subsidiaries;
(c) guarantees made by the Subsidiaries of the Borrower pursuant to
the Subordinated Debt Documents;
(d) Guarantee Obligations under this Agreement and the Security
Documents;
(e) the L/C Obligations;
(f) Guarantee Obligations of the Borrower or any Subsidiary in
respect of obligations of a Subsidiary permitted to be incurred by such
Subsidiary by this Agreement;
(g) Guarantee Obligations in respect of surety bonds issued in
respect of obligations of the type described in subsection 7.3(d),
provided, that surety bonds not backed by Letters of Credit or collateral
--------
shall not exceed $5,000,000 at any time;
(h) indemnities in favor of the companies issuing title insurance
policies insuring the Mortgages to induce such issuance; and
(i) indemnities made in the Commitment Letter, the Credit Documents,
and the Contribution Documents and in the corporate charter and/or bylaws
of the Borrower and its Subsidiaries.
7.5 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower other than the Operating
Subsidiary may be merged or consolidated with or into the Borrower
(provided that the Borrower shall be the
--------
<PAGE>
55
continuing or surviving corporation) or with or into any one or more wholly
owned Subsidiaries of the Borrower (provided that the wholly owned
--------
Subsidiary or Subsidiaries shall be the continuing or surviving
corporation);
(b) any wholly owned Subsidiary other than the Operating 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 of the Borrower; and
(c) the Business Combination.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue
or sell any shares of such Subsidiary's Capital Stock to any Person other than
the Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business;
(b) any Asset Sale; provided that the Net Proceeds thereof shall be
--------
applied to the prepayment of the Loans and the reduction of the Commitments
pursuant to subsection 2.6(b)(ii), provided, further, that non-cash
-------- -------
consideration received from Asset Sales under this paragraph (b) shall not
exceed $3,000,000 at any time outstanding;
(c) as permitted by subsection 7.5(b);
(d) the sale, transfer or exchange of inventory in the ordinary
course of business;
(e) transfers resulting from any casualty or condemnation of property
or assets;
(f) any sale or other transfer of any property or assets constituting
fixed assets for cash, provided that the aggregate net cash proceeds of the
--------
sales and transfers made pursuant to this paragraph (f) in the aggregate do
not exceed (i) $2,000,000 in fiscal year 1997 or (ii) $6,000,000 over the
entire Commitment Period;
(g) intercompany sales or transfers of assets made in the ordinary
course of business;
(h) licenses, leases or subleases of tangible property in the
ordinary course of business;
(i) any consignment arrangements or similar arrangements for the sale
of assets in the ordinary course of business; and
(j) the sale or discount of overdue accounts receivable arising in
the ordinary course of business, but only in connection with the compromise
or collection thereof.
7.7 Limitation on Leases. Permit Consolidated Lease Expense during
--------------------
any of the fiscal years of the Borrower set forth below to exceed the amount set
forth opposite such fiscal year below:
<PAGE>
56
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $15,000,000
1998 16,500,000
1999 18,000,000
2000 20,000,000
2001 and thereafter 22,000,000
</TABLE>
7.8 Limitation on Dividends. Declare or pay any dividend (other than
-----------------------
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary, except that Permitted Restricted Payments may be made.
7.9 Limitation on Capital Expenditures. Make or commit to make (by
----------------------------------
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries during any of the fiscal years of the
Borrower set forth below, the amount set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $22,000,000
1998 23,000,000
1999 25,000,000
2000 27,000,000
2001 and thereafter 29,000,000
</TABLE>
; provided, that up to (x) $5,000,000 for the 1997 Fiscal Year, and (y)
--------
$2,500,000 for each fiscal year from and including 1998 and thereafter, of any
such amount if not so expended in the fiscal year for which it is permitted
above may be carried over for expenditure in the next following fiscal year.
7.10 Limitation on Investments, Loans and Advances. Make any
---------------------------------------------
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person
("Investments"), except :
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans to officers of the Borrower listed on Schedule 7.10(d) in
aggregate principal amounts outstanding not to exceed the respective
amounts set forth for such officers on said Schedule;
<PAGE>
57
(d) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrower and its
Subsidiaries not to exceed $500,000 at any one time outstanding;
(e) investments by the Borrower in its Subsidiaries and investments
by such Subsidiaries in the Borrower and in other Subsidiaries;
(f) loans by the Borrower to its employees in connection with
management incentive plans in an aggregate amount not to exceed $500,000;
(g) loans, advances or Investments in existence on the Closing Date
set forth on Schedule 7.10(g) and extensions, renewals, modifications or
restatements or replacements thereof, provided that no such extension,
--------
renewal, modification or restatement shall increase the amount of the
original loan, advance or investment;
(h) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with the
dispositions permitted by subsection 7.6(b);
(i) Investments required by subsection 6.11;
(j) Investments (including debt obligations and Capital Stock)
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;
(k) loans and advances in the ordinary course of business to
employees of the Borrower or its Subsidiaries for equipment used by such
employees for business not to exceed $2,000,000;
(l) the IRB Related Transactions; and
(m) in addition to the foregoing, investments in an aggregate amount
not exceeding $2,000,000 (at cost, without regard to any write down or
write up thereof) at any one time outstanding.
7.11 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments. (a) Make any optional payment or prepayment on or redemption or
- -----------
purchase of, or deliver any funds to any trustee for the prepayment, redemption
or defeasance of, any Subordinated Debt or the NOL Note or, (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the material terms of any such Subordinated Debt or NOL Note (other than any
such amendment, modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon).
7.12 Limitation on Transactions with Affiliates. (a) Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
<PAGE>
58
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
(b) In addition, notwithstanding the foregoing, the Borrower and its
Subsidiaries shall be entitled to make the following payments and/or to enter
into the following transactions:
(i) the payment of reasonable and customary fees and
reimbursement of expenses payable to directors of the Borrower;
(ii) the employment arrangements with respect to the procurement
of services of directors, officers and employees in the ordinary course of
business and the payment of reasonable fees in connection therewith;
(iii) payments to directors and officers of the Borrower and
its Subsidiaries in respect of the indemnification of such Persons in such
respective capacities from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements, as the case may be, pursuant to the Charter, By-
laws or other corporate action of the Borrower or its Subsidiaries,
respectively, or pursuant to applicable law;
(iv) transactions described in the Contribution Documents; and
(iv) the IRB Related Transactions.
7.13 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
7.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of
------------------------------------
the Borrower to end on a day other than December 31.
7.15 Limitation on Negative Pledge Clauses. Enter into with any
-------------------------------------
Person any agreement, other than (a) this Agreement, (b) the Subordinated Debt
Documents and (c) any industrial revenue bonds, purchase money mortgages or
Financing Leases permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby other
than after acquired title in or on such property and proceeds of the existing
collateral in accordance with the instrument creating such Lien), which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.16 Limitation on Lines of Business. Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement
(after giving effect to the Business Combination) or which are directly related
thereto.
