<PAGE>
Filed Pursuant To Rule 424(b)(3)
Registration Number 333-76713
333-76713-(01 through 80)
$130,000,000
[GroupMac Logo Appears Here]
Group Maintenance America Corp.
Offer to Exchange
9 3/4% Exchange Senior Subordinated Notes due 2009 for any
and all outstanding 9 3/4% Senior Subordinated Notes due 2009
-------------
This Prospectus (and accompanying Letter of Transmittal) relates to our
proposed offer to exchange up to $130,000,000 aggregate principal amount of new
9 3/4% Senior Subordinated Notes due 2009 (the "Exchange Notes"), which will be
freely transferable, for any and all outstanding 9 3/4% Senior Subordinated
Notes due 2009 issued in a private offering on January 22, 1999 (the "Original
Notes"), which have certain transfer restrictions.
. The Exchange Offer expires 5:00 p.m., New York City time, on July 16,
1999, unless extended.
. The terms of the Exchange Notes are substantially identical to the terms
of the Original Notes, except that the Exchange Notes will be freely
transferable and issued free of any covenants regarding exchange and
registration rights.
. All Original Notes that are validly tendered and not validly withdrawn
will be exchanged.
. Tenders of Original Notes may be withdrawn at any time prior to
expiration of the Exchange Offer.
. We will not receive any proceeds from the Exchange Offer.
. The exchange of Original Notes for Exchange Notes should not be a
taxable event for United States Federal income tax purposes.
. Holders of Original Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer.
. Original Notes not exchanged in the Exchange Offer will remain
outstanding and be entitled to the benefits of the Indenture, but except
under certain circumstances will have no further exchange or
registration rights under the Registration Rights Agreement.
. Our "affiliates" (within the meaning of the Securities Act) may not
participate in the Exchange Offer.
. All broker-dealers must comply with the registration and prospectus
delivery requirements of the Securities Act.
. We do not intend to apply for listing of the Exchange Notes on any
securities exchange or to arrange for them to be quoted on any quotation
system.
The Exchange Notes and the Original Notes are referred to collectively as the
"Notes."
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Please see "Risk Factors" beginning on page 15 for a discussion of certain
factors you should consider in connection with the Exchange Offer.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Exchange Notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus,
the accompanying Letter of Transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
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The date of this Prospectus is June 17, 1999.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Summary.................................................................... 3
Risk Factors............................................................... 15
The Exchange Offer......................................................... 22
Use of Proceeds............................................................ 36
Ratio of Earnings to Fixed Charges......................................... 36
Capitalization............................................................. 37
Description of Credit Agreement............................................ 38
Description of the Notes................................................... 41
Certain Federal Income Tax Considerations.................................. 83
Legal Matters.............................................................. 88
Experts.................................................................... 89
Where You Can Find More Information........................................ 90
</TABLE>
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You should rely on the information contained in this prospectus or to which
we have referred you. We have not authorized anyone to provide you with
different information. This prospectus may only be used where it is legal to
sell the Notes. The information in this document may only be accurate on the
date set forth on the cover.
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about us, including, among other things:
. Our reliance on acquisitions for growth,
. Our plan to use our stock as consideration in future acquisitions, and
the effect of a decline in the stock price on that plan,
. Our ability to integrate acquired businesses,
. Our reliance on the commercial and residential new construction
industries,
. Anticipated trends and conditions in our industry, including future
consolidation,
. The effect of moderate weather patterns on the demand for our services,
and
. Our ability to compete in local markets.
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
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SUMMARY
This summary highlights selected information from this prospectus or
information incorporated by reference in this prospectus and may not contain
all the information that is important to you. This prospectus includes specific
terms of the notes we are offering, as well as information regarding our
business and detailed financial data. You should read carefully this entire
prospectus, including any information to which we refer you, before deciding to
exchange any of the notes. The terms "GroupMAC," "us", "our" and "we" as used
in this prospectus refer to Group Maintenance America Corp. and its
subsidiaries on a combined basis, as well as to the business and operations of
their predecessors, except where it is made clear that such term means only the
parent company. References to fiscal year financial information for GroupMAC
refers to the fiscal year ended December 31, 1998 or the respective fiscal year
ends of our subsidiaries. References to pro forma financial information of
GroupMAC, or to combined financial information of any group of its operating
units, refer to a year ended December 31. GroupMAC changed its fiscal year end
to December 31 after completing the initial public offering of its common stock
(the "IPO") on November 13, 1997.
Group Maintenance America Corp.
GroupMAC is a leading nationwide provider of mechanical and electrical
services. Mechanical services include heating, ventilating and air conditioning
("HVAC") and plumbing services. We provide services to commercial/industrial
and residential customers through our operations in 61 cities across 28 states.
We offer a broader range of comprehensive services to our customers than
virtually any other company in our industry. The following tables show our pro
forma revenue mix for the latest twelve months ended December 31, 1998.
<TABLE>
<CAPTION>
Industries Served
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Revenue
($ in millions) Percentage
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<S> <C> <C>
Mechanical........................................... $1,117.4 82.2%
Electrical........................................... $ 241.1 17.8%
</TABLE>
<TABLE>
<CAPTION>
Customer Markets
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Revenue
($ in millions) Percentage
--------------- ----------
<S> <C> <C>
Commercial/industrial................................ $1,057.6 77.8%
Residential.......................................... $ 300.9 22.2%
</TABLE>
<TABLE>
<CAPTION>
Services Provided
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Revenue
($ in millions) Percentage
--------------- ----------
<S> <C> <C>
Maintenance, Repair & Replacement.................... $819.7 60.3%
New Installation..................................... $538.8 39.7%
</TABLE>
We have achieved our goal of obtaining approximately 60% of our revenue from
maintenance, repair and replacement services and approximately 40% from new
installation services one year ahead of schedule. The benefits of maintenance,
repair and replacement services include higher margins, more predictable and
recurring revenues and a more diversified customer base. The benefits of new
installation services include pricing discounts received through volume
purchases and potential recurring customers for maintenance, repair and
replacement services. Nationwide, maintenance, repair and replacement
represented 66% of industry sales for 1997, with new installations accounting
for 34% of the total.
We provide our commercial/industrial customers with maintenance, repair and
replacement and new installation services for products such as:
. Boilers, chillers and central plants,
. Process piping and control systems, and
. Data cabling.
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We provide our residential customers with maintenance, repair and replacement
and new installation services for products such as:
. Central air conditioning systems and furnaces,
. Plumbing fixtures and pipes, and
. Water heaters.
Since our formation in 1996, we have acquired 72 companies in 44 of the top
100 markets in the United States. To date we have grown primarily through a
disciplined acquisition process. In addition to acquisition growth, we have
experienced 15.1% internal revenue growth for the fiscal year ended December
31, 1998 compared to the fiscal year ended December 31, 1997 in the 24
operating companies acquired before or concurrently with the initial public
offering of our common stock. These companies have been in business an average
of 27 years. Our pro forma revenues were approximately $1,359 million for the
fiscal year ended December 31, 1998.
The Industry
Overall. The mechanical and electrical services markets are substantial and
highly fragmented with a small number of multi-location regional or national
operators and a large number of relatively small, independent businesses
serving discrete local markets with limited service offerings. Based on
available industry data, we estimate there are over 100,000 businesses with
combined annual revenues of over $100 billion consisting of approximately $84
billion in mechanical and $16 billion in electrical service revenues. We
believe the combined revenues of the regional and national service providers,
including our company, account for approximately 5% of the total mechanical and
electrical service markets. We believe the fragmented nature of each industry
presents substantial consolidation and growth opportunities for companies with
access to capital and management skills to implement a disciplined acquisition
program and effectively integrate and operate a national network of mechanical
and electrical service businesses.
Commercial/Industrial Market. We provide maintenance, repair and replacement
services and new installation in the following major vertical markets:
. Manufacturing and processing facilities;
. Power generation facilities;
. Hospitals and other critical care facilities;
. Colleges and universities;
. Hotels;
. Commercial office buildings and complexes;
. Retail stores; and
. Restaurants, supermarkets, and convenience stores.
Our commercial and industrial customers include general contractors, facility
owners, facility managers, developers, utilities, energy service companies,
property managers, engineers, consultants and architects. We believe that the
demand for commercial/industrial
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services will primarily be derived from any one or a combination of the
following:
. Bundling of energy with other energy-related services/upgrades;
. Continued outsourcing trend;
. Single-sourcing of services by national customers;
. General economic conditions;
. Aging installed HVAC equipment base;
. Increased efficiency and sophistication of HVAC equipment; and
. Strong growth in voice and data communications.
It is becoming increasingly more important to be able to "bundle" mechanical
and electrical capabilities for national commercial/industrial companies as
more customers look for outsourcing options. Furthermore, as utilities and
other energy companies look for ways to secure their current market share,
extensive opportunities will exist to provide critical efficiency upgrades and
operations and maintenance programs on a national basis.
We estimate that approximately 52.2% of our pro forma revenue for the fiscal
year ended December 31, 1998 is associated with commercial/industrial
maintenance, repair and replacement services and 25.6% is derived from new
installation services.
Residential Market. We provide maintenance, repair and replacement and new
installation services in single family and low-rise multifamily housing units.
Our residential customers include local, regional, and national homebuilders,
apartment developers and individual property owners. The residential new
installation market is primarily dependent on the number of single family and
multi-family housing starts. The residential service market is dependent in the
short term on weather patterns and over the long term is expected to grow due
to the increasing size of the installed base. We estimate that approximately
8.2% of pro forma revenue for the fiscal year ended December 31, 1998 is
associated with residential maintenance, repair and replacement services with
14.0% derived from new installation services.
Company Strengths
We believe that we have six basic strengths as a company.
Balanced Business Mix. We believe that our balanced customer base, broad
geographic presence and comprehensive service offerings provide us with
earnings and cash flow stability and growth potential. Our balanced business
mix should mitigate the effects of national and regional economic cycles and
weather patterns.
Significant National Presence. We have become a leading national provider of
mechanical and electrical services through our acquisition of 72 operating
companies in 61 cities across 28 states. Our national presence is evident
through our operations in 44 of the top 100 markets. We have been utilizing our
United Service Alliance ("USA") affiliates as well as our operating companies
to expand our national presence. USA is a member organization owned by GroupMAC
which provides industry training programs and national account opportunities to
independent service companies. In geographic areas where we have limited or no
operations, we coordinate with a USA affiliate to provide
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service to our customers. This affiliate network together with our operating
companies facilitates the cross marketing of services and the development of
regional and national customers. Our larger and/or national customers include
Microsoft, Lincoln Properties, Builders Square, Pep Boys, Blockbuster and MCI
Worldcom.
Meaningful Utility Alliances. We believe that we will benefit from utility
deregulation through our national presence and the breadth of products and
services we can offer to energy companies seeking to bundle their service and
product offerings to commercial, industrial and residential owners and
builders. We were recently selected by PG&E Energy Services as their preferred
provider of commercial HVAC services nationwide. An unregulated subsidiary of
the third largest utility in the United States, PG&E Energy Services has a
national presence and is likely to be a significant participant in the rapidly
growing energy services market.
Proven Ability to Integrate Acquisitions. We have a dedicated eight member
acquisition team that selectively targets well-managed, profitable service
providers with established market positions in specific geographic, product or
service markets. Moreover, each company we acquire has a solid financial and
administrative infrastructure in place prior to acquisition. We have a
formalized, analytical screening process to source and evaluate acquisition
candidates. We are currently evaluating financial statements of potential
acquisition targets with over $1,400.0 million in annualized revenues from
which we intend to select acquisition targets.
Experienced Management Team. Our senior management team includes four
recognized leaders in the HVAC industry and all others have industry,
consolidation and/or public company experience. We believe that our management
team is capable of achieving our growth strategy. In addition, local management
has substantial experience in the mechanical and electrical service industries.
Our directors and executive officers and the management of our operating
companies own a significant amount of our common stock.
Superior Customer Service. We provide superior, consistent customer service
on a nationwide basis. Historically, mechanical and electrical service
companies have provided inconsistent quality or a limited scope of services to
their customers. In recent years, technological developments and changing
service needs have heightened the problem of unpredictable service quality in
our markets. Our superior service is the result of thorough hiring and training
methods and close supervision. To differentiate GroupMAC's commercial service
delivery, we have developed a standardized approach to preventative maintenance
services, the Performance Service System. This system allows us to
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design customized maintenance programs for customers based upon their targeted
maintenance expenditure levels. Furthermore, this system allows us to manage
services and control quality for customers in a consistent manner which
augments our national accounts effort. Finally, the use of equity incentives
for substantially all employees encourages a service-oriented workforce.
Company Strategy
Our objective is to become the premier provider of mechanical and electrical
services by supplying high quality, nationwide service. To achieve our
objective, we have adopted a strategy based on the following elements.
Continue to Develop National Accounts. We believe that our national scope and
superior service quality will allow us to compete successfully for larger
service contracts. National contracts typically require greater geographic
coverage and personnel availability to allocate and share resources more
effectively. In pursuing long-term national contracts we focus on contracts
with:
. multi-location commercial and industrial customers,
. building management companies,
. electric utilities, and
. real estate investment trusts and other large property owners.
We believe that several trends among our customer base have heightened the
need for national service capabilities, including:
. trends toward the institutional ownership and management of all types of real
estate,
. increased outsourcing of services, and
. offering our services as a value added element to enhance the sale of
electricity and natural gas to commercial/industrial customers by utilities.
Establish Strategic Alliances with Utility Companies. As electric utility
markets deregulate, we expect certain national energy providers to "bundle" the
services we offer with their more traditional commodity products and services.
These providers will likely include services for the installation, retrofit
and/or maintenance of the energy-consuming systems of commercial and industrial
businesses. We believe that national utility providers will seek to align
themselves with us for our ability to provide high quality service nationwide.
We continue to evaluate all acquisitions based upon their ability to allow us
to pursue the opportunities inherent in utility deregulation.
Pursue Selective Acquisitions. The fragmented nature of our markets provides
substantial opportunities for us to continue our acquisition strategy. We use
detailed criteria in screening for potential acquisitions. After an initial
screening, each candidate is evaluated through a rigorous due diligence process
including detailed financial, operational and other reviews. We will continue
to seek to retain senior management of acquired companies and to align their
interests with ours by using common stock as consideration for acquisitions and
compensation.
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Attract, Develop and Retain Skilled Technicians. Our growth and success
depends on our ability to attract and retain a highly trained and motivated
technical workforce. Our objective is to become the employer of choice within
our markets by offering our employees opportunities that most smaller operators
cannot, including:
. superior training,
. formalized career development and advancement throughout a large
organization,
. substantial employee benefits,
. equity-based incentive compensation and participation, and
. greater stability of employment.
We intend to monitor continuously our employee relations and policies to
attract and retain key technical employees.
Continue to Achieve Operating Efficiencies. As a national operator, we
benefit from increased efficiency in several areas, including:
. materials purchasing,
. computer systems,
. employee benefits,
. insurance,
. financing, and
. marketing programs.
We are also able to share "best practices" in all of our companies by
facilitating and promoting communication throughout our company and our
affiliates.
Maintain Decentralized Field Operations. Each market we serve has different
operating characteristics and requires knowledgeable local or regional
management. As part of our acquisition and operating strategy, we retain local
brand names and management and allow them to maintain substantial
responsibility for the day-to-day operations while providing significant
support from both the corporate level and the overall organization to best
manage long-term operating success. We provide incentives to local managers and
former owners through both equity participation and cash-based performance
programs. Our decentralized operations allow local management to focus on
maintaining the highest level of customer service and provide useful
information on regional trends and activities.
Recent Developments
Since March 31, 1999, we completed six acquisitions. The aggregate
consideration paid or to be paid for these acquisitions consisted of
approximately $36.6 million in cash, 1.8 million shares of our common stock and
assumed debt of $3.0 million. The combined annual 1998 revenues of these
companies was approximately $117.0 million. We will account for these
acquisitions using the purchase method of accounting.
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The Exchange Offer
Registration Rights
Agreement.................. We sold $130 million in aggregate principal
amount of Original Notes to qualified
institutional buyers as defined in Rule 144A
under the Securities Act or to institutional
accredited investors within the meaning of Rule
501 under the Securities Act, through Merrill
Lynch & Co., NationsBanc Montgomery Securities
LLC, ABN AMRO Incorporated, The Robinson-Humphrey
Company, Jefferies & Company, Inc. and U.S.
Bancorp Libra, as initial purchasers (the
"Initial Purchasers"). The Initial Purchasers and
we entered into an Exchange and Registration
Rights Agreement dated as of January 22, 1999
(the "Registration Rights Agreement"), which
grants the holders of the Original Notes certain
exchange and registration rights. The Exchange
Offer made hereby is intended to satisfy such
exchange rights.
The Exchange Offer.......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of
Original Notes. As of the date hereof, $130
million aggregate principal amount of the
Original Notes are outstanding. We will issue the
Exchange Notes to holders on the earliest
practicable date following the Expiration Date.
Resales of the Exchange
Notes...................... Based on an interpretation by the staff of the
SEC set forth in no-action letters issued to
third parties, we believe that, except as
described below, the Exchange Notes issued
pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by a
holder thereof (other than any such holder that
is an "affiliate" of GroupMAC within the meaning
of Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in
the ordinary course of such holder's business and
that such holder has no arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes.
Each broker-dealer that receives Exchange Notes
pursuant to the Exchange Offer in exchange for
Original Notes that such broker-dealer acquired
for its own
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account as a result of market-making activities
or other trading activities (other than Original
Notes acquired directly from us or our
affiliates) must acknowledge that it will deliver
a prospectus in connection with any resale of
such Exchange Notes. 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.
If we receive certain notices in the Letter of
Transmittal, this Prospectus, as it may be
amended or supplemented from time to time, may be
used for the period described below by a broker-
dealer in connection with resales of Exchange
Notes received in exchange for Original Notes
where such Original Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities and not
acquired directly from us. We have agreed that,
if we receive certain notices in the Letter of
Transmittal, for a period of 180 days after the
date on which the Registration Statement becomes
effective, we will make this Prospectus available
to any such broker-dealer for use in connection
with any such resale.
The Letter of Transmittal requires broker-dealers
tendering Original Notes in the Exchange Offer to
indicate whether such broker-dealer acquired such
Original Notes for its own account as a result of
market-making activities or other trading
activities (other than Original Notes acquired
directly from us or any of our affiliates). If no
broker-dealer indicates that such Original Notes
were so acquired, we have no obligation under the
Registration Rights Agreement to maintain the
effectiveness of the Registration Statement past
the consummation of the Exchange Offer or to
allow the use of this Prospectus for such
resales. See "The Exchange Offer--Registration
Rights" and "--Resale of the Exchange Notes; Plan
of Distribution."
Expiration Date............. The Exchange Offer expires at 5:00 p.m., New York
City time, on July 16, 1999, unless we extend the
Exchange Offer in our sole discretion, in which
case
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the term "Expiration Date" means the latest date
and time to which such Exchange Offer is
extended.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which we may waive. See "The Exchange
Offer--Conditions to the Exchange Offer."
Procedures for Tendering
the Original Notes......... Each holder of Original Notes wishing to accept
the Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal together with the Original
Notes and any other required documentation to the
Exchange Agent (as defined below under "Exchange
Agent") at the address set forth herein. By
executing the Letter of Transmittal, a holder
will make certain representations to us. See "The
Exchange Offer--Registration Rights" and "--
Procedures for Tendering Original Notes."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. See "The Exchange Offer--
Procedures for Tendering Original Notes."
Guaranteed Delivery
Procedures................. Holders of Original Notes who wish to tender
their Original Notes when those securities are
not immediately available or who cannot deliver
their Original Notes, the Letter of Transmittal
or any other documents required by such Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Original Notes
according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for
Tendering Original Notes--Guaranteed Delivery."
Withdrawal Rights........... Tenders of Original Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to the Expiration Date.
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Acceptance of Original
Notes and Delivery of
Exchange Notes............. We will accept for exchange any and all Original
Notes that are properly tendered in the Exchange
Offer, and not withdrawn, prior to the Expiration
Date. The Exchange Notes issued pursuant to the
Exchange Offer will be issued on the earliest
practicable date following our acceptance for
exchange of Original Notes. See "The Exchange
Offer--Terms of the Exchange Offer."
Exchange Agent.............. State Street Bank & Trust Company is serving as
exchange agent (the "Exchange Agent") in
connection with the Exchange Offer.
Federal Income Tax
Considerations............. We have received an opinion of counsel advising
that the exchange of Original Notes for Exchange
Notes pursuant to the Exchange Offer will not be
treated as a taxable exchange for federal income
tax purposes. See "Certain Federal Income Tax
Considerations."
The Notes
Maturity Date............... January 15, 2009.
Interest Payment Dates...... January 15 and July 15 of each year, commencing
July 15, 1999.
Optional Redemption......... We may redeem the Notes at our option, in whole
or in part, at any time on or after January 15,
2004 at the redemption prices set forth herein
plus accrued interest on the date of redemption.
Additionally, we may redeem up to an aggregate of
35% of the principal amount of the Notes from
time to time prior to January 15, 2002 at our
option at the redemption price set forth herein
plus accrued interest to the date of redemption,
with the net proceeds of certain sales of our
common stock if at least 65% of the principal
amount of the Notes remains outstanding. See
"Description of the Notes--Optional Redemption."
Change of Control........... Upon certain change of control events, we must
offer to repurchase all outstanding Notes at 101%
of the principal amount thereof plus accrued
interest. See "Description of the Notes--Change
of Control."
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Subsidiary Guarantees....... The Notes are guaranteed (the "Guarantees"),
jointly and severally on a senior subordinated
basis, by each of our existing and future direct
and indirect Subsidiaries (excluding Unrestricted
Subsidiaries and Foreign Subsidiaries). As of the
date hereof, all of our subsidiaries guarantee
the Notes. See "Description of the Notes--
Guarantees."
Ranking..................... The Notes and the subsidiary guarantees will be
unsecured senior subordinated obligations. The
Notes rank behind all our existing and future
senior indebtedness including borrowings under
our $425 million bank credit agreement (the
"Credit Agreement"). The guarantees will rank
behind all existing and future guarantor senior
indebtedness. They will rank equally in right of
payment with any of our future senior
subordinated indebtedness and of the subsidiary
guarantors, and senior in right of payment of any
of their junior subordinated indebtedness. The
term "senior indebtedness" is defined in the
"Description of the Notes--Certain Definitions"
section of this prospectus.
At March 31, 1999, assuming we had completed all
acquisitions we have acquired subsequent to such
date, the Notes and the subsidiary guarantees:
. would have been subordinated to $189.6 million
of senior indebtedness, and
. would have ranked senior to $1.6 million of
junior subordinated debt.
We and our subsidiaries may incur additional
debt, subject to certain limitations. See
"Description of the Notes--Subordination" and "--
Certain Covenants--Limitation on Indebtedness."
Restrictive Covenants....... The indenture under which the Original Notes were
issued and the Exchange Notes will be issued (the
"Indenture") contains certain covenants that,
among other things, limit our ability and the
ability of our restricted subsidiaries (as
defined) to:
. incur additional indebtedness,
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. incur additional senior subordinated
indebtedness,
. pay dividends on, redeem or repurchase our
capital stock,
. make investments,
. issue or sell capital stock of restricted
subsidiaries,
. engage in transactions with affiliates,
. create certain liens,
. sell assets,
. guarantee indebtedness,
. restrict dividend or other payments to us, and
. consolidate, merge or transfer all or
substantially all our assets and the assets of
our subsidiaries on a consolidated basis.
The covenants are subject to important exceptions
and qualifications which are described under the
heading "Description of the Notes" in this
prospectus.
Risk Factors
Prospective purchasers of the Notes should consider carefully the information
set forth under the caption "Risk Factors" and all other information set forth
in this prospectus before making any investment in the Notes.
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Our principal executive offices are located at 8 Greenway Plaza, Suite 1500,
Houston, Texas 77046 and our telephone number is (713) 860-0100.
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RISK FACTORS
You should carefully consider the following factors and other information in
this prospectus before deciding to invest in the Notes.
Significant Indebtedness and Interest Payment Obligations--Our substantial
indebtedness could adversely affect our financial health, make us more
vulnerable to adverse economic conditions and prevent us from fulfilling our
obligations under the Notes.
We are highly leveraged. As of March 31, 1999, assuming we had completed all
acquisitions we have acquired subsequent to such date, we had outstanding
$321.3 million of consolidated indebtedness (of which approximately $189.6
million would have been senior indebtedness) and our total consolidated
indebtedness, as a percentage of capitalization, was 46.6%. We will require
substantial capital to finance our anticipated growth, so we expect to incur
additional debt in the future. However, we will be limited in the amount we
could incur by our existing and future debt agreements.
Our high level of indebtedness could have important consequences to holders
of Notes, such as:
. limiting our ability to obtain additional financing to fund our growth
strategy, working capital, capital expenditures, debt service requirements or
other purposes;
. limiting our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these funds to
make principal payments and fund debt service;
. placing us at a competitive disadvantage compared to competitors with less
debt;
. increasing our vulnerability to adverse economic and industry conditions; and
. increasing our vulnerability to interest rate increases because borrowings
under our Credit Agreement are at variable interest rates.
Our ability to pay interest on the Notes and to satisfy our other debt
obligations will depend upon, among other things, our future operating
performance and our ability to refinance indebtedness when necessary. Each of
these factors is to a large extent dependent on economic, financial,
competitive and other factors beyond our control. If, in the future, we cannot
generate sufficient cash from operations to make scheduled payments on the
notes or to meet our other obligations, we will need to refinance, obtain
additional financing or sell assets. We cannot assure you that our business
will generate cash flow, or that we will be able to obtain funding, sufficient
to satisfy our debt service requirements.
Subordination of the Notes and Guarantees to Senior Indebtedness--Your right to
receive payment on the Notes is junior to most of our existing indebtedness and
possibly all of our future borrowings. Further, the guarantees of the Notes are
junior to all of our guarantors' existing indebtedness and possibly all of
their future borrowings.
The Notes will be subordinate to all our senior indebtedness. The guarantees
will be subordinated to all guarantor senior indebtedness. As of March 31,
1999, assuming we had completed all acqusitions we have acquired subsequent to
such date,
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we had outstanding $189.6 million of senior indebtedness ($188.7 million of
which was guarantor senior indebtedness). We also may incur additional senior
indebtedness under the terms of the Credit Agreement. For example, as of March
31, 1999, assuming we had completed all acquisitions that occurred subsequent
to such date and closed the now completed expansion of our Credit Agreement,
and subject to the terms and conditions of the Credit Agreement, we had $235.9
million available thereunder which, if borrowed, would be senior indebtedness.
In the event of our bankruptcy, liquidation or dissolution, our assets would be
available to pay obligations on the Notes only after all payments have been
made on our senior indebtedness. Similarly, in the event of a bankruptcy,
liquidation or dissolution of any guarantor, its assets would be available to
pay obligations on the guarantee only after all payments had been made on its
guarantor senior indebtedness. In addition, no cash payments may be made with
respect to the Notes during the continuance of a payment default with respect
to senior indebtedness. Furthermore, under certain circumstances, no cash
payments with respect to the Notes may be made for a period of up to 179 days
(during each period of 360 days) if a nonpayment default exists with respect to
designated senior indebtedness. We cannot assure you that sufficient assets
will remain to make any payments to you or other holders of the Notes. In
addition, certain events of default under the Credit Agreement would prohibit
us from making any payments on the Notes. The terms "senior indebtedness" and
"designated senior indebtedness" are defined in the "Description of the Notes--
Subordination" section of this prospectus.
Notes are Unsecured--Your right to enforce remedies is limited by the rights of
holders of secured debt.
In addition to being subordinate to all of our senior indebtedness, the Notes
will not be secured by any of our assets. Our obligations under our Credit
Agreement are secured by all of our inventory and accounts receivable and those
of our subsidiary guarantors and a pledge of the capital stock of each
guarantor. If we became insolvent or are liquidated, or if payment under our
Credit Agreement is accelerated, the lenders under our Credit Agreement will
have a prior right to such assets, and may foreclose upon such assets, to the
exclusion of holders of the Notes. Therefore, our bank lenders will have a
claim on certain of our assets before the holders of these Notes. See
"Description of the Notes" and "Description of Credit Agreement."
Restrictions in Credit Agreement and Indenture on Our Operations--We may not be
able to finance future needs or adapt our business plans to changes because of
restrictions placed on us by our lenders and noteholders.
The operating and financial restrictions and covenants in our Credit
Agreement and the indenture governing the Notes adversely affect, and any
future financing agreements may also adversely affect, and in fact limit or
prohibit, our ability to finance future operations or capital needs, to respond
to changes in our business or competitive activities, or to engage in other
business activities. See "Description of the Notes" and "Description of Credit
Agreement." A breach of any of these restrictions or covenants could cause a
default under the Credit Agreement and the Notes and in some cases acceleration
of debt under other instruments that contain cross-default or
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cross-acceleration provisions. A significant portion of our indebtedness then
may become immediately due and payable. We are not certain whether we would
have, or be able to obtain, sufficient funds to make these accelerated
payments, including payments on the Notes.
Possible Inability to Purchase Notes upon a Change of Control--We may be
prevented from financing, or may not have the ability to raise funds necessary
to finance, the change of control offer required by the Indenture.
Upon certain change of control events, each holder of Notes may require us to
repurchase all or a portion of its notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued interest. Our ability to repurchase
the Notes upon a change of control event is prohibited by the terms of our
Credit Agreement. Future agreements may contain a similar provision. Upon a
change of control event, we may be required immediately to repay the
outstanding principal, any accrued interest on and any other amounts owed by us
under our Credit Agreement. We cannot assure you that we would be able to repay
amounts outstanding under our Credit Agreement. Any requirement to offer to
purchase any outstanding Notes may result in us having to refinance our
outstanding indebtedness or obtain necessary consents under such agreement to
repurchase the Notes, which we may not be able to do. In the event that a
Change of Control occurs at a time when we are prohibited from purchasing the
Notes, we could seek the consent of our lenders to the purchase of the Notes or
could attempt to refinance the borrowings that contain such prohibition. If we
do not obtain such consent or repay such borrowings, we will remain prohibited
from purchasing the Notes. In such case, our failure to purchase Notes that are
tendered following a Change of Control would constitute an event of default
under the indenture which would, in turn, constitute a default under the Credit
Agreement and could constitute a default under other senior indebtedness. In
such circumstances, the subordination provisions in the indenture would likely
restrict payments to the holders of the Notes. In addition, even if we were
able to refinance such indebtedness, such financing may be on terms unfavorable
to us. The term "Change of Control" is defined in the "Description of the
Notes--Certain Definitions."
Integration of Acquired Companies--Any delay or inability to integrate
businesses we acquire could adversely affect our financial health.
We have grown, and plan to continue to grow, by acquiring other companies in
our industry. Our future success is dependent on our ability to integrate our
past and future acquisitions into one enterprise with a common operating plan.
We must also monitor the performance of our acquired companies. Many of these
acquired companies must change their past operating systems such as accounting,
employment, purchasing and marketing. We may not be successful in our efforts
to integrate acquired companies or monitor their performance. If we are unable
to do so, or if we experience delays or unusual expenses in doing so, it could
have a material adverse effect on our business, financial condition and results
of operations.
Dependence on Acquisitions for Growth--If our acquisition program strategy is
not achieved, our growth will be diminished.
We plan to grow primarily by acquisitions. This strategy requires that we
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identify acquisition targets and negotiate and close acquisitions without
disrupting our existing operations. The strategy may result in the diversion of
our time from operating matters, which may cause the loss of business and
personnel. There are also possible adverse effects on earnings resulting from
the possible loss of acquired customer bases, amortization of goodwill created
in purchase transactions and the contingent and latent risks associated with
the past operations and other unanticipated problems arising in the acquired
business. Our success is dependent upon our ability to identify, acquire,
integrate and manage profitably acquired businesses. If we cannot do this, our
business and growth may be harmed.
Cyclical Nature of New Installation Market--Downturns in the construction
industry could cause our revenues from installing equipment to decrease.
A substantial portion of our business involves installation of mechanical and
electrical systems in newly constructed residences and commercial/industrial
facilities. Our revenues from new installation services in the residential
market is dependent upon the level of housing starts in the areas in which we
operate. The housing industry is cyclical, and our revenues from new
residential installation will be affected by the factors that affect the
housing industry. These factors include changes in employment and income
levels, the availability and cost of financing for new home buyers and general
economic conditions. The level of new commercial/industrial installation
services is also affected by changes in economic conditions and interest rates.
General downturns in housing starts or new commercial/industrial construction
in the areas in which we operate could have a material adverse effect on our
business, including its financial condition and results of operations.
Availability of Technicians--A skilled labor force is important to our planned
internal growth.
Our ability to provide high-quality mechanical and electrical services on a
timely basis requires an adequate supply of skilled technicians. Shortages of
qualified technicians sometimes occur. We cannot assure you that we will be
able to maintain an adequate skilled labor force or that our labor expenses
will not increase. A shortage of skilled labor would require us to curtail our
planned internal growth.
Weather--Our profitability will be affected by prolonged bad weather or
seasonal variations.
Our business tends to be affected adversely by moderate weather patterns.
Comparatively warm winters and cool summers reduce the demand for our
maintenance, repair and replacement services. Additionally, our new
installation business is affected adversely by extremely cold weather and large
amounts of rain. As a result, we expect our revenues and operating results to
be lower in our first and, to a lesser degree, fourth calendar quarters.
Prolonged weather conditions or seasonal variations may cause unpredictable
fluctuations in operating results.
Competition--We face competition from owner-operated companies and large public
companies and utilities for the services we provide and for companies we may
want to acquire.
The mechanical and electrical and plumbing service industries are very
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competitive. These industries are served by small, owner-operated private
companies and by larger companies operating nationwide, including unregulated
affiliates of electric and gas public utilities and HVAC equipment
manufacturers, and there are few barriers to entry. Certain of the smaller
competitors have lower overhead cost structures and may be able to provide
their services at lower rates than we can. Some of the larger competitors have
greater financial resources, name recognition or other competitive advantages
and may be willing to pay higher prices than we are willing to pay for the same
opportunities. Consequently, we may encounter significant competition in our
efforts to achieve our growth objectives.
Dependence on Key Personnel--Our business may suffer if we do not retain our
management and the management of any company we acquire.
We depend on our executive officers and senior management personnel and on
the senior management of significant businesses we acquire. Our business could
be affected adversely if these persons do not continue in their roles and we
are unable to attract and retain qualified replacements. We do not maintain
key-man insurance on our executive officers and senior management personnel.
Dependence on Additional Capital for Future Growth--If we cannot use our common
stock or raise capital for consideration in acquisitions, we may not be able to
grow our business by acquisitions.
We have financed capital expenditures and acquisitions primarily through the
issuance of equity securities, secured bank borrowings and internally generated
cash flow. We currently intend to finance future acquisitions by using shares
of our common stock for a significant portion of the consideration to be paid.
If our common stock does not maintain a sufficient market value, or if
potential acquisition candidates are otherwise unwilling to accept our common
stock as part of the consideration for the sale of their businesses, we may be
required to utilize more of our cash resources, if available, in order to
initiate and maintain our acquisition program. We cannot assure you that we
will be able to raise the additional capital required. If we cannot do so, our
growth through acquisitions may be limited.
Dependence on Subsidiaries for Cash Flow--We rely on our subsidiaries for our
operating funds and our subsidiaries have no obligation to supply us with any
funds.
We conduct our operations through subsidiaries and are dependent upon our
subsidiaries for the funds we need to operate. We will be dependent on the
transfer of funds from our subsidiaries to make the payments due under the
notes. Each of our subsidiaries is a distinct legal entity and has no
obligation, contingent or otherwise, to transfer funds to us. Our ability to
pay the Notes, and the ability of our subsidiaries to transfer funds to us,
could be restricted by the terms of subsequent financings.
Fraudulent Transfer Considerations--Federal and state statutes allow courts,
under specific circumstances, to void guarantees and require noteholders to
return payments received from guarantors.