<PAGE>
59
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Loan, or any
other amount payable hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Credit Party herein or in any other Credit Document
or which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Credit Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
or
(c) The Borrower or any other Credit Party shall default in the
observance or performance of any agreement contained in Section 7 or
Sections 5.6, 5.9(a), 5.10(b) and 5.10(d) of the Guarantee and Collateral
Agreement; or
(d) The Borrower or any other Credit Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Credit Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default (x) in
any payment of principal of or interest of any Indebtedness (other than the
Loans, the L/C Obligations and any intercompany debt) or Interest Rate
Agreement Obligation or (y) in the payment of any Guarantee Obligation
(excluding any guaranties of the Obligations), beyond the period of grace,
if any, provided in the instrument or agreement under which such
Indebtedness, Interest Rate Agreement Obligation or Guarantee Obligation
was created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Interest Rate
Agreement Obligation or Guarantee Obligation 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 beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; provided, however, that no Default or Event
-------- -------
of Default shall exist under this paragraph unless the aggregate amount of
Indebtedness, Interest Rate Agreement Obligations and/or Guarantee
Obligations in respect of which any default or other event or condition
referred to in this paragraph shall have occurred shall be equal to at
least $2,000,000; or
(f) (i) The Borrower or any of its Subsidiaries or the Loomis
Stockholders Trust or Wells Fargo shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it
<PAGE>
60
or its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries or the
Loomis Stockholders Trust or Wells Fargo shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
the Borrower or any of its Subsidiaries or the Loomis Stockholders Trust or
Wells Fargo any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower or any of its Subsidiaries or the Loomis
Stockholders Trust or Wells Fargo any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries or
the Loomis Stockholders Trust or Wells Fargo shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Borrower or any of its Subsidiaries or the Loomis Stockholders Trust or
Wells Fargo shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $1,500,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect (unless released by the Administrative Agent at
the direction of Lenders or as otherwise permitted under this Agreement or
the other Loan Documents), or the Borrower or any other Credit Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby (and,
if such invalidity is such so as to be amenable to cure without materially
disadvantaging the position of the Administrative
<PAGE>
61
Agent and the Lenders, or the Borrower, as the case may be, as secured
parties thereunder, the Credit Party shall have failed to cure such
invalidity within 30 days after notice from the Administrative Agent or
such shorter time period as specified by the Administrative Agent in such
notice and is reasonable in the circumstances); or
(j) There shall have occurred a Change in Control;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (a) or (b) of paragraph (f) of this Section above with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Credit Documents. Amounts held in such cash collateral account shall
be applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
<PAGE>
62
SECTION 9. THE AGENTS; THE ARRANGERS
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints each of the Agents as the agent of such Lender under this Agreement and
the other Credit Documents, and each such Lender irrevocably authorizes each of
the Agents, in such capacity, 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 such Agents by the
terms of this Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, none of the Agents shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Credit Document or otherwise exist against any of the
Agents.
9.2 Delegation of Duties. The Agents may execute any of their duties
--------------------
under this Agreement and the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Agents shall be responsible for
the negligence or misconduct of any agents or attorneys in-fact selected by it
with reasonable care.
9.3 Exculpatory Provisions. Neither any of the Agents nor any of
----------------------
their 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 any other Credit
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Credit Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by such Agent under or in connection with, this Agreement or any
other Credit Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Credit Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. None of the Agents shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of the Borrower.
9.4 Reliance by Agents. The Agents shall be entitled to rely, and
------------------
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, 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), independent accountants and other experts
selected by such Agent. The Agents may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with such Agent. The
Agents 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 Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders 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 Agents 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
<PAGE>
63
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender 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 any Agent receives such a
notice, such Agent shall give notice thereof to the Lenders. Each Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until such
--------
Agent shall have received such directions, such 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 Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither any of the Agents nor any of their officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by any of the Agents
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by any of the Agents to any
Lender. Each Lender represents to each of the Agents that it has, independently
and without reliance upon any of the Agents or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon any
of the Agents or any other Lender, 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 the other Credit Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by any of the Agents hereunder, none of the Agents shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of such Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each of the
---------------
Agents in their respective capacities as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against any of the Agents in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Credit Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by any of the Agents under or in connection with any of the foregoing
(including, without limitation, any liabilities of the Administrative Agent
pursuant to the CIT Indemnity) provided that no Lender shall be liable for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from such Agent's gross negligence or willful misconduct. The
<PAGE>
64
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
9.8 Agents, in Their Individual Capacities. The Agents and their
--------------------------------------
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Agents were not
acting in such capacities hereunder and under the other Credit Documents. With
respect to the Loans made or renewed by it and any Note issued to it and with
respect to any Letter of Credit issued or participated in by it, each Agent
shall have the same rights and powers under this Agreement and the other Credit
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include the Agents in their
individual capacities.
9.9 Successor Administrative Agent, Syndication Agents and
------------------------------------------------------
Documentation Agent. The Administrative Agent or a Syndication Agent or the
- -------------------
Documentation Agent may resign as Administrative Agent or a Syndication Agent or
the Documentation Agent, as the case may be, upon 30 days' notice to the
Lenders. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Credit Documents or if a Syndication Agent or the
Documentation Agent shall resign as a Syndication Agent or the Documentation
Agent under this Agreement and the other Credit Documents, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent (provided that it shall have been approved by the
Borrower), shall succeed to the rights, powers and duties of the Administrative
Agent or a Syndication Agent or the Documentation Agent, as the case may be,
hereunder. Effective upon such appointment and approval, the term
"Administrative Agent" or a "Syndication Agent" or "Documentation Agent", as the
case may be, shall mean or include such successor agent, and the former
Administrative Agent's or Syndication Agent's or Documentation Agent's, as the
case may be, rights, powers and duties as Administrative Agent or Syndication
Agent or Documentation Agent, as the case may be, shall be terminated, without
any other or further act or deed on the part of such former Administrative Agent
or Syndication Agent or Documentation Agent, as the case may be, or any of the
parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's or Syndication Agent's or Documentation Agent's
resignation as Administrative Agent or Syndication Agent or Documentation Agent,
as the case may be, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent or Collateral and Documentation Agent, as the case may be, under this
Agreement and the other Credit Documents.
9.10 The Arrangers. Except as expressly set forth herein, each
-------------
Arranger, in its capacity as such, shall have no duties or responsibilities, and
shall incur no liabilities, under this Agreement or the other Credit Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
----------------------
Credit Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Agreement or the
other Credit Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the
<PAGE>
65
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Credit Documents or any Default or Event of Default and
its consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof, in each
case without the consent of each Lender affected thereby, or increase the
Commitment of any Lender without the consent of such Lender, or (ii) amend,
modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders, or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Credit Documents or release any Guarantor, in each case
without the written consent of all the Lenders, or (iii) release any Collateral
having a book value in excess of $5,000,000 without the consent of Lenders whose
Commitment Percentage aggregate at least 66 2/3%, or release all or
substantially all of the Collateral without the consent of all Lenders, or (iv)
increase the aggregate amount of the Commitments to an amount exceeding
$140,000,000 without the consent of each Lender, or (v) amend, modify or waive
any provision of Section 9 without the written consent of the then Agents, or
(vi) amend, modify or waive any provision of this Agreement or any other Credit
Document which would directly and adversely affect the Arrangers or the Agents
or the Issuing Lender without the written consent of the Arranger, the Agents or
the Issuing Lender, as the case may be. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Agents and the Issuing Lender and
all future holders of the Loans. Any extension of a Letter of Credit by the
Issuing Lender shall be treated hereunder as issuance of a new Letter of Credit.