Creditors of any business are protected by fraudulent conveyance laws which
differ among various jurisdictions, and these laws
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may apply to the issuance of the guarantees by our subsidiaries. The guarantees
may be voided by a court, or subordinated to the claims of other creditors, if
. a guarantee was incurred by a subsidiary with actual intent to hinder, delay
or defraud any present or future creditor of the subsidiary, or
. a subsidiary did not receive fair consideration--or reasonably equivalent
value--for issuing its guarantee, and the subsidiary
--was insolvent,
--was rendered insolvent by reason of issuing the guarantee,
--was engaged or about to engage in a business or transaction for which the
remaining assets of the subsidiary constituted unreasonably small
capital, or
--intended to incur, or believed that it would incur, debts beyond its
ability to pay as they matured.
If a guarantee of a subsidiary were voided as a fraudulent conveyance or held
unenforceable for any other reason, holders of the Notes would be solely our
creditors and creditors of our other subsidiaries that have guaranteed the
Notes. The Notes then would be effectively subordinated to all obligations of
the subsidiary. To the extent that the claims of the holders of the Notes
against any subsidiary were subordinated in favor of other creditors of such
subsidiary, such other creditors would be entitled to be paid in full before
any payment could be made on the Notes. If one or more of the guarantees is
voided or subordinated, we cannot assure you that after providing for all prior
claims, there would be sufficient assets remaining to satisfy the claims of
holders of the Notes.
Based upon financial and other information, we believe that the Notes and the
guarantees are being incurred for proper purposes and in good faith and that
the Company and each subsidiary is solvent and will continue to be solvent
after this offering is completed, will have sufficient capital for carrying on
its business after such issuance and will be able to pay its debts as they
mature. We cannot assure you, however, that a court reviewing these matters
would agree with us. A legal challenge to a guarantee on fraudulent conveyance
grounds may focus on the benefits, if any, realized by the subsidiary as a
result of our issuance of the Notes.
Lack of Public Market for the Notes
The Original Notes have not been registered under the Securities Act, and may
not be resold by purchasers thereof unless the Original Notes are subsequently
registered or an exemption from the registration requirements of the Securities
Act is available. While the Original Notes are at present eligible for trading
in the PORTAL market of the Nasdaq Stock Market, Inc., the Exchange Notes will
not be so eligible, and there can be no assurance, even following registration
or exchange of the Original Notes for Exchange Notes, that an active trading
market for the Original Notes or the Exchange Notes will exist. At the time of
the private placement of the Original Notes, the Initial Purchasers advised the
Company that they intended to make a market in the Original Notes and, if
issued, the Exchange Notes. However, the Initial Purchasers are not obligated
to make a market in the Original Notes or the Exchange Notes, and any such
market-making may be discontinued at any time at the sole discretion of the
Initial Purchasers. No assurance can be given as to the liquidity of or trading
market for the Original Notes or the Exchange Notes.
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Consequences to Non-Tendering Holders of Original Notes--The market value of
your Original Notes may be lower if you do not exchange your Original Notes or
fail to properly tender your Original Notes for exchange.
Consequences of Failure to Exchange. To the extent that Original Notes are
tendered and accepted for exchange pursuant to the Exchange Offer, the trading
market for Original Notes that remain outstanding may be significantly more
limited, which might adversely affect the liquidity of the Original Notes not
tendered for exchange. The extent of the market and the availability of price
quotations for Original Notes would depend upon a number of factors, including
the number of holders of Original Notes remaining at such time and the interest
in maintaining a market in such Original Notes on the part of securities firms.
An issue of securities with a smaller outstanding market value available for
trading (the "float") may command a lower price than would a comparable issue
of securities with a greater float. Therefore, the market price for Original
Notes that are not exchanged in the Exchange Offer may be affected adversely to
the extent that the amount of Original Notes exchanged pursuant to the Exchange
Offer reduces the float. The reduced float also may tend to make the trading
price of the Original Notes that are not exchanged more volatile.
Consequences of Failure to Properly Tender. Issuance of the Exchange Notes in
exchange for the Original Notes pursuant to the Exchange Offer will be made
following the prior satisfaction, or waiver, of the conditions set forth in
"The Exchange Offer--Conditions to the Exchange Offer" and only after timely
receipt by the Exchange Agent of such Original Notes, a properly completed and
duly executed Letter of Transmittal and all other required documents.
Therefore, holders of Original Notes desiring to tender such Original Notes in
exchange for Exchange Notes should allow sufficient time to ensure timely
delivery of all required documentation. Neither we, the Exchange Agent nor any
other person is under any duty to give notification of defects or
irregularities with respect to the tenders of Original Notes for exchange.
Original Notes that may be tendered in the Exchange Offer but which are not
validly tendered will, following the consummation of the Exchange Offer, remain
outstanding and will continue to be subject to the same transfer restrictions
currently applicable to such Original Notes.
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THE EXCHANGE OFFER
Registration Rights
At the closing of the offering of the Original Notes, we entered into the
Registration Rights Agreement with the Initial Purchasers pursuant to which we
agreed, for the benefit of the holders of the Original Notes, at our cost,
. within 90 days after the date of the original issue of the Original Notes, to
file an Exchange Offer Registration Statement with the SEC with respect to
the Exchange Offer for the Exchange Notes, and
. to use our reasonable efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 150 days
after the date of original issuance of the Original Notes.
Upon the Exchange Offer Registration Statement being declared effective, we
agreed to offer the Exchange Notes in exchange for surrender of the Original
Notes. We agreed to keep the Exchange Offer open for not less than 20 business
days (or longer if required by applicable law) after the date notice of the
Exchange Offer is mailed to the holders of the Original Notes.
For each Original Note surrendered to us pursuant to its Exchange Offer, the
holder of such Original Note will receive an Exchange Note having a principal
amount equal to that of the surrendered Note. Interest on each Exchange Note
will accrue from the last interest payment date on which interest was paid on
the Original Note surrendered in exchange therefor or, if no interest has been
paid on such Original Note, from the date of its original issue. The
Registration Rights Agreement also provides an agreement to include in the
prospectus for the Exchange Offer certain information necessary to allow a
broker-dealer who holds Original Notes that were acquired for its own account
as a result of market-making activities or other ordinary course trading
activities (other than Original Notes acquired directly from us or one of our
affiliates) to exchange such Original Notes pursuant to the Exchange Offer and
to satisfy the prospectus delivery requirements in connection with resales of
Exchange Notes received by such broker-dealer in the Exchange Offer. We agreed
to maintain the effectiveness of the Registration Statement for these purposes
for 180 days after the consummation of the Exchange Offer.
The preceding agreement is needed because any broker-dealer who acquires
Original Notes for its own account as a result of market-making activities or
other trading activities is required to deliver a prospectus meeting the
requirements of the Securities Act. This Prospectus covers the offer and sale
of the Exchange Notes pursuant to the Exchange Offer made hereby and the resale
of Exchange Notes received in the Exchange Offer by any broker-dealer who held
Original Notes acquired for its own account as a result of market-making
activities or other trading activities other than Original Notes acquired
directly from us or one of our affiliates.
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the Exchange Notes would in general be
freely tradeable after the Exchange Offer without further registration under
the Securities Act. However, any purchaser of Original Notes who is an
"affiliate" of ours or who intends to participate in the Exchange Offer for the
purpose of distributing the Exchange
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Notes (1) will not be able to rely on the interpretation of the staff of the
Commission, (2) will not be able to tender its Original Notes in the Exchange
Offer and (3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or transfer of
the Original Notes unless such sale or transfer is made pursuant to an
exemption from such requirements.
Each holder of the Original Notes (other than certain specified holders) who
wishes to exchange Original Notes for Exchange Notes in the Exchange Offer will
be required to make certain representations, including that (1) it is not an
affiliate of ours, (2) any Exchange Notes to be received by it were acquired in
the ordinary course of its business and (3) at the time of commencement of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes.
In the event that any changes in law or the applicable interpretations of the
staff of the SEC do not permit us to effect the Exchange Offer, or if for any
other reason the Exchange Offer is not consummated within 180 days of the date
of issuance and sale of the Original Notes, or upon request of the Initial
Purchasers (under certain circumstances), we will, at our cost,
. as promptly as practicable, file a Shelf Registration Statement (which may be
an amendment of the Registration Statement of which this Prospectus is a
part) covering resales of the Original Notes,
. use all reasonable efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act, and
. use all reasonable efforts to keep effective the Shelf Registration Statement
until two years after its effective date (or until all Original Notes have
been sold pursuant to the Shelf Registration Statement).
We will, in the event of the filing of a Shelf Registration Statement, (1)
provide to each holder of the Original Notes copies of the prospectus which is
a part of the Shelf Registration Statement, (2) notify each such holder when
the Shelf Registration Statement for the Original Notes has become effective,
and (3) take certain other actions as are required to permit unrestricted
resales of the Original Notes. A holder of Original Notes that sells such
Original Notes pursuant to the Shelf Registration Statement generally will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification obligations). In
addition, each holder of the Original Notes will be required to deliver
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Original
Notes included in the Shelf Registration Statement and to benefit from the
provisions regarding liquidated damages set forth in the following paragraph.
The interest rate borne by the Original Notes will be increased by one-
quarter of one percent per annum with respect to the first 90-day period (or
portion thereof) following the failure of
(1) the Exchange Offer Registration Statement to be filed with the
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SEC on or prior to the 90th calendar day following the date of original
issue of the Original Notes,
(2) the Exchange Offer Registration Statement or, if required in lieu
thereof, the Shelf Registration Statement, to be declared effective on or
prior to the 150th calendar day following the date of original issue of the
Original Notes,
(3) once effective, the Exchange Offer Registration Statement or the
Shelf Registration Statement to be effective or the prospectus to be usable
under certain circumstances, or
(4) the Exchange Offer to be consummated within 180 days of the original
issue of the Original Notes.
The amount of such additional interest will increase by an additional one-
quarter of one percent to a maximum of one-half of one percent per annum for
each subsequent 90-day period (or portion thereof) until the specified event
has occurred. Any additional interest is in each case payable in cash
semiannually, in arrears, on January 15 and July 15 of each year. If the
interest rate borne by the Original Notes is increased for any of these
reasons, it will return to the original interest rate upon
(w) the filing of the Exchange Offer Registration Statement in the
case of clause (1) above,
(x) the effectiveness of the Exchange Offer Registration Statement or
Shelf Registration Statement in the case of clause (2) above,
(y) the reeffectiveness of the Exchange Offer Registration Statement
or a Shelf Registration Statement in the case of clause (3) above, or
(z) the consummation of the Exchange Offer in the case of clause (4)
above.
This summary of certain provisions of the Registration Rights Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement, a
copy of which is filed as an exhibit to the registration statement of which
this prospectus is a part.
Except as set forth above, after consummation of the Exchange Offer, holders
of Original Notes have no registration or exchange rights under the
Registration Rights Agreement. See "--Consequences of Failure to Exchange," and
"--Resale of the Exchange Notes; Plan of Distribution."
Consequences of Failure to Exchange
The Original Notes which are not exchanged for Exchange Notes pursuant to the
Exchange Offer and are not included in a resale prospectus which, if required,
will be filed as part of an amendment to the Registration Statement, will
remain restricted securities and subject to restrictions on transfer.
Accordingly, such Original Notes may be resold
(1) to us (upon redemption thereof or otherwise),
(2) so long as the Original Notes are eligible for resale pursuant to
Rule 144A, to a person whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities
Act, purchasing for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
other transfer is being made in reliance on Rule 144A,
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(3) in an offshore transaction in accordance with Regulation S under the
Securities Act,
(4) pursuant to an exemption from registration in accordance with Rule
144 (if available) under the Securities Act,
(5) in reliance on another exemption from the registration requirements
of the Securities Act, or
(6) pursuant to an effective registration statement under the Securities
Act.
In all of the situations discussed above, the resale must be in accordance
with any applicable securities laws of any state of the United States and
subject to certain requirements of the registrar or co-registrar being met,
including receipt by the registrar or co-registrar of a certification and, in
the case of (3), (4) and (5) above, an opinion of counsel reasonably acceptable
to us and the registrar.
To the extent Original Notes are tendered and accepted in the Exchange Offer,
the principal amount of outstanding Original Notes will decrease with a
resulting decrease in the liquidity in the market therefor. Accordingly, the
liquidity of the market of the Original Notes could be adversely affected. See
"Risk Factors--Consequences to Non-Tendering Holders of Original Notes."
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus and
in the Letter of Transmittal, a copy of which is attached to this prospectus as
Annex A, we will accept any and all Original Notes validly tendered and not
withdrawn prior to the Expiration Date. We will issue $1,000 principal amount
of Exchange Notes in exchange for each $1,000 principal amount of Original
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Original Notes pursuant to the Exchange Offer. However, Original Notes may be
tendered only in integral multiples of $1,000 principal amount.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes, except that
. the Exchange Notes will have been registered under the Securities Act and
hence will not bear legends restricting their transfer pursuant to the
Securities Act, and
. except as otherwise described above, holders of the Exchange Notes will not
be entitled to the rights of holders of Original Notes under the Registration
Rights Agreement.
The Exchange Notes will evidence the same debt as the Original Notes which
they replace, and will be issued under, and be entitled to the benefits of, the
Indenture which governs all of the Notes.
Solely for reasons of administration and for no other purpose, we have fixed
the close of business on June 16, 1999 as the record date for the Exchange
Offer for purposes of determining the persons to whom this prospectus and the
Letter of Transmittal will be mailed initially. Only a registered holder of
Original Notes or such holder's legal representative or attorney-in-fact as
reflected on the records of the trustee under the Indenture may participate in
the Exchange Offer. There will be no fixed record date for determining
registered holders of the Original Notes entitled to participate in the
Exchange Offer.
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Holders of the Original Notes do not have any appraisal or dissenters' rights
under the Texas Business Corporation Act or the Indenture in connection with
the Exchange Offer. We intend to conduct the Exchange Offer in accordance with
the applicable requirements of the Exchange Act and the rules and regulations
of the SEC thereunder.
We shall be deemed to have accepted validly tendered Original Notes when, as
and if they have given oral or written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of the Original
Notes for the purposes of receiving the Exchange Notes. The Exchange Notes
delivered pursuant to the Exchange Offer will be issued on the earliest
practicable date following the acceptance for exchange of Original Notes by us.
If any tendered Original 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 Original Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Original 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 the
Original Notes pursuant to the Exchange Offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on July
16, 1999, unless we, in our sole discretion, extend the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, we will notify the Exchange Agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
We reserve the right, in our sole discretion,
(1) to delay accepting any Original Notes,
(2) to extend the Exchange Offer,
(3) if any of the conditions set forth below under "--Conditions to the
Exchange Offer" have not been satisfied, to terminate the Exchange Offer,
or
(4) to amend the terms of the Exchange Offer in any manner.
We may effect any such delay, extension or termination by giving oral or
written notice thereof to the Exchange Agent.
Except as specified in the second paragraph under this heading, any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. If the Exchange Offer
is amended in a manner determined by us to constitute a material change, we
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders of the Original Notes. The
Exchange Offer will then be extended for a period of five to 10 business days,
as
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required by law, depending upon the significance of the amendment and the
manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such five to 10 business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of this Exchange
Offer, we shall not have an obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
thereof to the Dow Jones News Service.
Procedures for Tendering Original Notes
Tenders of Original Notes. The tender by a holder of Original Notes pursuant
to any of the procedures set forth below will constitute the tendering holder's
acceptance of the terms and conditions of the Exchange Offer. Our acceptance
for exchange of Original Notes tendered pursuant to any of the procedures
described below will constitute a binding agreement between such tendering
holder and us in accordance with the terms and subject to the conditions of the
Exchange Offer. Only holders are authorized to tender their Original Notes. The
procedures by which Original Notes may be tendered by beneficial owners that
are not holders will depend upon the manner in which the Original Notes are
held.
DTC has authorized DTC participants that are beneficial owners of Original
Notes through DTC to tender their Original Notes as if they were holders. To
effect a tender, DTC participants should either (1) complete and sign the
Letter of Transmittal or a facsimile thereof, have the signature thereon
guaranteed if required by Instruction 1 of the Letter of Transmittal, and mail
or deliver the Letter of Transmittal or such facsimile pursuant to the
procedures for book-entry transfer set forth below under "--Book-Entry Delivery
Procedures," or (2) transmit their acceptance to DTC through the DTC Automated
Tender Offer Program ("ATOP"), for which the transaction will be eligible, and
follow the procedures for book-entry transfer set forth below under""--Book-
Entry Delivery Procedures."
Tender of Original Notes Held in Physical Form. To tender effectively
Original Notes held in physical form pursuant to the Exchange Offer,
. a properly completed Letter of Transmittal (or a facsimile thereof) duly
executed by the holder thereof, and any other documents required by the
Letter of Transmittal, must be received by the Exchange Agent at one of its
addresses set forth below, and tendered Original Notes must be received by
the Exchange Agent at such address (or delivery effected through the deposit
of Original Notes into the Exchange Agent's account with DTC and making book-
entry delivery as set forth below) on or prior to the Expiration Date, or
. the tendering holder must comply with the guaranteed delivery procedure set
forth below.
Letters of Transmittal or Original Notes should be sent only to the Exchange
Agent and should not be sent to us.
Tender of Original Notes Held Through a Custodian. To tender effectively
Original Notes that are held of record by a custodian bank, depository,
27
<PAGE>
broker, trust company or other nominee, the beneficial owner thereof must
instruct such holder to tender the Original Notes on the beneficial owner's
behalf. A Letter of Instructions from the record owner to the beneficial owner
may be included in the materials provided along with this prospectus which may
be used by the beneficial owner in this process to instruct the registered
holder of such owner's Original Notes to effect the tender.
Tender of Original Notes Held Through DTC. To tender effectively Original
Notes that are held through DTC, DTC participants should either
. properly complete and duly execute the Letter of Transmittal (or a facsimile
thereof), and any other documents required by the Letter of Transmittal, and
mail or deliver the Letter of Transmittal or such facsimile pursuant to the
procedures for book-entry transfer set forth below or
. transmit their acceptance through ATOP, for which the transaction will be
eligible, and DTC will then edit and verify the acceptance and send an
Agent's Message to the Exchange Agent for its acceptance.