In the case of any waiver, the Borrower, the Lenders and the Agents and the
Issuing Lender shall be restored to their former positions and rights hereunder
and under the other Credit Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Administrative Agent, the Syndication
Agents and the Documentation Agent, and as set forth in Schedule I in the case
of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower or
any of its
Subsidiaries: Loomis, Fargo & Co.
16225 Park Ten Place, Suite 600
Houston, Texas 77084
Attention: James K. Jennings, Jr.
Fax: (281) 647-5699
<PAGE>
66
with copies to: Wingate Partners, L.P.
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
Attention: Frederick B. Hegi, Jr.
Fax: (214) 871-8799
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Mary C. Korby, Esq.
Glenn D. West, Esq.
Fax: (214) 746-7777
The Administrative
Agent: with respect to notices, requests or demands
pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or
3.2:
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Renita Cummings
Fax: (214) 508-2515
and with respect to all other notices, requests and
demands:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana
Houston, Texas 77252-2518
Attention: Scott Singhoff
Fax: (713) 247-6360
The Documentation
Agent: Lehman Commercial Paper Inc.
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Fax: (212) 528-0819
<PAGE>
67
The Syndication
Agents: Lehman Commercial Paper Inc.
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Fax: (212) 528-0819
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: William A. Bowen, Jr.
Fax: (704) 388-0612
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or 3.2 shall not
be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Credit Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Credit Documents and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
-----------------------------
or reimburse each of the Agents for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Credit Documents and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to any of the Agents, (b) to pay or reimburse
each Lender and each Agent for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Credit Documents and any such other documents, including, without
limitation, the fees and disbursements of counsel to each Lender and of counsel
to any Agent, (c) to pay, indemnify, and hold each Lender and each Agent and the
Issuing Lender harmless from, any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Credit Documents and any such other documents, (d) to
pay or reimburse the Administrative Agent on demand for any amounts paid by it
under the CIT Indemnity, and (e) to pay, indemnify, and hold each Lender and
each Arranger, each Agent and the
<PAGE>
68
Issuing Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement or the other Credit Documents or the use of the proceeds of the Loans
in connection with the Business Combination, including, without limitation, any
of the foregoing relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any
of its Subsidiaries or any of the Properties (all the foregoing in this clause
(e), collectively, the "indemnified liabilities"), provided that the Borrower
--------
shall have no obligation hereunder to any Agent or the Issuing Lender or any
Lender with respect to indemnified liabilities arising from the gross negligence
or willful misconduct of such Agent or the Issuing Lender or any such Lender;
provided further, that the Borrower shall have no obligation hereunder to the
- -------- -------
Agents, the Arrangers or the Issuing Lender or any Lender with respect to any
indemnified liabilities incurred by any Agents, Arranger or the Issuing Lender
or any Lender as a result of any Hazardous Materials that are first
manufactured, emitted, generated, treated, released, spilled stored or disposed
of on, at or from the Mortgaged Property or any violation of any Environmental
Law, which in either case first occurs on or with respect to the Mortgaged
Property after the Mortgaged Property is transferred to any Agent, Arranger,
Issuing Lender or any Lender or their successors or assigns by foreclosure sale,
deed in lieu of foreclosure, for similar transfer except to the extent such
manufacture, emission, spill, generation, treatment, release, storage or
disposal is actually caused by Borrower or any Affiliate thereof, any of their
tenants or subtenants, or any of their employees, agents, representatives, or
invitees. The agreements in this subsection shall survive repayment of the Loans
and all other amounts payable hereunder.
10.6 Successors and Assigns; Participation and Assignments. (a)
-----------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Agents and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
------------
Lender or any other interest of such Lender hereunder and under the other Credit
Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other
Credit Documents, and the Borrower and the Agents shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents. No Lender
shall be entitled to create in favor of any Participant, in the participation
agreement pursuant to which such Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Credit Document except for those
specified in clauses (i) and (ii) of the proviso to subsection 10.1. The
Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
--------
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 2.14, 2.15 and 2.16
with respect to its participation in
<PAGE>
69
the Letters of Credit, the Commitments and the Loans outstanding from time to
time as if it was a Lender; provided that in the case of subsection 2.15, such
--------
Participant shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to receive any greater
- -------- -------
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any affiliate thereof or, with the consent of the Borrower and the
Agents (which in each case shall not be unreasonably withheld), to an additional
bank or financial institution (an "Assignee") all or any part of its rights and
--------
obligations under this Agreement and the other Credit Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit F, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agents) and
delivered to the Administrative Agent for its acceptance and recording in the
Register with a copy to the Syndication Agent, provided that, in the case of any
--------
such assignment to an additional bank or financial institution, (A) the sum of
the aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the unused Commitments being assigned
and, if such assignment is of less than all of the rights and obligations of the
assigning Lender, the sum of the aggregate principal amount of the Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the unused
Commitments remaining with the assigning Lender are each not less than
$5,000,000 (or such lesser amount as may be agreed to by the Borrower and the
Agents) and (B) each Assignee which is a Non-U.S. Lender shall comply with the
provisions of clause (A) of subsection 2.15(b) hereof, or, with the prior
written consent of the Borrower, which shall not be unreasonably withheld, the
provisions of clause (B) of subsection 2.15(b) hereof (and, in either case, with
all of the other provisions of subsection 2.15(b) hereof). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (f) of this
subsection, the consent of the Borrower shall not be required for any assignment
which occurs at any time when any of the events described in Section 8(f) shall
have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
--------
and Commitments of and principal amounts of the Loans owing to, each Lender from
time to time and the registered owners of the Obligations evidenced by the
Notes. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders may
(and, in the case of any Loan or other Obligation hereunder not evidenced by a
Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan, a Note or other Obligation hereunder as the owner thereof for
all purposes of this Agreement and the other Credit Documents, notwithstanding
any notice to the contrary. Any assignment of any Loan or other obligation
evidenced by a Note shall be effective only upon appropriate entries with
respect thereto being made in the Register. Any assignment or transfer of all
<PAGE>
70
or part of an Obligation evidenced by a Note shall be registered in the Register
only upon surrender for registration of assignment or transfer of the Note
evidencing such Obligation, duly endorsed by (or accompanied by a written
instrument of assignment or transfer duly executed by) the holder thereof, and
thereupon one or more new Notes shall be issued to the designated Assignee and
the old Note shall be returned by the Administrative Agent to the Borrower
marked "cancelled."