Delivery of tendering Original Notes held through DTC must be made to the
Exchange Agent pursuant to the book-entry delivery procedures set forth below
or the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below.
The method of delivery of Original Notes and Letters of Transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance or Agent's Message transmitted through
ATOP, is at the election and risk of the person tendering Original Notes and
delivering Letters of Transmittal. Except as otherwise provided in the Letter
of Transmittal, delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, it is suggested that the holder use
properly insured, registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to such date.
Except as provided below, unless the Original Notes being tendered are
deposited with the Exchange Agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed Letter of Transmittal or
a properly transmitted Agent's Message), GroupMAC may, at its option, reject
such tender. Exchange of Exchange Notes for the Original Notes will be made
only against deposit of the tendered Original Notes and delivery of all other
required documents.
Book-Entry Delivery Procedures. The Exchange Agent will establish accounts
with respect to the Original Notes at DTC 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 DTC may make book-entry delivery of the
Original Notes by causing DTC to transfer such Original Notes into the Exchange
Agent's account in accordance with DTC's procedures for such transfer. However,
although delivery of Original Notes may be effected through book-entry at DTC,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any
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<PAGE>
case, be transmitted to and received by the Exchange Agent at one or more of
its addresses set forth in this prospectus on or prior to the Expiration Date,
or compliance must be made with the guaranteed delivery procedures described
below. Delivery of documents to DTC does not constitute delivery to the
Exchange Agent. The confirmation of a book-entry transfer into the Exchange
Agent's account at DTC as described above is referred to herein as a "Book-
Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each participant in DTC tendering the Original Notes and that such participant
has received the Letter of Transmittal and agrees to be bound by the terms of
the Letter of Transmittal and we may enforce such agreement against such
participant.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered thereby are
tendered (1) by a registered holder of Original Notes (or by a participant in
DTC whose name appears on a DTC security position listing as the owner of such
Original Notes) who has not completed either the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal,
or (2) for the account of an Eligible Institution. See Instruction 1 of the
Letter of Transmittal. If the Original Notes are registered in the name of a
person other than the signer of the Letter of Transmittal or if Original Notes
not accepted for exchange or not tendered are to be returned to a person other
than the registered holder, then the signatures on the Letter of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Original Notes pursuant to
the Exchange Offer and time will not permit the Letter of Transmittal,
certificates representing such Original Notes and all other required documents
to reach the Exchange Agent, or the procedures for book-entry transfer cannot
be completed, on or prior to the Expiration Date, such Original Notes may
nevertheless be tendered if all the following conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by GroupMAC herewith, or an Agent's
Message with respect to guaranteed delivery that is accepted by GroupMAC,
is received by the Exchange Agent on or prior to the Expiration Date, as
provided below; and
(3) the certificates for the tendered Original Notes, in proper form for
transfer (or a Book-Entry Confirmation of the transfer of such Original
Notes into the Exchange Agent's account at DTC as described above),
together with a Letter of Transmittal (or facsimile thereof), property
completed and duly executed, with any required signature
29
<PAGE>
guarantees and any other documents required by the Letter of Transmittal or
a properly transmitted Agent's Message, are received by the Exchange Agent
within two business days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, telegram,
facsimile transmission or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, delivery of Exchange Notes by
the Exchange Agent for Original Notes tendered and accepted for exchange
pursuant to the Exchange Offer will, in all cases, be made only after timely
receipt by the Exchange Agent of such Original Notes (or Book-Entry
Confirmation of the transfer of such Original Notes into the Exchange Agent's
account at DTC as described above), and a Letter of Transmittal (or facsimile
thereof) with respect to such Original Notes, properly completed and duly
executed, with any required signature guarantees and any other documents
required by the Letter of Transmittal, or a properly transmitted Agent's
Message.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
Original Notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to
reject any and all Original Notes not properly tendered or any Original Notes
our acceptance of which, in the opinion of our counsel, would be unlawful.
We also reserve the right to waive any defects, irregularities or conditions
of tender as to particular Original Notes. The interpretation of the terms and
conditions of its Exchange Offer (including the instructions in the Letter of
Transmittal) by us will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Original Notes
must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of Original Notes, neither we, the Exchange Agent nor any
other person is under any duty to give such notice, nor shall they incur any
liability for failure to give such notification. Tenders of Original Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived.
Any Original Notes received by the Exchange Agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if Original Notes are submitted in a principal amount greater than
the principal amount of Original Notes being tendered by such tendering
holder, such unaccepted or non-exchanged Original Notes will either be
(1) returned by the Exchange Agent to the tendering holders, or
(2) in the case of Original 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, credited to an
account maintained with such Book-Entry Transfer Facility.
By tendering, each registered holder will represent to us that, among other
things,
(1) the Exchange Notes to be acquired by the holder and any beneficial
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<PAGE>
owner(s) of the Original Notes ("Beneficial Owner(s)") in connection with
the Exchange Offer are being acquired by the holder and any Beneficial
Owner(s) in the ordinary course of business of the holder and any
Beneficial Owner(s),
(2) the holder and each Beneficial Owner are not participating, do not
intend to participate, and have no arrangement or understanding with any
person to participate, in a distribution of the Exchange Notes,
(3) the holder and each Beneficial Owner acknowledge and agree that (x)
any person participating in the Exchange Offer for the purpose of
distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction with respect to the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the SEC set
forth in no-action letters that are discussed herein under "--Resale of the
Exchange Notes; Plan of Distribution," and (y) any broker-dealer that
receives Exchange Notes for its own account in exchange for Original Notes
pursuant to the Exchange Offer must delivery a prospectus in connection
with any resale of such Exchange Notes, but by so acknowledging, the holder
shall not be deemed to admit that, by delivering a prospectus, it is an
"underwriter" within the meaning of the Securities Act,
(4) neither the holder nor any Beneficial Owner is an "affiliate," as
defined under Rule 405 of the Securities Act, of ours except as otherwise
disclosed to us in writing, and
(5) the holder and each Beneficial Owner understands that a secondary
resale transaction described in clause (3) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the SEC.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "--Resale of the Exchange Notes;
Plan of Distribution."
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Original Notes pursuant to
the Exchange Offer may be withdrawn, unless theretofore accepted for exchange
as provided in the Exchange Offer, at any time prior to the Expiration Date.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the Exchange Agent at its address set forth herein prior to
the Expiration Date. Any such notice of withdrawal must
. specify the name of the person having deposited the Original Notes to be
withdrawn (the "Depositor"),
. identify the Original Notes to be withdrawn, including the certificate number
or numbers of the particular certificates evidencing the Original Notes
(unless such Original Notes were tendered by book-entry transfer), and
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<PAGE>
aggregate principal amount of such Original Notes, and
. be signed by the holder in the same manner as the original signature on the
Letter of Transmittal (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee under the
Indenture register the transfer of the Original Notes into the name of the
person withdrawing such Original Notes.
If Original Notes have been delivered pursuant to the procedures for book-
entry transfer set forth in "--Procedures for Tendering Original Notes--Book-
Entry Delivery Procedures," any notice of withdrawal must specify the name and
number of the account at the appropriate book-entry transfer facility to be
credited with such withdrawn Original Notes and must otherwise comply with such
book-entry transfer facility's procedures.
If the Original Notes to be withdrawn have been delivered or otherwise
identified to the Exchange Agent, a signed notice of withdrawal meeting the
requirements we discussed above is effective immediately upon written or
facsimile notice of withdrawal even if physical release is not yet effected. A
withdrawal of Original Notes can only be accomplished in accordance with these
procedures.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us in our sole discretion, which
determination shall be final and binding on all parties. No withdrawal of
Original Notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither we, the Exchange
Agent nor any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or revocation, nor shall
they incur any liability for failure to give any such notification. Any
Original Notes so withdrawn will be deemed not to have been validly tendered
for purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Original Notes so withdrawn are retendered. Properly
withdrawn Original Notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering Original Notes" at any time
prior to the Expiration Date.
Any Original Notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the prior
termination of the Exchange Offer, or which have been validly withdrawn, will
be returned to the holder thereof unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date or, if so
requested in the notice of withdrawal, promptly after receipt by us of notice
of withdrawal without cost to such holder.
Conditions to the Exchange Offer
The Exchange Offer shall not be subject to any conditions, other than that
(1) the SEC has issued an order or orders declaring the Indenture
governing the Notes qualified under the Trust Indenture Act of 1939,
(2) the Exchange Offer, or the making of any exchange by a holder, does
not violate applicable law or any applicable interpretation of the staff of
the SEC,
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<PAGE>
(3) no action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency with respect to the
Exchange Offer, which, in our judgment, might impair our ability to proceed
with the Exchange Offer,
(4) there shall not have been adopted or enacted any law, statute, rule
or regulation which, in our judgment, would materially impair our ability
to proceed with the Exchange Offer, or
(5) there shall not have occurred any material change in the financial
markets in the United States or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which on the financial
markets of the United States, in our judgment, would materially impair our
ability to proceed with the Exchange Offer.
If we determine in our sole discretion that any of the conditions to the
Exchange Offer are not satisfied, we may
(1) refuse to accept any Original Notes and return all tendered Original
Notes to the tendering holders,
(2) extend the Exchange Offer and retain all Original Notes tendered
prior to the Expiration Date, subject, however, to the rights of holders to
withdraw such Original Notes (see "--Withdrawal of Tenders"), or
(3) waive such unsatisfied conditions with respect to the Exchange Offer
and accept all validly tendered Original Notes which have not been
withdrawn.
If such waiver constitutes a material change to the Exchange Offer, we will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and will extend the Exchange Offer for a
period of five to 10 business days, depending upon the significance of the
waiver and the manner of disclosure to the registered holders, if the Exchange
Offer would otherwise expire during such five to 10 business day period.
Exchange Agent
State Street Bank & Trust Company, the Trustee under the Indenture governing
the Notes, has been appointed as Exchange Agent for the Exchange Offer.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery and other documents should be directed to the Exchange
Agent addressed as follows:
By Mail:
State Street Bank & Trust Company
P.O. Box 778
Boston, Massachusetts 02102-0078
Attention: Kellie Mullen
By Facsimile:
(617) 664-5290
Confirm by Telephone:
(617) 664-5587
By Hand:
State Street Bank & Trust Company
Two Avenue de LaFayette
5th Floor, Corporate Trust Window
Boston, Massachusetts 02111-1724
Attention: Kellie Mullen
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<PAGE>
Fees and Expenses
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by officers and regular employees
of our company and its affiliates.
No dealer-manager has been retained in connection with the Exchange Offer and
no payments will be made to brokers, dealers or others soliciting acceptance of
the Exchange Offer. However, reasonable and customary fees will be paid to the
Exchange Agent for its services and it will be reimbursed for its reasonable
out-of-pocket expenses in connection therewith.
We estimate that our out of pocket expenses for the Exchange Offer will be
approximately $200,000. Such expenses include fees and expenses of the Exchange
Agent and the trustee under the Indenture, accounting and legal fees and
printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the
Original Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Original Notes pursuant
to the Exchange Offer, then the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
Accounting Treatment
The Exchange Notes will be recorded at the carrying value of the Original
Notes and no gain or loss for accounting purposes will be recognized. The
expenses of the Exchange Offer will be amortized over the term of the Exchange
Notes.
Resale of the Exchange Notes; Plan of Distribution
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period of
180 days after the Expiration Date, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until September 15, 1999 (90 days after the date of
this prospectus), all dealers effecting transactions in the Exchange Notes,
whether or not participating in this distribution, may be required to deliver a
prospectus. This requirement is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
We will not receive any proceeds from any sale of Exchange Notes by broker-
dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions
(1) in the over-the-counter market,
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<PAGE>
(2) in negotiated transactions,
(3) through the writing of options on the Exchange Notes or a combination
of such methods of resale,
(4) at market prices prevailing at the time of resale,
(5) at prices related to such prevailing market prices or
(6) 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 Exchange
Notes.
Any broker-dealer that resells Exchange Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission on concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, we 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. We have agreed to pay all expenses incident to the Exchange Offer
(including the expenses approved in writing of one counsel for the holders of
the Notes) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Notes (including any broker-dealers) required
to use this prospectus in connection with their resale of Exchange Notes as
described above against certain liabilities, including liabilities under the
Securities Act.
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<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy our material obligations under the
Registration Rights Agreement. We will not receive any cash proceeds from the
issuance of the Exchange Notes offered by this prospectus. In consideration
for issuing the Exchange Notes as contemplated in this prospectus, we will
receive in exchange Original Notes in like principal amount, the form and
terms of which are the same as the form and terms of the Exchange Notes,
except as otherwise described herein under "The Exchange Offer--Terms of the
Exchange Offer." The Original Notes surrendered in exchange for the Exchange
Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase in our
indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES
Our unaudited ratios of earnings to fixed charges for the periods indicated
are as follows:
<TABLE>
<CAPTION>
Years Ended
Quarter Year Ten Months February 28 or
Ended Ended Ended 29,
March 31, December 31, December 31, -----------------
1999 1998 1997(1) 1997 1996 1995
--------- ------------ ------------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(2)........ 2.54x 5.64x -- 8.60x 8.69x 6.56x
</TABLE>
- --------
(1) In the ten months ended December 31, 1997, earnings were inadequate to
cover fixed charges in the amount of $0.8 million due to the impact of a
$7.0 million compensation charge that will not recur.
(2) The ratio of earnings to fixed charges was computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income before
income taxes and fixed charges. Fixed charges consist of interest expense,
amortization of debt issuance costs and the estimated interest portion of
rental expense.
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<PAGE>
CAPITALIZATION
The following table sets forth (1) our historical consolidated capitalization
as of March 31, 1999 and (2) our pro forma consolidated capitalization as of
March 31, 1999 after giving effect to the acquisition of six companies
subsequent to March 31, 1999. For a description of the pro forma adjustments,
see Notes to Unaudited Pro Forma Combined Financial Statements incorporated by
reference herein from our Form 8-K filed June 14, 1999. This presentation
should be read in conjunction with our historical and unaudited pro forma
combined financial statements and related notes thereto incorporated by
reference herein (in thousands).
<TABLE>
<CAPTION>
As of March 31, 1999
---------------------
Pro Forma
for
Actual Acquisitions
-------- ------------
<S> <C> <C>
Short-term senior debt.................................... $ 885 $ 885
======== ========
Long-term debt:
Credit facility ........................................ 156,000 188,726
9 3/4% Notes due 2009................................... 130,000 130,000
Junior subordinated debt................................ 1,650 1,650
-------- --------
Total long-term debt.................................. 287,650 320,376
-------- --------
Shareholders' equity...................................... 348,471 369,545
-------- --------
Total capitalization.................................. $636,121 $689,921
======== ========
</TABLE>
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<PAGE>
DESCRIPTION OF CREDIT AGREEMENT
General
The lenders under our Credit Agreement are committed to provide us, subject
to certain terms and conditions, the entire $425 million principal amount of
the revolving credit facility described below. The following description
summarizes the material provisions of the Credit Agreement. The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the provisions of the Credit Agreement a copy
of which is filed as an exhibit to the registration statement of which this
prospectus is a part.
Amortization; Prepayments
Loans under the Credit Agreement may be prepaid at any time without premium
or penalty in reasonable minimum amounts. Prepayments of Eurodollar borrowings
on any day other than the last day of an interest period must be accompanied by
a payment to the lenders of various costs, expenses or losses, if any, incurred
as a result of such prepayment. Any loans under the Credit Agreement are
payable in full on October 13, 2001.
Security; Guarantees
Borrowings under the Credit Agreement are guaranteed by our domestic
Subsidiaries (as defined in the Credit Agreement), including future domestic
Subsidiaries. Our obligations under the Credit Agreement and the obligations
under the guarantees are secured by a first priority lien on the accounts
receivable and inventory of the domestic Subsidiaries, and by a pledge of stock
of its domestic Subsidiaries.
Interest Rates
Loans under the Credit Agreement bear interest at a rate per annum, at our
option, of either (1) the Alternate Base Rate which is equal to the greater of
the Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.5%
or the Prime Rate (as defined in the Credit Agreement) plus a margin depending
on the ratio of indebtedness for borrowed money to Adjusted EBITDA (as defined
in the Credit Agreement), or (2) the Eurodollar Rate (as defined in the Credit
Agreement) plus a margin depending on the ratio of indebtedness for borrowed
money to Adjusted EBITDA.
Fees, Expenses and Costs; Credit Facilities
The terms of the Credit Agreement require us to pay the following fees in
connection with the maintenance of loans under the Credit Agreement: (1)
commitment fees to be paid to the Lenders in amounts between 0.25% and 0.375%
per annum with respect to the unused commitments under the Credit Agreement
depending on the ratio of indebtedness for borrowed money to Adjusted EBITDA,
payable quarterly in arrears until such time as such facility is terminated;
and (2) administration fees payable annually to the Agent. In addition, we paid
various underwriting and arrangement fees and closing costs in connection with
the origination and syndication of the Credit Agreement.
We are required to reimburse the Agent for all reasonable out-of-pocket costs
and expenses incurred in the preparation, documentation and administration of
the Credit Agreement and to reimburse the Lenders for all reasonable costs and
expenses incurred in connection with the
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<PAGE>
enforcement of their rights in connection with a default or the enforcement of
the Credit Agreement. We must indemnify the Agent and the Lenders and their
respective officers, directors, shareholders, employees, agents and attorneys
against certain costs, expenses (including fees and reimbursements of counsel)
and liabilities arising out of or relating to the Credit Agreement and the
transactions contemplated thereby. The Lenders also are entitled to be
reimbursed for certain reserve requirements and increases therein, changes in
law and circumstances, taxes (other than on overall net income), capital
adequacy, and consequential costs. Further, the inability to determine
Eurodollar Rates or the possible future illegality of the Eurodollar Rate
option will result in such rate option being unavailable.