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agents) together
with payment to the Administrative Agent of a registration and processing fee of
$3,500 (provided that no such payment shall be required whenever Lehman
--------
Commercial Paper Inc. or NationsBank is the assigning Lender), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
----------
subject to the provisions of subsection 10.15, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) If, pursuant to this subsection 10.6, any interest in this
Agreement or any Loan is transferred to any Transferee which would be a Non-U.S.
Lender upon the effectiveness of such transfer, the assigning Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the assigning Lender (for the benefit of the assigning Lender, the
Administrative Agent and the Borrower) that under applicable law and treaties no
U.S. Taxes will be required to be withheld by the Administrative Agent, the
Borrower or the assigning Lender with respect to any payments to be made to such
Transferee in respect of the Loans, (ii) to furnish to the assigning Lender
(and, in the case of any Assignee registered in the Register, the Administrative
Agent and the Borrower such Internal Revenue Service Forms required to be
furnished pursuant to subsection 2.15(b) and (iii) to agree (for the benefit of
the assigning Lender, the Administrative Agent and the Borrower) to be bound by
the provisions of subsection 2.15(b).
(h) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
-------------------- ----------
Lender") shall at any time receive any payment of all or part of its Loans or
- ------
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as
<PAGE>
71
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
- -------- -------
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set-
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
--------
affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Credit Documents
-----------
represent the agreement of the Borrower, the Agents and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by any Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Credit Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
<PAGE>
72
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 10.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) none of the Arrangers, the Agents nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Credit Documents, and
the relationship between any of the Agents and the Lenders, on one hand,
and the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE
---------------------
ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each Lender agrees to keep confidential all
---------------
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the Borrower in writing as confidential; provided that
--------
nothing herein shall prevent any Lender from disclosing any such information (i)
to any Agent or any other Lender, (ii) to any Transferee which receives such
information having been made aware of the confidential nature thereof, (iii) to
its employees, directors, agents, attorneys, accountants and other professional
advisors, (iv) upon the request or demand of any Governmental Authority having
jurisdiction over such Lender, (v) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
<PAGE>
73
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
LOOMIS, FARGO & CO.
By: /s/ James K. Jennings, Jr.
----------------------------------------------
Title: Executive Vice President
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent, a Syndication Agent,
an Arranger and as a Lender
By: /s/ Dennis J. Dee
----------------------------------------------
Title: Authorized Signatory
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent, an Arranger
and as a Lender
By: /s/ Forest S. Singhoff
----------------------------------------------
Title: Senior Vice President
NATIONSBANC CAPITAL MARKETS, INC.,
as a Syndication Agent
By: /s/ Jan A. Schipper
----------------------------------------------
Title: Associate
<PAGE>
74
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ John Hanley
----------------------------------------------
Title: Vice President - Structured Finance
<PAGE>
75
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ William M. Clark
----------------------------------------------
Title: Managing Director
<PAGE>
76
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By: /s/ P.C. Lauinger III
----------------------------------------------
Title: Vice President & Joint Manager
<PAGE>
77
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Hugo H. Gravenhorst
----------------------------------------------
Title: Vice President
<PAGE>
78
THE SUMITOMO BANK, LIMITED
By: /s/ John J. O'Neill
----------------------------------------------
Title: Vice President & Managing
By: /s/ Bruce Portillo
----------------------------------------------
Title: Vice President
<PAGE>
79
COMERICA BANK
By: /s/ Kim A. Uhlemann
----------------------------------------------
Title: Vice President
<PAGE>
80
GIROCREDIT BANK
By: /s/ Rima Terradista
----------------------------------------------
Title: Assistant Vice President
By: /s/ Richard Stone
----------------------------------------------
Title: First Vice President
<PAGE>
81
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By: /s/ Paul P. Malecki
----------------------------------------------
Title: Vice President
<PAGE>
82
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Cedric M. Henley
----------------------------------------------
Title: Credit Officer
By: /s/ Cary Moore
----------------------------------------------
Title: Vice President
<PAGE>
Schedule I
to Credit Agreement
-------------------
Commitments and Addresses
-------------------------
<TABLE>
<CAPTION>
Lender/Address for Notices Commitment
- -----------------------------------------------------------
<S> <C>
LEHMAN COMMERCIAL PAPER INC. $12,500,000.00
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Telecopy: (212) 528-0819
NATIONSBANK OF TEXAS, N.A. $12,500,000.00
901 Main Street
Dallas, Texas 75202
Attention: Renita Cummings
Telecopy: (214) 508-2515
GENERAL ELECTRIC CAPITAL CORPORATION $12,500,000.00
5400 LBJ Freeway, Suite 1280
Dallas, TX 75240
Attention: John Hanley
Telecopy: (972) 991-6367
and
777 Long Ridge Rd.
Building A, 3rd Floor
Stamford, CT 06927
Attention: Denise Persav
Telecopy: (203) 316-7989
THE FIRST NATIONAL BANK OF BOSTON $11,500,000.00
Diversifed Finance MS 01-08-05
100 Federal Street
Boston, MA 02110
Attention: Gregory C. Badger, William M. Clark,
and Eunice Nwabuzor
Telecopy: (617) 434-4929
and
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Lender/Address for Notices Commitment
- -----------------------------------------------------------
<S> <C>
Commercial Loan Services
100 Federal Street
MS 01-08-04
Boston, MA 02110
Attention: Halise Shrago and Jennifer Hartley
Telecopy: (617) 434-9820
THE FUJI BANK, LIMITED, HOUSTON AGENCY $11,500,000.00
1221 McKinney Street, Suite 4100
Houston, TX 77010
Attention: Greg Parten and Jenny Lin
Telecopy: (713) 759-0048 and (713) 951-0590
SANWA BUSINESS CREDIT CORPORATION $11,500,000.00
1 South Wacker Drive
Chicago, IL 60606
Attention: Pam Eskra and Francis Miller
Telecopy: (312) 782-6035
THE SUMITOMO BANK, LIMITED $11,500,000.00
Houston Center Office
909 Fannin, Suite 3750
Houston, TX 77010-1086
Attention: Richard Menchaca and Donna Johnson
Telecopy: (713) 759-1419
COMERICA BANK $10,000,000.00
4100 Spring Valley, Suite 900
Dallas, TX 75244
Attention: Kim A. Uhlemann
Telecopy: (214) 818-2550
and
500 Woodward
MC 3281
Detroit, MI 48226
Attention: Debbie Clark
Telecopy: (313) 222-9434
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
Lender/Address for Notices Commitment
- -----------------------------------------------------------
<S> <C>
GIROCREDIT BANK $10,000,000.00
65 East 55th Street, 29th Floor
New York, New York 10022
Attention: Jo Marie Rivera and Paul Fasone
Telecopy: (212) 223-0283
BANK OF TOKYO - MITSUBISHI TRUST COMPANY $5,750,000.00
1251 Avenue of the Americas, 12th Floor
New York, New York 10020-1104
Attention: Robert Gamba and Rolando Uy
Telecopy: (212) 782-4981 and (212) 766-3127
UNION BANK OF CALIFORNIA, N.A. $5,750,000.00
445 South Figueroa, 16th Floor
Los Angeles, CA
Attention: Cedric Henley
Telecopy: (213) 236-7814
and
350 California Street, 11th Floor
San Francisco, CA
Attention: Robin Kirsch
Telecopy: (415) 705-7046
</TABLE>
<PAGE>
Schedule II
to Credit Agreement
-------------------
<TABLE>
<CAPTION>
Applicable
Eurodollar Applicable Base Commitment
Debt Ratio Margin Rate Margin Fee
<S> <C> <C> <C>
greater than or equal to 5.00 2.250% 1.250% 0.500%
greater than or equal to 4.25 1.875% 0.875% 0.450%
but less than 5.00
greater than or equal to 3.75 1.625% 0.625% 0.375%
but less than 4.25
greater than or equal to 3.25 1.375% 0.375% 0.375%
but less than 3.75
less than 3.25 1.125% 0.125% 0.375%
</TABLE>
<PAGE>
EXHIBIT 10.12
Loomis Holding Corporation
16225 Park Ten Place, Suite 600
Houston, Texas 77084
January 22, 1997
James B. Mattly
16225 Park Ten Place
Suite 600
Houston, Texas 77084
Dear Jim:
Reference is made to that certain Employment Agreement, dated as of
November 11, 1991, between James B. Mattly and Loomis Holding Corporation (the
"Company"), as amended by the resolutions of the board of directors of the
Company, dated as of May 2, 1996 (as amended, the "Employment Agreement").
Pursuant to a Contribution Agreement, dated as of November 28, 1996,
among the Company, Loomis Armored Inc. ("Loomis Armored"), Loomis, Fargo & Co.
("Loomis Fargo"), Borg-Warner Security Corporation, Wells Fargo Armored Service
Corporation ("Wells Fargo Armored"), and the Loomis Stockholders Trust, the
businesses of Loomis Armored and Wells Fargo Armored are being combined,
together with other related transactions (collectively, the "Transactions").
Following the consummation of the Transactions, the Company will be a wholly
owned subsidiary of Loomis Fargo, which shall be owned 51% by the Company's
former stockholders and 49% by Wells Fargo Armored.
In connection with the Transactions, the former holders of units ("MEGA
Units") in the Company's Management Equity Growth and Appreciation Plan have
agreed to exchange such MEGA Units for options (the "Unitholder Options") to
purchase shares of the common stock, $0.01 par value ("Common Stock"), of Loomis
Fargo.
This letter agreement shall amend certain provisions of the Employment
Agreement as follows:
<PAGE>
1. The phrase "98,254 Units of the Management Equity Growth and
Appreciation Plan dated as of February 24, 1995, to be effective as of May 15,
1991 (as amended from time to time, the "Plan") in the first paragraph of
section 2(c)(iii) is hereby deleted and replaced with "options ("Options') to
purchase up to 166,543.44 shares of the common stock, $0.01 par value ("Loomis
Fargo Common Stock"), of Loomis, Fargo & Co., a Delaware corporation ("Loomis
Fargo"), pursuant to the terms of Loomis Fargo's Unitholders Option Plan and
Agreement dated as of January 24, 1997 (the "Unitholders Plan").
2. The references to "June 30, 1998," "45%," and "29,476 Units of the Plan"
in the second paragraph of section 2(c)(iii) of the Employment Agreement are
hereby deleted and replaced with "December 31, 1999," "40%," and "Options to
purchase an aggregate of 49,962.69 shares of Loomis Fargo Common Stock under the
Unitholders Plan."
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this letter
agreement to be effective as of the date first written above.
LOOMIS HOLDING CORPORATION
By: /s/ F. B. HEGI, JR.
-------------------------
Frederick B. Hegi
Chairman of the Board
ACCEPTED AND AGREED:
- -------------------
/s/ JAMES B. MATTLY
- ----------------------------
James B. Mattly
3
<PAGE>
UNANIMOUS WRITTEN CONSENT
OF
BOARD OF DIRECTORS
OF
LOOMIS HOLDING CORPORATION
May 2, 1996
Pursuant to the provisions of the General Corporation Law of the State of
Delaware (the "DGCL"), the undersigned, being all of the members of the board of
directors of Loomis Holding Corporation, a Delaware corporation (the "Company"),
do hereby consent to and approve the adoption of the following resolutions and
each and every action effected thereby:
1. Management Equity Growth and Appreciation Plan.
----------------------------------------------
RESOLVED, that the number of Units which may be awarded by the Management
Equity Growth and Appreciation Plan dated as of February 24, 1995, to be
effective as of May 5, 1991, has been changed from "302,621" to "350,000".
2. Employment Agreement.
--------------------
RESOLVED, that the terms and conditions of the Employment Agreement between
the Company and James B. Mattly entered into as of November 11, 1991 (as amended
from time to time, the "Agreement", attached as Exhibit A) are effective as of
November 11, 1991;
FURTHER RESOLVED, that the reference to "5% of the Company's common stock
outstanding as of this date, subject to dilution but subject to adjustment in
the event of stock splits and stock dividends of the Company's common stock" in
the first paragraph of 2(c)(iii) of the Agreement has been replaced with "98,254
Units of the Management Equity Growth and Appreciation Plan dated as of February
24, 1995, to be effective as of May 5, 1991 (as amended from time to time, the
"Plan")";
FURTHER RESOLVED, that the references to "June 30, 1996", "50%", and "1.5%"
in the second paragraph of 2(c)(iii) of the Agreement has been replaced with
"June 30, 1998", "45%", and "29,476 Units of the Plan", respectively.
3. Ratification of Past Actions.
----------------------------
RESOLVED, that all acts and deeds of any officer of the Company taken prior
to the date hereof to carry out the intent and accomplish the purposes of the
foregoing resolutions are hereby approved, adopted, ratified and confirmed in
all respects as the acts and deeds of the Company.
4. General Authority.
-----------------
RESOLVED, that each officer of the Company, any one of whom may act without
the joinder of any of the others, hereby is authorized in the name and on
behalf of the Company, to take all such further actions, including, but not
limited to, (i) the negotiation of such additional agreements, amendments,
supplements, reports,
<PAGE>
documents, instruments, applications, notes or certificates not now known but
which may be required, (ii) the negotiation of such changes and additions to any
agreements, amendments, supplements, reports, documents, instruments,
applications, notes or certificates currently existing, (iii) the execution,
delivery and filing (if applicable) of any of the foregoing and (iv) the payment
of all fees, consent payments, taxes and other expense as any such officer, in
his sole discretion, may approve or deem necessary, appropriate or advisable in
order to carry out the intent and accomplish the purposes of the foregoing
resolutions and the transactions contemplated thereby, all of such actions,
executions, deliveries, filings and payments to be conclusive evidence of such
approval or that such officer deemed the same to be so necessary, appropriate or
advisable; and that all such actions, executions, deliveries, filings and
payments taken or made at any time in connection with the transactions
contemplated by the foregoing resolutions hereby are approved, adopted, ratified
and confirmed in all respects as the acts and deeds of the Company as if
specifically set out in these resolutions.