Covenants
The Credit Agreement contains substantial restrictive covenants limiting our
ability and that of our subsidiaries to:
. incur Indebtedness (as defined in the Credit Agreement), including
contractual contingent obligations;
. pay certain debt after default;
. create or allow to exist liens or other encumbrances;
. transfer assets except for sales and other transfers of inventory or surplus,
immaterial or obsolete assets in the ordinary course of business;
. enter into mergers, consolidations and asset dispositions of all or
substantially all of our properties;
. make investments;
. extend credit to any entity;
. sell, transfer or otherwise dispose of any class of stock or the voting
rights of any subsidiary of GroupMAC;
. enter into transactions with related parties other than on an arm's-length
basis on terms no less favorable to us than those available from third
parties;
. amend certain agreements;
. make any material change in the nature of the business conducted by
GroupMAC;
. pay dividends or redeem shares of capital stock; and
. make capital expenditures.
In addition, the Credit Agreement contains covenants that, among other things
and with certain exceptions, require us and our subsidiaries to:
. maintain the existence, qualification and good standing of GroupMAC and its
subsidiaries;
. comply in all material respects with all material applicable laws;
. maintain material properties, rights and franchises;
. deliver certain financial and other information;
. maintain specified insurance;
. pay taxes; and
. notify the Lenders of any default under the Loan Documents (as defined in the
Credit Agreement) and of certain other material events.
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Under the Credit Agreement, we are required to satisfy certain financial
covenants and tests, including (1) a minimum fixed charge coverage ratio; (2) a
maximum ratio of total indebtedness for borrowed money to Capitalization (as
defined in the Credit Agreement); and (3) a minimum Consolidated Net Worth (as
defined in the Credit Agreement).
Events of Default
Events of Default under the Credit Agreement include, subject to certain
applicable notice and grace periods, the following:
. a default in the payment when due of any principal, interest, fees or other
amount under the Credit Agreement;
. a default by GroupMAC under any debt instrument in excess of $5,000,000, or
the occurrence of any event or condition that enables the holder of such debt
to accelerate the maturity thereof;
. any material breach of any representation, warranty or statement in, or
failure to perform any duty or covenant under the Credit Agreement or any of
the Loan Documents;
. commencement of voluntary or involuntary bankruptcy, insolvency or similar
proceedings by or against GroupMAC or any Material Subsidiary (as defined in
the Credit Agreement);
. any judgment or order in excess of $5,000,000 net of confirmed insurance
remaining undischarged or unstayed for longer than certain periods; and
. a Change of Control (as defined in the Credit Agreement).
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DESCRIPTION OF THE NOTES
The Notes are to be issued under an indenture (the "Indenture") among
GroupMAC, each of the GroupMAC's subsidiaries as of the date of the issuance
(the "Initial Guarantors") and State Street Bank and Trust Company, as trustee
(the "Trustee"). The Indenture will not be qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), except upon effectiveness
of a registration statement for the Exchange Offer. By its terms, however, the
Indenture will incorporate certain provisions of the Trust Indenture Act and,
upon consummation of the Exchange Offer, the Indenture will be subject to and
governed by the Trust Indenture Act. References to the Notes include the
Exchange Notes unless the context otherwise requires.
The following summary of the material provisions of the Indenture and the
Notes does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the provisions of the Indenture and the Notes,
including the definitions of certain terms contained therein and those terms
made part of the Indenture by reference to the Trust Indenture Act. The
definitions of certain capitalized terms used in the following summary are set
forth below under "--Certain Definitions."
General
The Notes are unsecured senior subordinated obligations of GroupMAC limited
to $200 million aggregate principal amount, of which $130 million were issued
on the Issue Date, and are guaranteed by each of the Guarantors on a senior
subordinated basis as described below. The Notes will be issued only in
registered form without coupons, in denominations of $1,000 and integral
multiples thereof.
Principal of, premium, if any, and interest on the Notes will be payable, and
the Notes will be transferable, at the corporate trust office or agency of the
Trustee in the City of New York maintained for such purposes. In addition,
interest may be paid at the option of GroupMAC by check mailed to the person
entitled thereto as shown on the security register. No service charge will be
made for any transfer, exchange or redemption of Notes, except in certain
circumstances for any tax or other governmental charge that may be imposed in
connection therewith.
Maturity, Interest and Principal
The Notes mature on January 15, 2009. Interest on the Notes accrues at the
rate of 9 3/4% per annum and will be payable semi-annually in arrears on each
January 15 and July 15, commencing July 15, 1999, to the holders of record of
Notes at the close of business on the January 1 and July 1, respectively,
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 January 22, 1999 (the "Issue Date"). Interest is
computed on the basis of a 360-day year comprised of twelve 30-day months.
The Notes are expected to trade in the Same-Day Funds Settlement System of
The Depository Trust Company ("DTC") until maturity, and secondary market
trading activity for the Notes will therefore settle in same day funds.
Additional Interest
Pursuant to the Registration Rights Agreement, GroupMAC agreed to file with
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the Commission the Exchange Offer Registration Statement and to offer to the
holders of Notes who are able to make certain representations the opportunity
to exchange their Notes for Exchange Notes. In the event that GroupMAC is not
permitted to file the Exchange Offer Registration Statement or to consummate
the Exchange Offer because the Exchange Offer is not permitted by applicable
law or Commission policy or in certain other circumstances, including if for
any reason the Exchange Offer is not consummated within 180 days after the
Issue Date, GroupMAC will file with the Commission a Shelf Registration
Statement with respect to resales of the Notes by the holders thereof. The
interest rate on the Notes is subject to increase under certain circumstances
if GroupMAC is not in compliance with its obligations under the Registration
Rights Agreement.
Optional Redemption
Optional Redemption. The Notes are redeemable at the option of GroupMAC, in
whole or in part, at any time on or after January 15, 2004, at the redemption
prices expressed as percentages of principal amount set forth below, plus
accrued and unpaid interest, if any, to the redemption date, if redeemed during
the 12-month period beginning January 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ----------
<S> <C>
2004............................ 104.875%
2005............................ 103.250%
2006............................ 101.625%
2007 and thereafter............. 100.000%
</TABLE>
In addition, at any time, or from time to time, on or prior to January 15,
2002, GroupMAC may, at its option, use the net cash proceeds of one or more
Equity Offerings (as defined below) to redeem up to an aggregate of 35% of the
principal amount of the Notes issued, at a redemption price equal to 109.75% of
the principal amount thereof plus accrued and unpaid interest, if any, thereon
to the redemption date. We may do this only if at least 65% of the issued
principal amount of Notes remains outstanding immediately after the occurrence
of such redemption. In order to effect this kind of redemption with the
proceeds of any Equity Offering, GroupMAC must send a redemption notice to the
Trustee not later than 90 days after the consummation of any such Equity
Offering.
As used in the preceding paragraph, "Equity Offering" means a sale of Common
Stock of GroupMAC with net cash proceeds to GroupMAC of at least $25.0 million.
Selection and Notice. In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate subject to the
rules of DTC. If this happens, Notes will only be redeemable in principal
amounts of $1,000 or an integral multiple of $1,000. Notice of redemption will
be mailed by first-class mail at least 30 but not more than 60 days before the
redemption date to each holder of 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 will state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be
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issued in the name of the holder thereof upon surrender for cancellation of the
original Note. On and after the redemption date, interest will cease to accrue
on Notes or portions thereof called for redemption, unless GroupMAC defaults in
the payment of the redemption price.
Sinking Fund
The Notes are not entitled to the benefit of any mandatory sinking fund.
Voting
The Indenture provides that the holders of the Notes and the Exchange Notes
will vote and consent together on all matters to which such holders are
entitled to vote or consent as one class and that none of the holders of the
Notes and the Exchange Notes will have the right to vote or consent as a
separate class on any matter to which such holders are entitled to vote or
consent.
Change of Control
Upon the occurrence of a Change of Control, GroupMAC will be obligated to
make an offer to purchase (a "Change of Control Offer"), on a business day (the
"Change of Control Purchase Date") not more than 60 nor less than 30 days
following the occurrence of the Change of Control, all of the then outstanding
Notes tendered. GroupMAC must pay for these tendered Notes purchase price in
cash (the "Change of Control Purchase Price") equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, thereon to the Change
of Control Purchase Date. GroupMAC will be required to purchase all Notes
tendered into the Change of Control Offer and not withdrawn. The Change of
Control Offer is required to remain open for at least 20 business days.
In order to effect such Change of Control Offer, GroupMAC must, not later
than the 30th day after the Change of Control, mail to each holder of Notes
notice of the Change of Control Offer. This notice will govern the terms of the
Change of Control Offer and will state, among other things, the procedures that
holders of Notes must follow to accept the Change of Control Offer.
If a Change of Control Offer is made, there can be no assurance that GroupMAC
will have available funds sufficient to pay the Change of Control Purchase
Price for all of the Notes that might be delivered by holders of Notes seeking
to accept the Change of Control Offer. In addition, there can be no assurance
that GroupMAC's debt instruments will permit such offer to be made.
The New Credit Agreement does not permit GroupMAC to make a Change of Control
Offer and, in order to make such offer, GroupMAC would be required to pay off
the New Credit Agreement in full or seek a waiver from the lenders under the
New Credit Agreement to allow GroupMAC to make the Change of Control Offer. The
occurrence of a Change of Control is also an event of default under the New
Credit Agreement and would entitle the lenders thereunder to accelerate all
amounts owing under the New Credit Agreement. Failure to make a Change of
Control Offer, even if prohibited by GroupMAC's debt instruments, would
constitute a default under the Indenture. See "Risk Factors--Possible Inability
to Repurchase Notes upon a Change of Control."
GroupMAC 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
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the times and otherwise in compliance with the requirements applicable to a
Change of Control Offer made by GroupMAC and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
The provisions of the Indenture may not afford Noteholders protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving GroupMAC if such transaction is not a
transaction defined as a "Change of Control."
The use of the term "all or substantially all" in provisions of the Indenture
such as clause (b) of the definition of "Change of Control" and under "--
Consolidation, Merger, Sale of Assets, Etc." has no clearly established meaning
under New York law, which governs the Indenture, and has been the subject of
limited judicial interpretation in only a few jurisdictions. Accordingly, there
may be a degree of uncertainty in ascertaining whether any particular
transaction would involve a disposition of "all or substantially all" of the
assets of a person, which uncertainty should be considered by prospective
purchasers of Notes.
Management has no present intention to engage in a transaction involving a
Change of Control, although it is possible that GroupMAC would decide to do so
in the future. Subject to the limitations discussed below, GroupMAC could, in
the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control under the Indenture, but that would increase the amount of indebtedness
outstanding at such time or otherwise affect GroupMAC's capital structure or
credit ratings. Restrictions on the ability of GroupMAC to incur additional
Indebtedness are contained in the covenant described under "Certain Covenants--
Limitation on Indebtedness." Such restrictions can only be waived with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such covenant, however,
the Indenture does not contain any covenants or protections that may afford
Holders of the Notes protection in the event of a highly leveraged transaction.
GroupMAC will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder, to the extent such laws or
regulations are applicable, in the event that a Change of Control occurs and
GroupMAC is required to purchase Notes as described above, and any violation of
the provisions of the Indenture relating to such Offer to Purchase occurring as
a result of such compliance shall not be deemed a Default or an Event of
Default.
Subordination
The indebtedness evidenced by the Notes is subordinated in right of payment
to the prior payment in full in cash of all Senior Indebtedness, including
Indebtedness under the New Credit Agreement. The Notes are unsecured senior
subordinated indebtedness of GroupMAC ranking senior to all existing and future
Subordinated Indebtedness of GroupMAC.
The Indenture provides that in the event of any insolvency or bankruptcy case
or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to GroupMAC or its
assets, or any liquidation, dissolution or other winding-up of GroupMAC,
whether voluntary or
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involuntary, or any assignment for the benefit of creditors or other
marshalling of assets or liabilities of GroupMAC, all Senior Indebtedness
(including, in the case of Designated Senior Indebtedness, any interest
accruing subsequent to the filing of a petition for bankruptcy regardless of
whether such interest is an allowed claim in the bankruptcy proceeding) must be
paid in full in cash before any payment is made on account of the principal of,
premium, if any, or interest on the Notes.
During the continuance of any default in the payment of principal, premium,
if any, or interest on any Senior Indebtedness, when the same becomes due, and
after receipt by the Trustee and GroupMAC from representatives of holders of
such Senior Indebtedness of written notice of such default, no direct or
indirect payment (other than payments from trusts previously created pursuant
to the provisions described under "--Defeasance or Covenant Defeasance of
Indenture") by or on behalf of GroupMAC of any kind of character (excluding
certain permitted equity or subordinated securities) may be made on account of
the principal of, premium, if any, or interest on, or the purchase, redemption
or other acquisition of, the Notes unless and until such default has been cured
or waived or has ceased to exist or such Senior Indebtedness shall have been
discharged or paid in full in cash, after which GroupMAC shall resume making
any and all required payments in respect of the Notes, including any missed
payments.
In addition, during the continuance of any other default with respect to any
Designated Senior Indebtedness that permits, or would permit with the passage
of time or the giving of notice or both, the maturity thereof to be accelerated
(a "Non-payment Default") and upon the earlier to occur of (a) receipt by the
Trustee and GroupMAC from the representatives of holders of such Designated
Senior Indebtedness of a written notice of such Non-payment Default or (b) if
such Non-payment Default results from the acceleration of the maturity of the
Notes, the date of such acceleration, no payment (other than payments from
trusts previously created pursuant to the provisions described under "--
Defeasance or Covenant Defeasance of Indenture") of any kind or character
(excluding certain permitted equity or subordinated securities) may be made by
GroupMAC on account of the principal of, premium, if any, or interest on, or
the purchase, redemption, or other acquisition of, the Notes for the period
specified below (the "Payment Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of a
Non-payment Default by the Trustee and GroupMAC from the representatives of
holders of Designated Senior Indebtedness or the date of the acceleration
referred to in clause (b) of the preceding paragraph, as the case may be, and
shall end on the earliest to occur of the following events:
(1) 179 days have elapsed since the receipt of such notice or the date of the
acceleration referred to in clause (b) of the preceding paragraph (provided the
maturity of such Designated Senior Indebtedness shall not theretofore have been
accelerated),
(2) such default is cured or waived or ceases to exist or such Designated
Senior Indebtedness is discharged or paid in full in cash, or
(3) such Payment Blockage Period has been terminated by written notice to
GroupMAC or the Trustee from the representatives of holders of Designated
Senior Indebtedness initiating such Payment
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Blockage Period, after which GroupMAC shall promptly resume making any and all
required payments in respect of the Notes, including any missed payments.
Only one Payment Blockage Period with respect to the Notes may be commenced
within any 360 consecutive day period. No Non-payment Default with respect to
Designated Senior Indebtedness that existed or was continuing on the date of
the commencement of any Payment Blockage Period will be, or can be, made the
basis for the commencement of a second Payment Blockage Period, whether or not
within a period of 360 consecutive days, unless such default has been cured or
waived for a period of not less than 90 consecutive days. In no event will a
Payment Blockage Period extend beyond 179 days from the date of the receipt by
the Trustee of the notice or the date of the acceleration initiating such
Payment Blockage Period and there must be a 180 consecutive day period in any
360 day period during which no Payment Blockage Period is in effect.
If GroupMAC fails to make any payment on the Notes when due 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 the Notes
to accelerate the maturity thereof. See "--Events of Default."
By reason of such subordination, in the event of liquidation or insolvency,
creditors of GroupMAC who are holders of Senior Indebtedness may recover more,
ratably, than the holders of the Notes, and funds which would be otherwise
payable to the holders of the Notes will be paid to the holders of Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full,
and GroupMAC may be unable to meet its obligations fully with respect to the
Notes.
On a pro forma basis after giving effect to the now completed expansion of
the New Credit Agreement and the acquisitions that occurred subsequent to March
31, 1999, GroupMAC and the Guarantors would have had, without duplication,
$189.6 million of Senior Indebtedness outstanding as of March 31, 1999, and
GroupMAC would have had $235.9 million of borrowing capacity available under
the New Credit Agreement. The Indenture limits, but not prohibits, the
incurrence by GroupMAC of additional Indebtedness which is senior to the Notes
and prohibits the incurrence by GroupMAC of Indebtedness which is subordinated
in right of payment to any other Indebtedness of GroupMAC and senior in right
of payment to the Notes.
"Designated Senior Indebtedness" means (1) all Indebtedness under the New
Credit Agreement and (2) any other issue of Senior Indebtedness which (a) at
the time of the determination is equal to or greater than $25 million in
aggregate principal amount and (b) is specifically designated by GroupMAC in
the instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of GroupMAC, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, (x) "Senior Indebtedness" shall include the principal of,
premium, if any,
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and interest on all obligations of every nature of GroupMAC from time to time
owed to the lenders under the New Credit Agreement, including, without
limitation, principal of and interest on, and all fees, indemnities and
expenses payable under, the New Credit Agreement, and (y) in the case of
Designated Senior Indebtedness, "Senior Indebtedness" shall include interest
accruing thereon subsequent to the occurrence of any Event of Default specified
in clause (7) or (8) under "--Events of Default" relating to GroupMAC, whether
or not the claim for such interest is allowed under any applicable Bankruptcy
Code.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(a) Indebtedness evidenced by the Notes,
(b) Indebtedness that is expressly subordinate or junior in right of payment
to any Indebtedness of GroupMAC,
(c) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without recourse to
GroupMAC,
(d) Indebtedness which is represented by Redeemable Capital Stock,
(e) Indebtedness for goods, materials or services purchased in the ordinary
course of business or Indebtedness consisting of trade payables or other
current liabilities (other than any current liabilities owing under the New
Credit Agreement, or the current portion of any long-term Indebtedness which
would constitute Senior Indebtedness but for the operation of this clause (e)),
(f) Indebtedness of or amounts owed by GroupMAC for compensation to employees
or for services rendered to GroupMAC,
(g) any liability for federal, state, local or other taxes owed or owing by
GroupMAC,
(h) Indebtedness of GroupMAC to a Subsidiary of GroupMAC or any other
Affiliate of GroupMAC or any of such Affiliate's Subsidiaries,
(i) that portion of any Indebtedness which is incurred by GroupMAC in
violation of the Indenture,
(j) Indebtedness of GroupMAC that by operation of law is subordinate to any
general unsecured obligations of GroupMAC, and
(k) amounts owing under leases.
Guarantees
Each Initial Guarantor and each future subsidiary of GroupMAC that is not an
Unrestricted Subsidiary (collectively, the "Guarantors") will fully and
unconditionally guarantee, on a senior subordinated basis, jointly and
severally, to each holder of Notes and the Trustee, the full and prompt
performance of GroupMAC's obligations under the Indenture and the Notes,
including the payment of principal of and interest on the Notes. The Guarantees
will be subordinated to Guarantor Senior Indebtedness on the same basis as the
Notes are subordinated to Senior Indebtedness.
The obligations of each Guarantor are limited to the maximum amount which,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, will result in the obligations of such Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. See "Risk Factors--Fraudulent Transfer Considerations."
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Each Guarantor that makes a payment or distribution under a Guarantee shall
be entitled to a contribution from each other Guarantor in an amount pro rata,
based on the net assets of each Guarantor, determined in accordance with GAAP.
Each Guarantor may consolidate with or merge into or sell its assets to
GroupMAC or another Guarantor without limitation, or with other persons upon
the terms and conditions set forth in the Indenture. See "--Consolidation,
Merger, Sale of Assets, Etc." In the event all or substantially all of the
assets or the capital stock of a Guarantor is sold and the sale complies with
the provisions set forth in "--Certain Covenants-- Disposition of Proceeds of
Asset Sales," the Guarantor's Guarantee will be automatically and
unconditionally discharged and released.
"Guarantor Senior Indebtedness" of a Guarantor means the principal of,
premium, if any, and interest on any Indebtedness of such Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to such
Guarantor's Guarantee. Without limiting the generality of the foregoing, (x)
"Guarantor Senior Indebtedness" shall include the principal of, premium, if
any, and interest on all obligations of every nature of such Guarantor from
time to time owed to the lenders under the New Credit Agreement, including,
without limitation, principal of and interest on, and all fees, indemnities and
expenses payable under, the New Credit Agreement, and (y) in the case of
amounts owing under the New Credit Agreement and guarantees of Designated
Senior Indebtedness, "Guarantor Senior Indebtedness" shall include interest
accruing thereon subsequent to the occurrence of any Event of Default specified
in clause (7) or (8) under "--Events of Default" relating to such Guarantor,
whether or not the claim for such interest is allowed under any applicable
Bankruptcy Code.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not
include
(a) Indebtedness evidenced by the Notes or the Guarantees,
(b) Indebtedness that is expressly subordinate or junior in right of payment
to any Indebtedness of such Guarantor,
(c) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without recourse to
such Guarantor,
(d) Indebtedness which is represented by Redeemable Capital Stock,
(e) Indebtedness for goods, materials or services purchased in the ordinary
course of business or Indebtedness consisting of trade payables or other
current liabilities (other than any current liabilities owing under the New
Credit Agreement, or the current portion of any long-term Indebtedness which
would constitute Guarantor Senior Indebtedness but for the operation of this
clause (e)),
(f) Indebtedness of or amounts owed by such Guarantor for compensation to
employees or for services rendered to such Guarantor,
(g) any liability for federal, state, local or other taxes owed or owing by
such Guarantor,
(h) Indebtedness of such Guarantor to GroupMAC or a Subsidiary of GroupMAC or
any other Affiliate of GroupMAC or any of such Affiliate's Subsidiaries,
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(i) that portion of any Indebtedness which is incurred by such Guarantor in
violation of the Indenture,
(j) Indebtedness of such Guarantor that by operation of law is subordinate to
any general unsecured obligations of such Guarantor, and
(k) amounts owing under leases.
Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to
GroupMAC's obligations pursuant to the Notes, and the
aggregate net assets, earnings and equity of the Guarantors and GroupMAC are
substantially equivalent to the net assets, earnings and equity of GroupMAC on
a consolidated basis.
Certain Covenants
The Indenture contains the following covenants, among others:
Limitation on Indebtedness. GroupMAC will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or in any manner become directly or indirectly liable,
contingently or otherwise (in each case, to "incur"), for the payment of any
Indebtedness (including any Acquired Indebtedness) other than Permitted
Indebtedness; provided, however, that (a) GroupMAC and any Guarantor will be
permitted to incur Indebtedness (including Acquired Indebtedness), and (b) a
Restricted Subsidiary will be permitted to incur Acquired Indebtedness, if in
each case, after giving pro forma effect to (1) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness were
incurred at the beginning of the four full fiscal quarters immediately
preceding such incurrence, taken as one period; (2) the incurrence, repayment
or retirement of any other Indebtedness or any obligations giving rise to
Consolidated Rental Payments by GroupMAC and its Restricted Subsidiaries since
the first day of such four-quarter period as if such Indebtedness or
obligations were incurred, repaid or retired at the beginning of such four-
quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter
period); and (3) any Asset Sale or Asset Acquisition occurring since the first
day of such four-quarter period (including to the date of calculation) as if
such acquisition or disposition occurred at the beginning of such four-quarter
period, the Consolidated Fixed Charge Coverage Ratio of GroupMAC is at least
2:1.
Limitation on Restricted Payments. GroupMAC will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution or payment
on or in respect of Capital Stock of GroupMAC or any of its Restricted
Subsidiaries or make any payment to the direct or indirect holders (in
their capacities as such) of Capital Stock of GroupMAC or any of its
Restricted Subsidiaries (other than dividends or distributions payable
solely in Capital Stock of GroupMAC (other than Redeemable Capital Stock)
or in options, warrants or other rights to purchase Capital Stock of
GroupMAC (other than Redeemable Capital Stock)) (other than the declaration
or payment of dividends or other distributions to the extent declared or
paid to GroupMAC or any Restricted Subsidiary),
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(b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of GroupMAC or any of its Restricted Subsidiaries or any options,
warrants or other rights to purchase any such Capital Stock (other than any
such securities owned by GroupMAC or a Restricted Subsidiary),
(c) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Indebtedness outstanding on the Issue
Date (other than any such Subordinated Indebtedness owned by GroupMAC or a
Restricted Subsidiary), or
(d) make any Investment (other than any Permitted Investment) in any
person
(such payments or Investments described in the preceding clauses (a), (b), (c)
and (d) are collectively referred to as "Restricted Payments"), unless, after
giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the Fair Market Value of the
asset(s) proposed to be transferred by GroupMAC or such Restricted Subsidiary,
as the case may be, pursuant to such Restricted Payment), (A) no Default or
Event of Default shall have occurred and be continuing, (B) immediately after
giving effect to such Restricted Payment, GroupMAC would be able to incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness) and (C)
the aggregate amount of all Restricted Payments declared or made from and
after the Issue Date would not exceed the sum of:
(1) 50% of the aggregate Consolidated Net Income of GroupMAC accrued on a
cumulative basis during the period beginning on the Issue Date and ending
on the last day of the fiscal quarter of GroupMAC ending immediately prior
to the date of such proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Net Income of GroupMAC for such period shall be a
loss, minus 100% of such loss);
(2) the aggregate net cash proceeds received by GroupMAC as capital
contributions to GroupMAC after the Issue Date and which constitute
shareholders' equity of GroupMAC in accordance with GAAP;
(3) the aggregate net cash proceeds received by GroupMAC from the
issuance or sale of Capital Stock (excluding Redeemable Capital Stock) of
GroupMAC to any person (other than to a Subsidiary of GroupMAC) after the
Issue Date;
(4) the aggregate net cash proceeds received by GroupMAC from any person
(other than a Subsidiary of GroupMAC) upon the exercise of any options,
warrants or rights to purchase shares of Capital Stock (other than
Redeemable Capital Stock) of GroupMAC after the Issue Date;
(5) the aggregate net cash proceeds received after the Issue Date by
GroupMAC from any person (other than a Subsidiary of GroupMAC) for debt
securities that have been converted into or exchanged for Capital Stock of
GroupMAC (other than Redeemable Capital Stock) (to the extent such debt
securities were originally sold for cash) plus the aggregate amount of cash
received by GroupMAC (other than from a Subsidiary of GroupMAC) in
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connection with such conversion or exchange;
(6) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment after the Issue Date, an amount equal to
the lesser of the return of capital with respect to such Investment and the
initial amount of such Investment, in either case, less the cost of the
disposition of such Investment; and
(7) so long as the Designation thereof was treated as a Restricted Payment
made after the Issue Date, with respect to any Unrestricted Subsidiary that
has been redesignated as a Restricted Subsidiary after the Issue Date in
accordance with "--Limitation on Designations of Unrestricted Subsidiaries"
below, the Fair Market Value of GroupMAC's interest in such Subsidiary at
the time of such redesignation; provided that such amount shall not in any
case exceed the Designation Amount with respect to such Restricted
Subsidiary upon its Designation, minus the Designation Amount (measured as
of the date of Designation) with respect to any Restricted Subsidiary of
GroupMAC which has been designated as an Unrestricted Subsidiary after the
Issue Date in accordance with "--Limitations on Designations of Unrestricted
Subsidiaries" below.
For purposes of the preceding clause (C)(4), the value of the aggregate net
proceeds received by GroupMAC upon the issuance of Capital Stock upon the
exercise of options, warrants or rights will be the net cash proceeds received
upon the issuance of such options, warrants or rights plus the incremental
amount received by GroupMAC upon the exercise thereof.
None of the foregoing provisions will prohibit, so long, in the case of
clauses (2), (3), (6) and (7) below, as there is no Default or Event of Default
continuing,
(1) the payment of any dividend or distribution within 60 days after the
date of its declaration, if at the date of declaration such payment would
be permitted by the first paragraph of this covenant;
(2) the redemption, repurchase or other acquisition or retirement of any
shares of any class of Capital Stock of GroupMAC in exchange for, or out of
the net cash proceeds of a substantially concurrent issue and sale of,
other shares of Capital Stock of GroupMAC (other than Redeemable Capital
Stock) to any person (other than to a Subsidiary of GroupMAC); provided,
however, that such net cash proceeds are excluded from clause (C) of the
first paragraph of this covenant;
(3) any redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness in exchange for, or out of the net cash proceeds
of a substantially concurrent issue and sale of, (a) Capital Stock (other
than Redeemable Capital Stock) of GroupMAC to any person (other than to a
Subsidiary of GroupMAC); provided, however, that any such net cash proceeds
are excluded from clause (C) of the first paragraph of this covenant; or
(b) Indebtedness of GroupMAC so long as such Indebtedness is Subordinated
Indebtedness which (i) has no scheduled principal payment prior to the 91st
day after the Maturity Date, (ii) has an Average Life to Stated Maturity
greater than the remaining Average Life to Stated Maturity of the Notes and
(iii) is
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subordinated to the Notes in the same manner and to the same extent as the
Subordinated Indebtedness so purchased, exchanged, redeemed, acquired or
retired;
(4) Investments constituting Restricted Payments made as a result of the
receipt of non-cash consideration from any Asset Sale or other sale of
assets or property made pursuant to and in compliance with the Indenture;
(5) payments to purchase Capital Stock of GroupMAC from management or
employees of GroupMAC or any of its Subsidiaries, or their authorized
representatives, upon the death, disability or termination of employment of
such employees, in aggregate amounts under this clause (5) not to exceed $1
million in any fiscal year of GroupMAC;
(6) the payment of any dividend or distribution by a Restricted
Subsidiary to the holders of its Capital Stock on a pro rata basis; and
(7) payments to purchase Capital Stock of GroupMAC in the aggregate
amount under this clause (7) not to exceed $5 million from the Issue Date.
Any payments made pursuant to clause (1) or (5) of this paragraph shall be
taken into account in calculating the amount of Restricted Payments made
from and after the Issue Date.
Limitation on Liens. GroupMAC will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens
of any kind securing Indebtedness upon any of its property or assets, or any
proceeds therefrom, unless the Notes are equally and ratably secured (except
that Liens securing Subordinated Indebtedness shall be expressly subordinate to
Liens securing the Notes to the same extent such Subordinated Indebtedness is
subordinate to the Notes), except for (a) Liens securing Senior Indebtedness
and Guarantor Senior Indebtedness; (b) Liens securing the Notes; (c) Liens
securing Indebtedness which is incurred to refinance Indebtedness which has
been secured by a Lien (other than a Lien in favor of GroupMAC or a Restricted
Subsidiary) permitted under the Indenture and which has been incurred in
accordance with the provisions of the Indenture; provided, however, that such
Liens do not extend to or cover any property or assets of GroupMAC or any of
its Restricted Subsidiaries not securing the Indebtedness so refinanced; and
(d) Permitted Liens.
Disposition of Proceeds of Asset Sales. GroupMAC will not, and will not
permit any of its Restricted Subsidiaries to, make any Asset Sale unless (a)
GroupMAC or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets sold or otherwise disposed of and (b) at least
75% of such consideration consists of cash or Cash Equivalents or Replacement
Assets; provided, however, that the amount of any Indebtedness (as shown on the
most recent balance sheet of GroupMAC or such Restricted Subsidiary) of
GroupMAC or such Restricted Subsidiary that is assumed by the transferee of
such assets and any securities, notes or other obligations received by GroupMAC
or such Restricted Subsidiary from such transferee that are converted within 30
days into cash or Cash Equivalents (to the extent of the cash or Cash
Equivalents received) shall be deemed to be cash for the purposes of this
provision; and provided, further, that the 75% limitation referred to in clause
(b) will not apply to any Asset Sale in which the cash or Cash
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Equivalent portion of the consideration received therefrom determined in
accordance with the foregoing provision is equal to or greater than what the
after tax proceeds would have been had such Asset Sale complied with the
aforementioned 75% limitation. To the extent that the Net Cash Proceeds, or
portion thereof, of any Asset Sale are not applied to repay, and permanently
reduce the commitments under Senior Indebtedness, Guarantor Senior Indebtedness
or Indebtedness of a Foreign Restricted Subsidiary which is not a Guarantor,
GroupMAC or such Restricted Subsidiary, as the case may be, may apply the Net
Cash Proceeds from such Asset Sale, within 360 days of such Asset Sale, to an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that (as
determined in good faith by the Board of Directors of GroupMAC or the
Restricted Subsidiary, as the case may be) are used or useful in the business
of GroupMAC and its Restricted Subsidiaries conducted at such time or in
businesses reasonably related thereto or in Capital Stock of a person, the
principal portion of whose assets consist of such property or assets
("Replacement Assets"). Any Net Cash Proceeds or portion thereof from any Asset
Sale that are neither used to repay, and permanently reduce the commitments
under, Senior Indebtedness, Guarantor Senior Indebtedness or Indebtedness of a
Foreign Restricted Subsidiary which is not a Guarantor nor invested in
Replacement Assets within such 360-day period constitute "Excess Proceeds"
subject to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds $10 million,
GroupMAC shall make an offer to purchase (an "Asset Sale Offer"), from all
holders of the Notes, an aggregate principal amount of Notes equal to such
Excess Proceeds, at a price in cash equal to 100% of the outstanding principal
amount thereof plus accrued and unpaid interest, if any, to the purchase date
(the "Asset Sale Offer Price"). To the extent that the aggregate principal
amount of Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, GroupMAC may use such deficiency for general corporate
purposes. The Notes shall be purchased by GroupMAC, at the option of the holder
thereof, in whole or in part in integral multiples of $1,000, on a date that is
not earlier than 30 days and not later than 60 days from the date the notice is
given to holders, or such later date as may be necessary for GroupMAC to comply
with the requirements under the Exchange Act. If the aggregate principal amount
of Notes validly tendered and not withdrawn by holders thereof exceeds the
Excess Proceeds, Notes to be purchased will be selected on a pro rata basis.
Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall
be reset to zero.
GroupMAC will comply with Rule 14e-11 under the Exchange Act and any other
securities laws and regulations thereunder, to the extent such laws and
regulations are applicable, in the event that an Asset Sale occurs and GroupMAC
is required to purchase Notes as described above, and any violation of the
provisions of the Indenture relating to such Offer to Purchase occurring as a
result of such compliance shall not be deemed a Default or an Event of Default.
Limitation on Issuance of Preferred Stock of Restricted Subsidiaries.
GroupMAC will not permit any Restricted Subsidiary to issue any Preferred Stock
other
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than Preferred Stock issued to GroupMAC or a Wholly-Owned Restricted
Subsidiary. GroupMAC will not sell, transfer or otherwise dispose of Preferred
Stock issued by a Restricted Subsidiary of GroupMAC or permit a Restricted
Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by
a Restricted Subsidiary, other than to GroupMAC or a Wholly-Owned Restricted
Subsidiary. Notwithstanding the foregoing, nothing in such covenant will
prohibit Preferred Stock (other than Redeemable Capital Stock) issued by a
person prior to the time (A) such person becomes a Restricted Subsidiary of
GroupMAC, (B) such person merges with or into a Restricted Subsidiary of
GroupMAC or (C) a Restricted Subsidiary of GroupMAC merges with or into such
person; provided that such Preferred Stock was not issued or incurred by such
person in anticipation of a transaction contemplated by subclause (A), (B), or
(C) above.
Limitation on Transactions with Affiliates. GroupMAC will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into any transaction or series of related transactions (including, without
limitation, the sale, transfer, disposition, purchase, exchange or lease of
assets, property or services) with, or for the benefit of, any of its
Affiliates (other than Restricted Subsidiaries), except (a) on terms that are
no less favorable to GroupMAC or such Restricted Subsidiary, as the case may
be, than those which could have been obtained at the time in a comparable
transaction or series of related transactions from persons who are not
Affiliates of GroupMAC, (b) with respect to a transaction or series of related
transactions involving aggregate payments or value equal to or greater than $2
million, GroupMAC shall have delivered an officer's certificate to the Trustee
certifying that such transaction or transactions comply with the preceding
clause (a), and (c) with respect to a transaction or series of related
transactions involving aggregate payments or value equal to or greater than $5
million, such transaction or transactions shall have been approved by a
majority of the disinterested members of the Board of Directors of GroupMAC.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to
(1) transactions with or among GroupMAC and the Restricted Subsidiaries,
(2) customary directors' fees, indemnification and similar arrangements,
consulting fees, employee salaries, bonuses or employment agreements,
compensation or employee benefit arrangements and incentive arrangements
with any officer, director or employee of GroupMAC or any Restricted
Subsidiary entered into in the ordinary course of business,
(3) any dividends made in compliance with "--Limitation on Restricted
Payments" above,
(4) loans and advances to officers, directors and employees of GroupMAC
or any Restricted Subsidiary made in the ordinary course of business,
(5) the incurrence of intercompany Indebtedness which constitutes
Permitted Indebtedness and
(6) transactions pursuant to agreements in effect on the Issue Date.