IN WITNESS WHEREOF, the undersigned directors have hereby executed this
Unanimous Consent as of the date first above written.
/s/ FREDERICK B. HEGI, JR.
-----------------------------------------------
Frederick B. Hegi, Jr.
/s/ JAMES T. CALLIER, JR.
-----------------------------------------------
James T. Callier, Jr.
/s/ THOMAS W. STURGESS
-----------------------------------------------
Thomas W. Sturgess
/s/ DAVID S. TEED
-----------------------------------------------
David S. Teed
/s/ JAMES B. MATTLY
-----------------------------------------------
James B. Mattly
/s/ EDWARD H. HAMLETT
-----------------------------------------------
Edward H. Hamlett
<PAGE>
EXHIBIT A
EMPLOYMENT AGREEMENT
--------------------
This Agreement between Loomis Holding Corporation, a Delaware corporation
("Company"), and James B. Mattly ("Executive") is hereby entered into as of
November 11, 1991.
Recitals:
--------
The following statements are true and correct:
The Company wishes to employ Executive, and Executive wishes to be employed
by the Company, in the capacity of President and Chief Executive Officer of its
wholly-owned subsidiary, Loomis Armored Inc., a Texas corporation ("Loomis"), on
the terms and subject to the conditions set forth in this Agreement.
The Company and its affiliates are engaged in the armored car and related
services businesses (the "Business").
Executive is or will be employed by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, will become familiar with and aware of information as to the specific
manner of doing business and the potential acquisition candidates and customers
of the Company and its affiliates and their future plans with respective
thereto, all of which will be established and maintained at great expense to the
Company; this information is a trade secret and constitutes the valuable
goodwill of the Company.
Executive recognizes that the Company's business is dependent upon a number
of trade secrets, including the identity of customers and potential acquisition
candidates, the analysis of such candidates and financial data of the Company.
The protection of these trade secrets is of critical importance to the Company.
The Company will sustain great loss and damage if during the term of this
Agreement or Executive's employment with the Company, or for a period of 12
months immediately following the termination of this Agreement or Executive's
employment, for whatever reason, Executive should violate the provisions of
paragraph 3 of this Agreement. Further,
<PAGE>
monetary damages for such losses would be extremely difficult to measure.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
terms, covenants and conditions set forth herein and the performance of each,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment and Duties.
---------------------
(a) During the terms of this Agreement, the Company shall employ Executive
as the President and Chief Executive Officer of Loomis on the terms and
conditions herein set forth. Executive's duties shall include such
responsibilities, duties and authorities as Loomis' Board of Directors shall
determine; provided that Executive shall have primary responsibility for
recommending to Loomis' Board of Directors for ultimate approval strategic and
key tactical issues, acquisitions, divestitures, and closures, key personnel
additions and terminations, compensation and benefit programs, major capital
expenditures, all financing matters, and the selection of outside professionals
(e.g., accounting, legal, and consulting organizations). Executive hereby
---
covenants and agrees to devote his full time, attention and best efforts to
promote and further the business and affairs of the Company and its affiliates.
Executive shall faithfully adhere to, execute and fulfill all policies
established by the Company and its affiliates from time to time.
(b) Except as described on Schedule 1(b), Executive shall not, during the
term of this Agreement, engage in any other business activity pursued for gain,
profit or other pecuniary advantage without the prior written consent of the
Company, except for insignificant activities or insignificant interests which do
not conflict with the business of the Company, interfere with the performance of
Executive's duties hereunder or violate the terms of paragraph 3 hereof.
(c) All funds received by Executive on behalf of the Company or its
affiliates, if any, shall be held by Executive in trust for the Company and
shall be delivered to the Company as soon as practicable.
2. Compensation and Other Benefits. For all services rendered by
-------------------------------
Executive to or on behalf of the
2
<PAGE>
Company or its affiliates during the term hereof, the Company shall compensate
the Executive as follows:
(a) Upon commencement of the term of this Agreement, the base salary
payable to Executive shall be $300,000 per year (the "Initial Base Salary"),
payable monthly in arrears in accordance with the Company's normal payroll
policies. In the event that the Executive is required to move near Loomis'
principal executive office located in Oakland, California, the base salary
payable to Executive shall be adjusted, as mutually agreed to by the Company's
Board of Directors and the Executive, to reflect an increase, if any, in cost of
living expenses. In addition, Executive's base salary may be increased from
time to time and in such amounts as the Board of Directors of the Company may,
in its sole discretion, approve.
In addition, the Company may, in the sole discretion of its Board of
Directors, pay Executive a bonus or other incentive compensation in an amount up
to 100% of the Executive's base salary. Such additional compensation, if any,
would generally be payable following the end of the Company's fiscal year in
recognition of Executive's services for such year.
The payment of base salary and any bonus or other incentive compensation to
Executive hereunder shall be subject to all federal, state and local withholding
taxes, social security deductions, and any other required payroll deductions.
(b) Executive shall be entitled to three weeks of paid vacation during
each 12-month period of his employment hereunder to be scheduled for times
mutually acceptable to Executive and the Company and otherwise in accordance
with vacation policies established by the Company.
(c) Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and only to the extent explicitly set
forth below:
(i) Upon commencement of the term of this Agreement, Executive shall be
entitled to participate in the Company's pension, group life, medical and other
insurance, thrift, savings, deferred compensation, and other Company benefit
plans, fringe benefits and allowances, all as may from time to time be made
generally available to senior executives of the Company by the Board of
Directors.
3
<PAGE>
(ii) Executive may incur reasonable business expenses while on Company
business, including reasonable expenses for hotels, meals, air travel,
telephone, automobile, gasoline and similar items. Executive may also incur
reasonable moving expenses in the event that the Company requires Executive to
maintain his office outside of a 50-mile radius of Houston, Texas. The Company
shall either pay such reasonable expenses directly or promptly reimburse
Executive for such reasonable out-of-pocket expenses incurred by Executive upon
presentation of receipts and an itemized accounting of the expenses for which
such reimbursement is sought.
(iii) The Executive shall be entitled to "employee equity rights" equal
to 5% of the Company's common stock outstanding as of this date, subject to
dilution but subject to adjustment in the event of stock splits and stock
dividends of the Company's common stock. The Executive understands and agrees
that the "employee equity rights" provided for in this Agreement shall have the
same terms and conditions as the "employee equity rights" to be granted by the
Company to its other employees under a program to be developed by the Company.