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Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. GroupMAC will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of GroupMAC to
(a) pay dividends, in cash or otherwise, or make any other distributions
on or in respect of its Capital Stock or any other interest or
participation in, or measured by, its profits,
(b) pay any Indebtedness owed to GroupMAC or any other Restricted
Subsidiary of GroupMAC,
(c) make loans or advances to GroupMAC or any other Restricted Subsidiary
of GroupMAC,
(d) transfer any of its properties or assets to GroupMAC or any other
Restricted Subsidiary of GroupMAC or
(e) guarantee any Indebtedness of GroupMAC or any other Restricted
Subsidiary of GroupMAC, except for such encumbrances or restrictions
existing under or by reason of
(1) applicable law or any applicable rule, regulation or order,
(2) customary nonassignment provisions of any contract or any lease
governing a leasehold interest of GroupMAC or any Restricted Subsidiary
of GroupMAC,
(3) customary restrictions on transfers of property subject to a Lien
permitted under the Indenture,
(4) the New Credit Agreement as in effect on the Issue Date,
(5) any agreement or other instrument of a person acquired by GroupMAC
or any Restricted Subsidiary of GroupMAC in existence at the time of
such acquisition (but not created in contemplation thereof), 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,
(6) an agreement entered into for the sale or disposition of Capital
Stock or assets of a Restricted Subsidiary or an agreement entered into
for the sale of specified assets (in either case, so long as such
encumbrance or restriction, by its terms, terminates on the earlier of
the termination of such agreement or the consummation of such agreement
and so long as such restriction applies only to the Capital Stock or
assets to be sold),
(7) any agreement in effect on the Issue Date,
(8) the Indenture and the Guarantees, and
(9) any agreement that amends, extends, refinances, renews or replaces
any agreement described in the foregoing clauses; provided that the
terms and conditions of any such agreement are not materially less
favorable to the holders of the Notes with respect to such dividend and
payment restrictions than those under or pursuant to the agreement
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amended, extended, refinanced, renewed or replaced.
Limitation on Designations of Unrestricted Subsidiaries. GroupMAC may
designate after the Issue Date any Restricted Subsidiary as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(1) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(2) GroupMAC would be permitted to make an Investment (other than a
Permitted Investment, except a Permitted Investment covered by clause (x)
of the definition thereof) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to the first paragraph of "--
Limitation on Restricted Payments" above in an amount (the "Designation
Amount") equal to the Fair Market Value of GroupMAC's interest in such
Subsidiary on such date; and
(3) GroupMAC would be permitted under the Indenture to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant described under "--Limitation on Indebtedness" at the time of such
Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, GroupMAC shall be deemed to have made
an Investment constituting a Restricted Payment pursuant to the covenant "--
Limitation on Restricted Payments" for all purposes of the Indenture in the
Designation Amount.
GroupMAC shall not, and shall not cause or permit any Restricted Subsidiary
to, at any time (x) provide credit support for or subject any of its property
or assets (other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary), except
any non-recourse guarantee given solely to support the pledge by GroupMAC or
any Restricted Subsidiary of the Capital Stock of an Unrestricted Subsidiary.
All Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to
be Unrestricted Subsidiaries.
GroupMAC may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") if:
(1) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by an Officers'
Certificate delivered to the Trustee certifying compliance with the foregoing
provisions.
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Limitation on the Issuance of Subordinated Indebtedness. GroupMAC will not,
and will not permit any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is subordinate in right of
payment to any Indebtedness of GroupMAC or such Guarantor and senior in right
of payment to the Notes or the Guarantee of such Guarantor, as the case may be;
provided, however, that GroupMAC and the Guarantors may incur such Acquired
Indebtedness in an aggregate amount not to exceed $25.0 million at any one time
outstanding.
Additional Subsidiary Guarantees. If GroupMAC or any of its Restricted
Subsidiaries acquires, creates or designates another Restricted Subsidiary
organized under the laws of the United States or any possession or territory
thereof, any State of the United States or the District of Columbia, then such
newly acquired, created or designated Restricted Subsidiary shall, within 30
days after the date of its acquisition, creation or designation, whichever is
later, execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall
unconditionally guarantee all of GroupMAC's obligations under the Notes and the
Indenture on the terms set forth in the Indenture. Thereafter, such Subsidiary
shall be a Guarantor for all purposes of the Indenture. GroupMAC at its option
may also cause any other Restricted Subsidiary of GroupMAC to so become a
Guarantor.
Reporting Requirements. For so long as the Notes are outstanding, whether or
not GroupMAC is subject to Section 13(a) or 15(d) of the Exchange Act, or any
successor provision thereto, GroupMAC shall file with the Commission (if
permitted by Commission practice and applicable law and regulations) the annual
reports, quarterly reports and other documents which GroupMAC would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) or
any successor provision thereto if GroupMAC were so subject, such documents to
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which GroupMAC would have been required so to file such
documents if GroupMAC were so subject. GroupMAC shall also in any event within
15 days after each Required Filing Date (whether or not permitted or required
to be filed with the Commission) (1) transmit (or cause to be transmitted) by
mail to all holders of Notes, as their names and addresses appear in the Note
register, without cost to such holders, and (2) file with the Trustee, copies
of the annual reports, quarterly reports and other documents which GroupMAC
would be required to file with the Commission if the Notes were then registered
under the Exchange Act. In addition, for so long as any Notes remain
outstanding, GroupMAC will furnish to the holders of Notes and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act,
and, to any beneficial holder of Notes, if not obtainable from the Commission,
information of the type that would be filed with the Commission pursuant to the
foregoing provisions upon the request of any such holder.
Consolidation, Merger, Sale of Assets, Etc.
GroupMAC will not, in any transaction or series of transactions, merge or
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consolidate with or into, or sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of its properties and assets as an entirety
to, any person or persons, and GroupMAC will not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of GroupMAC or GroupMAC and its
Restricted Subsidiaries, taken as a whole, to any other person or persons,
unless at the time and after giving effect thereto
(a) either (1) if the transaction or series of transactions is a merger
or consolidation, GroupMAC or such Restricted Subsidiary, as the case may
be, shall be the surviving person of such merger or consolidation, or (2)
the person formed by such consolidation or into which GroupMAC or such
Restricted Subsidiary, as the case may be, is merged or to which the
properties and assets of GroupMAC or such Restricted Subsidiary, as the
case may be, substantially as an entirety, are transferred (any such
surviving person or transferee person being the "Surviving Entity") shall
be a corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia and shall
expressly assume by a supplemental indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of
GroupMAC under the Notes, the Indenture and the Registration Rights
Agreement, and in each case, the Indenture shall remain in full force and
effect;
(b) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), no Default or
Event of Default shall have occurred and be continuing; and
(c) except in the case of any merger of GroupMAC with any Wholly-Owned
Restricted Subsidiary of GroupMAC or any merger of Guarantors (and, in each
case, no other persons), GroupMAC or the Surviving Entity, as the case may
be, after giving effect to such transaction or series of transactions on a
pro forma basis (including, without limitation, any Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction or series of transactions), could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) (assuming a market rate of
interest with respect to such additional Indebtedness).
In connection with any consolidation, merger, transfer, lease, assignment or
other disposition contemplated hereby, GroupMAC shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, transfer, lease, assignment or other disposition
and the supplemental indenture in respect thereof comply with the requirements
under the Indenture.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all
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of the properties and assets of GroupMAC in accordance with the immediately
preceding paragraphs, the successor person formed by such consolidation or into
which GroupMAC or a Restricted Subsidiary, as the case may be, is merged or the
successor person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of GroupMAC under the Notes, the Indenture and/or the
Registration Rights Agreement, as the case may be, with the same effect as if
such successor had been named as GroupMAC in the Notes, the Indenture and/or
the Registration Rights Agreement, as the case may be, and, except in the case
of a lease, GroupMAC or such Restricted Subsidiary shall be automatically and
unconditionally released and discharged from its obligations thereunder.
The Indenture will provide that for all purposes of the Indenture and the
Notes (including the provision of this covenant and the covenants described in
"--Certain Covenants--Limitation on Indebtedness,"""--Limitation on Restricted
Payments," and "--Limitation on Liens"), Subsidiaries of any surviving person
shall, upon such transaction or series of related transactions, become
Restricted Subsidiaries unless and until designated Unrestricted Subsidiaries
pursuant to and in accordance with "--Limitation on Designations of
Unrestricted Subsidiaries" and all Indebtedness, and all Liens on property or
assets, of GroupMAC and the Restricted Subsidiaries in existence immediately
after such transaction or series of related transactions will be deemed to have
been incurred upon such transaction or series of related transactions.
Events of Default
The following are "Events of Default" under the Indenture:
(1) default in the payment of the principal of or premium, if any, when
due and payable, on any of the Notes (at Stated Maturity, upon optional
redemption, required purchase or otherwise); or
(2) default in the payment of an installment of interest on any of the
Notes, when due and payable, for 30 days; or
(3) default in the performance, or breach, of any covenant or agreement
of GroupMAC under the Indenture (other than a default in the performance or
breach of a covenant or agreement which is specifically dealt with in
clause (1), (2) or (4)) and such default or breach shall continue for a
period of 45 days after written notice has been given, by certified mail,
(x) to GroupMAC by the Trustee or (y) to GroupMAC and the Trustee by the
holders of at least 25% in aggregate principal amount of the outstanding
Notes; or
(4) (a) there shall be a default in the performance or breach of the
provisions of "--Consolidation, Merger and Sale of Assets, Etc."; (b)
GroupMAC shall have failed to make or consummate an Asset Sale Offer in
accordance with the provisions of the Indenture described under "--Certain
Covenants--Dispositions of Proceeds of Asset Sales"; or (c) GroupMAC shall
have failed to make or consummate a Change of Control Offer in accordance
with the provisions of the Indenture described under "--Change of Control";
or
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(5) default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which
GroupMAC or any Significant Subsidiary of GroupMAC then has outstanding
Indebtedness in excess of $15 million, individually or in the aggregate,
and (a) such default or defaults include a failure to make a payment of
principal, (b) such Indebtedness is already due and payable in full or (c)
such default or defaults have resulted in the acceleration of the maturity
of such Indebtedness; or
(6) one or more judgments, orders or decrees of any court or regulatory
or administrative agency of competent jurisdiction for the payment of money
in excess of $15 million, either individually or in the aggregate, shall be
entered against GroupMAC or any Significant Subsidiary of GroupMAC or any
of their respective properties and shall not be discharged and there shall
have been a period of 60 days after the date on which any period for appeal
has expired and during which a stay of enforcement of such judgment, order
or decree shall not be in effect; or
(7) the entry of a decree or order by a court having jurisdiction in the
premises (A) for relief in respect of GroupMAC or any Significant
Subsidiary in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other federal, state or foreign bankruptcy,
insolvency, reorganization or similar law or (B) adjudging GroupMAC or any
Significant Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of GroupMAC or any
Significant Subsidiary under the Federal Bankruptcy Code or any other
similar federal, state or foreign law, or appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or other similar official)
of GroupMAC or any Significant Subsidiary or of any substantial part of any
of their properties, or ordering the winding up or liquidation of any of
their affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days; or
(8) the institution by GroupMAC or any Significant Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
similar federal, state or foreign law or any other case or proceedings to
be adjudicated a bankrupt or insolvent, or the consent by GroupMAC or any
Significant Subsidiary to the entry of a decree or order for relief in
respect of GroupMAC or any Significant Subsidiary in any involuntary case
or proceeding under the Federal Bankruptcy Code or any other similar
federal, state or foreign law or to the institution of bankruptcy or
insolvency proceedings against GroupMAC or any Significant Subsidiary, or
the filing by GroupMAC or any Significant Subsidiary of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other similar federal, state or foreign law, or the
consent by it to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or other similar official) of any of GroupMAC or
any Significant Subsidiary or of any substantial part of its property, or
the making by it of an
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assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due or the
taking of corporate action by GroupMAC or any Significant Subsidiary in
furtherance of any such action; or
(9) any of the Guarantees by a Significant Subsidiary ceases to be in
full force and effect or any of such Guarantees is declared to be null and
void and unenforceable or any of such Guarantees is found to be invalid or
any of such Guarantors denies its liability under its Guarantee (other than
by reason of release of such Guarantor in accordance with the terms of the
Indenture).
If an Event of Default (other than those covered by clause (7) or (8) above
with respect to GroupMAC) shall occur and be continuing, the Trustee, by notice
to GroupMAC, or the holders of at least 25% in aggregate principal amount of
the Notes then outstanding, by notice to the Trustee and GroupMAC, may declare
the principal of, premium, if any, and accrued and unpaid interest, if any, on
all of the outstanding Notes due and payable immediately, upon which
declaration, all amounts payable in respect of the Notes (1) shall be due and
payable and (2) if there are any amounts outstanding under the New Credit
Agreement, shall become immediately due and payable upon the first to occur of
an acceleration under the New Credit Agreement or five business days after
receipt by GroupMAC and the Representative under the New Credit Agreement of
such notice of acceleration. If an Event of Default specified in clause (7) or
(8) above with respect to GroupMAC occurs and is continuing, then the principal
of, premium, if any, and accrued and unpaid interest, if any, on all the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any holder
of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to GroupMAC and the Trustee, may rescind
such declaration if
(a) GroupMAC has paid or deposited with the Trustee a sum sufficient to
pay (1) all sums paid or advanced by the Trustee under the Indenture and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, (2) all overdue interest on all Notes, (3)
the principal of and premium, if any, on any Notes which have become due
otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the Notes, and (4) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal at
the rate borne by the Notes which has become due otherwise than by such
declaration of acceleration;
(b) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction; and
(c) all Events of Default, other than the non-payment of principal of,
premium, if any, and interest on the Notes that has become due solely by
such declaration of acceleration, have been cured or waived.
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The holders of not less than a majority in aggregate principal amount of the
outstanding Notes may on behalf of the holders of all the Notes waive any past
defaults under the Indenture, except a default in the payment of the principal
of, premium, if any, or interest on any Note, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of each Note outstanding.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as Trustee under the Notes and the Indenture, the Trustee has
failed to institute such proceeding within 60 days after receipt of such notice
and the Trustee, within such 60-day period, has not received directions
inconsistent with such written request by holders of a majority in aggregate
principal amount of the outstanding Notes. Such limitations do not apply,
however, to a suit instituted by a holder of a Note for the enforcement of the
payment of the principal of, premium, if any, or interest on such Note on or
after the respective due dates expressed in such Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, whether or not an Event of Default shall occur and be continuing, the
Trustee under the Indenture is not under any obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
holders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under the Indenture.
If a Default or an Event of Default occurs and is continuing and is known to
the Trustee, the Trustee shall mail to each holder of the Notes notice of the
Default or Event of Default within 30 days after obtaining knowledge thereof.
Except in the case of a Default or an Event of Default in payment of principal
of, premium, if any, or interest on any Notes, the Trustee may withhold the
notice to the holders of such Notes if a committee of its trust officers in
good faith determines that withholding the notice is in the interest of the
Noteholders.
GroupMAC is required to furnish to the Trustee annual and quarterly
statements as to the performance by GroupMAC of its obligations under the
Indenture and as to any default in such performance. GroupMAC is also required
to notify the Trustee within five business days of any event which is, or after
notice or lapse of time or both would become, an Event of Default.
No Liability for Certain Persons
No director, officer, employee or stockholder of GroupMAC, nor any director,
officer or employee of any Guarantor, as such, will have any liability for any
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obligations of GroupMAC or any Guarantor under the Notes, the Guarantees or the
Indenture based on or by reason of such obligations or their creation. Each
holder by accepting a Note waives and releases all such liability. The
foregoing waiver and release are an integral part of the consideration for the
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws.
Defeasance or Covenant Defeasance of Indenture
GroupMAC may, at its option and at any time, terminate the substantive
obligations of GroupMAC and the Guarantors with respect to the outstanding
Notes ("defeasance") to the extent set forth below. Such defeasance means that
GroupMAC shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, except for
(1) the rights of holders of outstanding Notes to receive payment in
respect of the principal of, premium, if any, and interest on such Notes
when such payments are due,
(2) GroupMAC's obligations to issue temporary Notes, register the
transfer or exchange of any Notes, replace mutilated, destroyed, lost or
stolen Notes and maintain an office or agency for payments in respect of
the Notes,
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
(4) the defeasance provisions of the Indenture. In addition, GroupMAC
may, at its option and at any time, elect to terminate the substantive
obligations of GroupMAC and the Guarantors that are set forth in the
Indenture, including those which are described under "--Certain Covenants"
above, and any subsequent failure to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Notes
("covenant defeasance").
In order to exercise either defeasance or covenant defeasance,
(1) GroupMAC must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Notes, cash in United States dollars, U.S.
Government Obligations (as defined in the Indenture), or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes to
redemption or maturity (except lost, stolen or destroyed Notes which have
been replaced or paid;
(2) GroupMAC shall have delivered to the Trustee an opinion of counsel to
the effect that the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or 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 defeasance or covenant defeasance had not occurred
(in the case of defeasance, such opinion must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable federal
income tax laws);
(3) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit;
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(4) such defeasance or covenant defeasance shall not cause the Trustee to
have a conflicting interest with respect to any securities of GroupMAC;
(5) such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under, any agreement or instrument
to which GroupMAC is a party or by which it is bound;
(6) GroupMAC shall have delivered to the Trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) GroupMAC shall have delivered to the Trustee an officers' certificate
stating that the deposit was not made by GroupMAC with the intent of
preferring the holders of the Notes over the other creditors of GroupMAC
with the intent of hindering, delaying or defrauding creditors of GroupMAC
or others;
(8) no event or condition shall exist that would prevent GroupMAC from
making payments of the principal of, premium, if any, and interest on the
Notes on the date of such deposit or at any time ending on the 91st day
after the date of such deposit; and
(9) GroupMAC shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent under
the Indenture to either defeasance or covenant defeasance, as the case may
be, have been complied with.