Such employee equity rights will vest in the Executive over a five year period,
at the rate of 20% per annum in arrears; provided, however, that in the event of
-------- -------
a sale by Wingate Partners, L.P. (other than in a distress sale) of its interest
in the Company, 100% of such employee equity rights of the Executive will
immediately vest upon the consummation of such sale. In the event of the
Executive's termination of employment for cause, then all "employee equity
rights" granted to the Executive, whether or not vested, shall terminate.
In addition, in the event that Wingate Partners, L.P. receives, on or prior
to June 30, 1996, a compound rate of return equal to 50% on its total investment
(which term includes all additional investments) in the Company and Loomis
(which return shall include all cash distributions (other than management and
financing fees) made by the Company or Loomis to Wingate Partners, L.P., and in
the event that the common stock of the Company and/or preferred stock of Loomis
is publicly-held and traded, the fair market value of such common stock and
preferred stock), then the Executive shall be entitled to additional "employee
equity rights" equal to 1.5% of the Company's common stock presently
outstanding, subject to dilution.
4
<PAGE>
3. Non-Competition and Confidentiality Agreement
---------------------------------------------
(a) Executive will not, during the term of this Agreement or of his
employment by or with the Company, whichever period is longer, and for a period
of 12 months immediately following the termination of this Agreement or his
employment, whichever is longer (the "Post-Employment Period"), for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature: (i) call upon any customer of the Company
(including, but not limited to, any customer obtained for the Company by
Executive) for the purpose of soliciting or selling any products or services in
competition with those of the Company during the term of Executive's employment
by the Company; (ii) call upon any employee of the Company for the purpose or
with the intent of enticing such employee away from or out of the employ of the
Company; (iii) establish, enter into, be employed by or for, advise, consult
with or become a part of, any company, partnership, corporation or other
business entity or venture, or in any way engage in business for himself or for
others, in competition with the Company in any states in which the Company
acquires or operates a business in the Company's line of Business during the
term of this Agreement; or (v) call upon any prospective acquisition candidate
which was, during the term of this Agreement or Executive's employment, either
called upon by an employee of the Company or for which an employee of the
Company made an acquisition analysis for the Company.
During and after the term of this Agreement, Executive shall not, without
the prior written consent of the Company, use for his own benefit or disclose
any confidential information of the Company, including, without limitation, the
identity of the Company's potential acquisition candidates, analysis of such
candidates, financial data of the Company, customer lists or any other trade
secrets of the Company, whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever. For
the purposes hereof, confidential information will not include any information
which is in the public domain other than as a result of Executive's breach of
this provision.
(b) Because of the difficulty of measurinq economic losses to the Company
as a result of his breach of the foregoing covenants, and because of the
immediate and
5
<PAGE>
irreparable damage that would be caused to the Company for which it would have
no other adequate remedy, Executive agrees that, without limiting the remedies
available to the Company, the foregoing covenants may be enforced by the Company
by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Executive in light of the
activities, business and future plans of the Company on the date of this
Agreement, but it is also the intent of the Company and Executive that such
covenants be constructed and enforced in accordance with the activities and
business of the Company on the date of the termination of the employment of
Executive.
(d) The covenants in this paragraph 3 are intended to be severable and
separate, and the unenforceability of any specific covenant shall not affect the
enforceability of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth herein are unreasonable, then it is in the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby and to that extent be
reformed.
(e) The covenants in this paragraph 3 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants. It is specifically agreed that the Post-
Employment Period shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3 and
any time during which there is pending in any court of competent jurisdiction
any action (including any appeal) brought by any person, whether or not a party
to this Agreement, in which action the Company seeks to enforce the agreements
and covenants of Executive or in which any person contests the validity of such
agreements and covenants or their enforceability or seeks to avoid their
performance or enforcement.
4. Return of Company Property. Executive recognizes and acknowledges that
--------------------------
he will have access to
6
<PAGE>
various confidential or proprietary information concerning the Company and its
affiliates which is of a special and unique value to the Company and that all
such information is and shall remain the property of the Company. In particular
and without limiting the generality of the foregoing, all products, records,
designs, patents, plans, manuals, "field guides," memoranda, lists and other
property of any type, whether written or oral, delivered to Executive by or on
behalf of the Company or by its customers (including, but not limited to,
customers obtained for the Company by Executive), and all records compiled by
Executive which pertain to the business of the Company shall be and remain the
property of the Company and be subject at all times to its discretion and
control. In addition, Executive shall return to the Company upon termination of
his employment for any reason, and not keep or use for his own benefit at any
time, all such confidential or proprietary information in his possession,
including, without limitation, all correspondence with customers or
representatives, reports, records, charts, advertising materials, and any data
collected by Executive or by or on behalf of the Company or its representatives.
5. Intellectual Property. Executive shall disclose promptly to the
---------------------
Company any and all conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Executive solely or jointly with another during the term of his employment
hereunder and which are related to the business or activities of the Company or
which Executive conceives as a result of his employment by the Company, and
Executive hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Executive
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to evidence such assignment to the Company or
to apply for and obtain Letters Patent of the United States or any foreign
country or to otherwise protect the Company's interest in such intellectual
property. The obligations set forth in this paragraph 5 shall continue beyond
the termination of this Agreement with respect to inventions, improvements and
valuable discoveries, whether patentable or not, conceived, made or acquired by
Executive during the term hereof and shall be binding upon Executive and his
assigns, executors, administrators and other legal representatives.
7
<PAGE>
6. Term; Termination; Rights of Termination.
----------------------------------------
(a) The term of this Agreement shall commence on November 11, 1991, and
shall continue until the first anniversary of such date, and, if mutually agreed
in writing prior to the expiration of the term, shall continue thereafter on a
year-to-year basis on the same terms and conditions contained herein. This
Agreement may terminate in any one of the following ways:
(i) The death of Executive shall terminate the Agreement;
(ii) A notice of resignation by the Executive presented to the Company
shall terminate the Agreement;
(iii) The Company may terminate the Agreement upon written notice to
Executive for cause, which shall be defined to mean: (A) Executive's material
breach of this Agreement, including, without limitation, failure to perform his
obligations hereunder in a reasonably satisfactory manner; (B) if, because of
illness or physical or mental disability or other incapacity which continues for
a period in excess of three months in any consecutive 12 month period, Executive
is unable to perform his duties under this Agreement; or (C) Executive's fraud
or dishonesty with respect to the business or affairs of the Company or if
Executive is convicted of a crime which, in the reasonable opinion of the Board
of Directors of the Company, would negatively affect the Company's business or
reputation;
(iv) The Company may terminate this Agreement without cause at any
time, provided that in the event of a termination of this Agreement without
cause, Executive shall be entitled to a severance payment equal to an amount
ranging from nine to twelve months of the Executive's base salary, such amount
to be determined by the Board of Directors of the Company in its sole
discretion, and payable in accordance with the Company's normal payroll
practices, commencing on the normal monthly payment date immediately following
such termination. In the event that Executive obtains other employment during
such severance payment period, the Company's severance payment obligations
hereunder shall be offset against such payments. Executive agrees to use his
good faith best efforts to seek and obtain new employment during any such
severance payment period in order to mitigate the Company's severance
obligations hereunder; or
8
<PAGE>
(v) The expiration of the term of this Agreement (if not extended by
mutual agreement pursuant to paragraph 6(a)) shall terminate this Agreement.
(b) Upon termination of this Agreement for any reason whatsoever, Executive
shall be entitled to receive all salary earned under this Agreement to the date
of termination. However, termination of this Agreement shall not accelerate the
payment date of any monies accrued or accruing to the account of Executive as a
result of any bonuses or other compensation, nor shall termination vest in
Executive any right in connection therewith.
(c) In the event of termination of this Agreement for any reason provided
in this paragraph 6, all rights and obligations of the Company and Executive
under this Agreement shall cease immediately, except for those which by their
terms specifically apply to periods following the termination of this Agreement,
and thereafter Executive shall have no right to receive any compensation
hereunder except, under appropriate circumstances, as set forth in paragraph
6(a)(iv).
7. The Executive hereby represents and warrants to the Company that the
execution, delivery, and performance of this Agreement does not, and will not,
violate the terms of any other agreement or understanding, written or oral, to
which the Executive is a party or is bound, including, without limitation, that
certain Employment Agreement, dated September 17, 1991, between United Waste
Systems, Inc., d/b/a/ Jacobs Environmental, Inc., and James B. Mattly. The
Executive acknowledges that the Company has relied on the foregoing
representation in entering into this Agreement.
8. Complete Agreement. There are no oral representations, understandings
------------------
or agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This written
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company and Executive and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence of
any prior or contemporaneous oral or written agreements. This written Agreement
may not later be modified except by a further writing signed by the Company and
Executive, and no term of this Agreement may be waived except by a writing
signed by the party waiving the benefit of such term.
9
<PAGE>
9. No Waiver. No waiver by the parties hereto of any default or breach
---------
of any term, condition or covenant of this Agreement shall be deemed to be a
waiver of any other term, condition or covenant contained herein or of any
subsequent default or breach of the same term, condition or covenant.
10. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties thereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
11. Notice. Whenever any notice is required hereunder, it shall be given
------
in writing addressed as follows:
To the Company: Loomis Holding Corporation
c/o Wingate Partners, L.P.
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Facsimile: 214/871-8799
Attention: Frederick B. Hegi, Jr.
To Executive: James B. Mattly
1210 Emerald Green
Houston, TX 77094
Facsimile: c/o Carl Norton at
713/961-1738
Notice shall be deemed given and effective (a) three business days after the
deposit in the U.S. mail or a writing addressed as above and sent first class
mail, certified, return receipt requested, (b) one business day after delivered
to a nationally recognized air courier for new day delivery service, or (c) upon
personal delivery (including, without limitation, delivery via facsimile).
Either party may change the address for notice by notifying the other party of
such change in accordance with this paragraph 11.
12. Severability; Headings. If any portion of this Agreement is held
----------------------
invalid or inoperative, the other portions of this agreement shall be deemed
valid and operative, and so far as it is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.
The paragraph headings herein are for reference purposes only and are not
intended
10
<PAGE>
in any way to describe, interpret, define or limit the extent or intent of this
Agreement or any part hereof.
13. Governing Law. This Agreement shall be construed in all respects in
-------------
accordance with the laws of the State of Texas, without giving effect to its
conflicts of laws principles.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on this
date first above written.
LOOMIS HOLDING CORPORATION
By: /s/ F.B. HEGI, JR.
-------------------
Frederick B. Hegi, Jr.
Chairman
/s/ JAMES B. MATTLY
-------------------
James B. Mattly
11
<PAGE>
SCHEDULE 1(b)
(I) Browning Ferris Industries, Inc.
(A) Holds common stock or options to purchase common stock.
12
<PAGE>
Exhibit 12.1
Statement Re: Computation of
Ratio of Earnings to Fixed Charges
of Loomis, Fargo & Co.
<TABLE>
<CAPTION>
Six Three
Years Ended Months Ended Months Ended
June 30, December 31, March 31,
---------------------------------- ----------------------- ------------------------
1994 1995 1996 1995 1996 1996 1997
-------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating income $ 2,020 $ 3,124 $ 4,186 1,855 $ 3,691 $ 817 $ (112)
Interest portion of rental expense
on noncancelable leases 969 998 1,031 534 593 278 698
-------- -------- -------- ------- -------- -------- --------
Earnings $ 2,989 $ 4,122 $ 5,217 2,389 $ 4,284 $ 1,095 $ 586
======== ======== ======== ======= ======== ======== ========
Interest expense $ 3,053 $ 3,158 $ 2,981 $ 1,528 $ 1,445 $ 734 $ 3,078
Interest portion of rental expense
on noncancelable leases 969 998 1,031 534 593 278 698
-------- -------- -------- ------- -------- -------- --------
Fixed charges $ 4,022 $ 4,156 $ 4,012 2,062 $ 2,038 $ 1,012 $ 3,776
======== ======== ======== ======= ======== ======== ========
Ratio of earnings to fixed charges 0.7 1.0 1.3 1.2 2.1 1.1 0.2
======== ======== ======== ======== ======== ======== ========
Insufficiency of earnings to cover
fixed charges $ 1.0 $ 3.2
======== ========
</TABLE>
<PAGE>
Exhibit 12.2
Statement Re: Computation of Pro Forma Ratio
of Earnings to Fixed Charges of Loomis, Fargo & Co.
<TABLE>
<CAPTION>
Twelve Months Ended Three Months Ended
December 31, 1996 March 31, 1997
------------------- ------------------
<S> <C> <C>
Operating income $ 19,166 $ 567
Interest portion of rental expense
on noncancelable leases 4,350 706
-------- ------
Earnings $ 23,516 $1,273
======== ======
Interest expense $ 15,847 $3,915
Interest portion of rental expense
on noncancelable leases 4,350 706
-------- ------
Fixed charges $ 20,197 $4,621
======== ======
Ratio of earnings to fixed charges 1.2 0.3
======== ======
Insufficiency of earnings to
cover fixed charges $3,300
======
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary Historical
Financial Information," "Selected Historical Financial Information" and
"Experts" and to the use of our report dated March 14, 1997, in Amendment No.
1 to the Registration Statement (Form S-1 No. 333-24689) and related
Prospectus of Loomis, Fargo & Co. for the registration of $85,000,000 of
Senior Subordinated Notes due 2004.
/s/ Ernst & Young LLP
Houston, Texas April 3, 1997
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-24689 of Loomis, Fargo & Co. on Form S-1 of our report dated March 14, 1997,
relating to the financial statements of Wells Fargo Armored Service Corporation
(a wholly owned subsidiary of Borg-Warner Security Corporation), appearing in
the Prospectus, which is part of this Registration Statement, and to the
reference to us under the headings "Selected Historical Financial
Information-Wells Fargo Armored" and "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
June 3, 1997