GroupMAC may exercise its defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when
(1) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or repaid
and Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by GroupMAC and thereafter repaid to
GroupMAC or discharged from such trust) have been delivered to the Trustee
for cancellation or (b) all Notes not theretofore delivered to the Trustee
for cancellation (except lost, stolen or destroyed Notes which have been
replaced or paid) have become due and payable and GroupMAC has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together
with irrevocable instructions from GroupMAC directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case
may be;
(2) GroupMAC has paid all other sums payable under the Indenture by
GroupMAC; and
(3) GroupMAC has delivered to the Trustee an officers' certificate and an
opinion of counsel stating that all conditions precedent under the
Indenture
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relating to the satisfaction and discharge of the Indenture have been
complied with.
Amendments and Waivers
From time to time, GroupMAC, when authorized by a resolution of its Board of
Directors, and the Trustee may, without the consent of the holders of any
outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act, or making any change that does not
adversely affect the rights of any holder of Notes. Other amendments and
modifications of the Indenture or the Notes may be made by GroupMAC and the
Trustee with the consent of the holders of not less than a majority of the
aggregate principal amount of the outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby,
(1) reduce the principal amount of, change the fixed maturity of or alter
the redemption provisions of the Notes,
(2) change the currency in which any Notes or any premium or the interest
thereon is payable,
(3) reduce the percentage in principal amount of outstanding Notes that
must consent to an amendment, supplement or waiver or consent to take any
action under the Indenture or the Notes,
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to the Notes,
(5) waive a default in payment with respect to the Notes,
(6) amend, change or modify the obligation of GroupMAC to make and
consummate a Change of Control Offer after the occurrence of a Change of
Control or make and consummate the Asset Sale Offer with respect to any
Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto,
(7) reduce or change the rate or time for payment of interest on the
Notes, or
(8) modify or change any provision of the Indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner which adversely affects the Noteholders.
The Trustee
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee thereunder,
should it become a creditor of GroupMAC, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect of any such
claims, as security or
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otherwise. The Trustee is permitted to engage in other transactions; provided,
however, that if it acquires any conflicting interest (as defined in such Act)
it must eliminate such conflict or resign.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trustee under the Indenture.
Governing Law
The Indenture and the Notes are governed by the laws of the State of New
York, without regard to the principles of conflicts of law.
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a person (a) assumed in
connection with an Asset Acquisition from such person or (b) existing at the
time such person becomes or is merged into a Subsidiary of any other person
other than Indebtedness incurred in connection with, or in contemplation of,
such Asset Acquisition or such person becoming a Subsidiary.
"Affiliate" means, with respect to any specified person, (1) any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person, (2) any other person that owns,
directly or indirectly, 10% or more of such specified person's Voting Stock, or
(3) any officer or director of (A) any such specified person, (B) any
Subsidiary of such specified person or (C) any person described in clause (1)
or (2) above.
"Asset Acquisition" means (a) an Investment by GroupMAC or any Restricted
Subsidiary of GroupMAC in any other person pursuant to which such person shall
become a Restricted Subsidiary of GroupMAC, or shall be merged with or into
GroupMAC or any Restricted Subsidiary of GroupMAC, or (b) the acquisition by
GroupMAC or any Restricted Subsidiary of GroupMAC of the assets of any person
which constitute all or substantially all of the assets of such person, any
division or line of business of such person or, other than in the ordinary
course of business, any other properties or assets of such person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease (that has
the effect of a disposition) or other disposition by GroupMAC or any Restricted
Subsidiary of GroupMAC to any person other than GroupMAC or a Restricted
Subsidiary of GroupMAC, of (a) any Capital Stock of any Restricted Subsidiary
of GroupMAC; (b) all or substantially all of the properties and assets of any
division or line of business of GroupMAC or any Restricted Subsidiary of
GroupMAC; or (c) any other properties or assets of GroupMAC or any Restricted
Subsidiary outside of the ordinary course of business, other than (1) sales of
obsolete, damaged or used equipment or other equipment or inventory sales in
the ordinary course of business, (2) sales of assets in one or a series of
related transactions for an aggregate consideration of less than $5.0 million,
(3) sales of accounts receivable for financing purposes, (4) the grant in the
ordinary course of business of any non-exclusive license of patents,
trademarks, registrations therefor and other similar intellectual property, (5)
any Lien (or foreclosure thereon) securing Indebtedness to the extent that such
Lien is granted in compliance with "--Limitation on Liens" above, and (6) any
Restricted Payment permitted by "--Limitation on Payments" above. For the
purposes of this definition, the term "Asset Sale" shall not include any sale,
issuance, conveyance, transfer, lease or
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other disposition of properties or assets that is governed by the provisions
described under "--Consolidation, Merger, Sale of Assets, Etc."
"Average Life to Stated Maturity" means, with respect to any Indebtedness, as
at any date of determination, the quotient obtained by dividing (1) the sum of
the products of (a) the number of years from such date of such determination to
the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund requirements) of such Indebtedness and (b)
the amount of each such principal payment by (2) the sum of all such principal
payments.
"Board of Directors" means the board of directors of a company or its
equivalent, including managers of a limited liability company, general partners
of a partnership or trustees of a business trust, or any duly authorized
committee thereof.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such person's capital stock or equity participations, and any rights (other
than debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock and including, without
limitation, with respect to partnerships, limited liability companies or
business trusts, ownership interests (whether general or limited) and 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, such partnerships,
limited liability companies or business trusts.
"Capitalized Lease Obligation" means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of the Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof
at such date, determined in accordance with GAAP and the stated maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Equivalents" means, at any time, (a) any evidence of Indebtedness,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case rated at least A-1 by Standard & Poor's Ratings Group or P-1 by
Moody's Investors Service, Inc., (c) any certificate of deposit (or time
deposits represented by such certificates of deposit) or bankers acceptance,
maturing not more than one year after such time, or overnight Federal Funds
transactions that are issued or sold by a commercial banking institution that
is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500 million, (d) any repurchase
agreement entered into with any commercial banking institution of the stature
referred to in clause (c) which (i) is secured by a fully perfected security
interest in any obligation of the type described in any of clauses (a) through
(c) and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such
commercial banking institution thereunder, (e) investments in
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short term asset management accounts managed by any bank party to the New
Credit Agreement (or by an affiliate of any such bank) which are invested in
indebtedness of any state or municipality of the United States or of the
District of Columbia and which are rated under one of the two highest ratings
then obtainable from Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. or investments of the types described in clauses (a) through (d)
above, and (f) investments in funds investing primarily in investments of the
types described in clauses (a) through (e) above.
"Change of Control" means the occurrence of any of the following events: (a)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total Voting
Stock of GroupMAC; (b) GroupMAC consolidates with, or merges with or into,
another person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person, or any person
consolidates with, or merges with or into, GroupMAC, in any such event pursuant
to a transaction in which the outstanding Voting Stock of GroupMAC is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of GroupMAC is converted
into or exchanged for Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation and (ii) immediately after such transaction
no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total Voting
Stock of the surviving or transferee corporation; (c) during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors of GroupMAC (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of GroupMAC was approved by a vote of 66 2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of GroupMAC
then in office; or (d) GroupMAC is liquidated or dissolved or adopts a plan of
liquidation.
"Common Stock" means the common stock of GroupMAC, par value $0.001 per
share.
"Consolidated Cash Flow Available for Fixed Charges" as of any date of
determination means, with respect to any person for any period, (1) the sum of,
without duplication, the amounts for such period, taken as a single accounting
period, of (a) Consolidated Net Income, (b) Consolidated Non-cash Charges, (c)
Consolidated Interest Expense, (d) Consolidated Income Tax Expense (other than
income tax expense (either positive or negative) attributable to extraordinary
gains
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or losses), (e) one-fourth of Consolidated Rental Payments and (f) if any Asset
Sale or Asset Acquisition shall have occurred since the first day of any four-
quarter period for which Consolidated Cash Flow Available for Fixed Charges is
being calculated (including to the date of calculation) (A) the amount of any
compensation, remuneration or other benefit paid or provided to any employee,
consultant, Affiliate or equity owner of the entity involved in any such Asset
Acquisition to the extent such costs are eliminated or reduced (or public
announcement has been made of the intent to eliminate or reduce such costs)
prior to the date of such calculation and not replaced and (B) the amount of
any reduction in general, administrative or overhead costs of the entity
involved in any such Asset Acquisition, to the extent such amounts under
clauses (A) and (B) would be permitted to be eliminated in a pro forma income
statement prepared in accordance with Rule 11-02 of Regulation S-X, less (2)
the sum of (x) non-cash items increasing Consolidated Net Income and (y) all
cash payments during such period relating to non-cash charges that were added
back in determining Consolidated Cash Flow Available for Fixed Charges in the
most recent four-quarter period (as defined in the definition of "Consolidated
Fixed Charge Coverage Ratio").
"Consolidated Fixed Charge Coverage Ratio" as of any date of determination
means, with respect to any person, the ratio of the aggregate amount of
Consolidated Cash Flow Available for Fixed Charges of such person for the four
full fiscal quarters, treated as one period, for which financial information in
respect thereof is available immediately preceding the date of the transaction
(the "Transaction Date") giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio (such four full fiscal quarter period being
referred to herein as the "Four Quarter Period") to the aggregate amount of
Consolidated Fixed Charges of such person for the Four Quarter Period. In
calculating Consolidated Fixed Charges for purposes of determining the
denominator (but not the numerator) of this Consolidated Fixed Charge Coverage
Ratio, (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the Transaction Date;
and (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period. If such person or any of its
Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a
third person, the above clause shall give effect to the incurrence of such
guaranteed Indebtedness as if such person or such Subsidiary had directly
incurred or otherwise assumed such guaranteed Indebtedness.
"Consolidated Fixed Charges" means, with respect to any person for any
period, the sum of, without duplication, the amounts for such period of (1)
Consolidated Interest Expense, (2) the aggregate amount of dividends and other
distributions paid or accrued during such period in respect of Redeemable
Capital Stock of such person and its Restricted Subsidiaries on a consolidated
basis and (3) one-fourth of Consolidated Rental Payments.
"Consolidated Income Tax Expense" means, with respect to any person for any
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period, the provision for federal, state, local and foreign income taxes of
such person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, the sum of (1) the interest expense of such person
and its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Protection
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities and (e) all accrued interest and (2) the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" means, with respect to any person, for any period,
the consolidated net income (or loss) of such person and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (1) all extraordinary gains or losses (net of fees and expenses
relating to the transaction giving rise thereto), (2) the portion of net income
of such person and its Restricted Subsidiaries allocable to minority interests
in unconsolidated persons or to Investments in Unrestricted Subsidiaries to the
extent that cash dividends or distributions have not actually been received by
such person or one of its Restricted Subsidiaries, (3) net income (or loss) of
any person combined with such person or one of its Restricted Subsidiaries on a
"pooling of interests" basis attributable to any period prior to the date of
combination, (4) gains or losses in respect of any Asset Sales by such person
or one of its Restricted Subsidiaries (net of fees and expenses relating to the
transaction giving rise thereto), on an after-tax basis, (5) the net income of
any Restricted Subsidiary of such person to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is not at the time permitted, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders and (6) any gain or loss realized as a result of the cumulative
effect of a change in accounting principles.
"Consolidated Non-cash Charges" means, with respect to any person for any
period, the aggregate depreciation, amortization (including amortization of
goodwill and other intangibles) and other non-cash expenses of such person and
its Restricted Subsidiaries reducing Consolidated Net Income of such person and
its Restricted Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss).
"Consolidated Rental Payments" of any person means, for any period, the
aggregate rental obligations of such person and its Restricted Subsidiaries
(not including taxes, insurance, maintenance and similar expenses that the
lessee is obligated to pay
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under the terms of the relevant leases), determined on a consolidated basis in
accordance with GAAP, payable in respect of such period (net of income from
subleases thereof, not including taxes, insurance, maintenance and similar
expenses that the sublessee is obligated to pay under the terms of such
sublease), whether or not such obligations are reflected as liabilities or
commitments on a consolidated balance sheet of such person and its Restricted
Subsidiaries or in the notes thereto, excluding, however, in any event, (1)
that portion of Consolidated Interest Expense of such person representing
payments by such person or any of its Restricted Subsidiaries in respect of
Capitalized Lease Obligations (net of payments to such person or any of its
Restricted Subsidiaries under subleases qualifying as capitalized lease
subleases to the extent that such payments would be deducted in determining
Consolidated Interest Expense) and (2) the aggregate amount of amortization of
obligations of such person and its Restricted Subsidiaries in respect of such
Capitalized Lease Obligations for such period (net of payments to such person
or any of its Restricted Subsidiaries and subleases qualifying as capitalized
lease subleases to the extent that such payments could be deducted in
determining such amortization amount).
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Credit Facility" means one or more debt or commercial paper facilities with
banks or other institutional lenders (including the New Credit Agreement)
providing for revolving credit loans, term loans, receivables or inventory
financing (including through the sale of receivables or inventory to such
lenders or to special purpose, bankruptcy remote entities formed to borrow from
such lenders against such receivables or inventory) or letters of credit, in
each case together with any amendments, supplements, modifications (including
by any extension of the maturity thereof), substitutions, refinancing or
replacements thereof by a lender or syndicate of lenders in one or more
successive transactions (including any such transaction that changes the amount
available thereunder, replaces such agreement or document, or provides for
other agents or lenders).
"Default" means any event that is, or after notice or passage of time or both
would be, an Event of Default.
"Event of Default" has the meaning set forth under "--Events of Default"
herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset, the price (after taking
into account any liabilities relating to such assets) which could be negotiated
in an arm's length free market transaction between a willing seller and a
willing buyer, neither of which is under pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the Board of Directors of
GroupMAC in good faith.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary which is not
organized under the laws of the United States, or any possession or territory
thereof, any State of the United States or the District of Columbia.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable at the date of
the Indenture.
"guarantee" means, as applied to any obligation, (1) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (2) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts available to be drawn down under letters of credit of
another person.
"Indebtedness" means, with respect to any person, without duplication, (a)
all liabilities of such person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such person in
connection with any letters of credit, banker's acceptance or other similar
credit transaction, (b) all obligations of such person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding consignments, trade
accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such person, (e) all Indebtedness referred to
in the preceding clauses of other persons and all dividends of other persons,
the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon property (including, without limitation, accounts and contract
rights) owned by such person, even though such person has not assumed or become
liable for the payment of such Indebtedness (the amount of such obligation
being deemed to be the lesser of the Fair Market Value of such property or
asset or the amount of the obligation so secured), (f) all guarantees of
Indebtedness referred to in this definition by such person, (g) all Redeemable
Capital Stock of such person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends, (h) all
Interest Rate Protection Obligations of such person, and (i) any amendment,
supplement, modification, deferral, renewal, extension, refinancing or
refunding of any liability of the types referred to in clauses (a) through (h)
above; provided, however, that Indebtedness shall not include (1) any holdback
or escrow of the purchase price of property, services, businesses or assets,
(2) any contingent payment obligations incurred in connection with the
acquisition of assets or businesses, which are contingent on the performance of
the assets or businesses so acquired or (3) obligations under performance
bonds, performance guarantees,
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surety bonds, appeal bonds, security deposits or similar obligations. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such
Redeemable Capital Stock were purchased on any date on which Indebtedness shall
be required to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be approved in good faith by the board of
directors of the issuer of such Redeemable Capital Stock.
"Interest Rate Protection Agreement" means, with respect to any person, any
arrangement with any other person whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Interest Rate Protection Obligations" means the net obligations of any
person pursuant to any Interest Rate Protection Agreements.
"Investment" means, with respect to any person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), but other than advances to customers in the ordinary course of
business recorded as an account receivable in accordance with GAAP on the books
of the person making the advance, or any purchase or acquisition by such person
of any Capital Stock, bonds, notes, debentures or other securities or evidences
of Indebtedness issued by, any other person.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim or other
encumbrance upon or with respect to any property of any kind. A person shall be
deemed to own subject to a Lien any property which such person has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement (other than a consignment), capital lease or other title retention
agreement.
"Maturity Date" means January 15, 2009.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to GroupMAC or any Restricted Subsidiary of GroupMAC) net of (1)
brokerage commissions and other fees and expenses (including, without
limitation, fees and expenses of legal counsel and investment bankers,
recording fees, transfer fees and appraisers' fees) related to such Asset Sale,
(2) provisions for all taxes payable as a result of such Asset Sale, (3)
amounts required to be paid to any person (other than GroupMAC or any
Restricted Subsidiary of GroupMAC) owning a beneficial interest in the assets
subject to the Asset Sale, (4) payments made to retire Indebtedness where
payment of such
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Indebtedness is secured by the assets or properties the subject of such Asset
Sale, and (5) appropriate amounts to be provided by GroupMAC or any Restricted
Subsidiary of GroupMAC, as the case may be, as a reserve required in accordance
with GAAP against any liabilities associated with such Asset Sale and retained
by GroupMAC or any Restricted Subsidiary of GroupMAC, as the case may be, after
such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
Asset Sale.
"New Credit Agreement" means the Second Amended and Restated Credit Agreement
dated as of October 15, 1998 among GroupMAC, the Subsidiaries of GroupMAC
listed as guarantors therein, Chase Bank of Texas, National Association, as the
Agent, Bank of America Texas, N.A., as co-Agent, Paribas, as syndication agent
and ABN AMRO Bank, N.A., as documentation agent, and the Banks named therein,
including any notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended
(including any amendment and restatement thereof), modified, extended,
deferred, renewed, refunded, substituted or replaced or refinanced from time to
time, including any agreement extending the maturity of, refinancing, replacing
or otherwise restructuring (including increasing the amount of available
borrowings thereunder or adding Subsidiaries of GroupMAC as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement and whether by
the same or any other agents, creditor, lender or group of creditors or
lenders.
"Permitted Indebtedness" means, without duplication:
(a) Indebtedness of GroupMAC and the Guarantors evidenced by up to $130
million principal amount of the Notes and the Guarantees;
(b) Indebtedness of GroupMAC and Restricted Subsidiaries under one or
more Credit Facilities in an aggregate principal amount at any one time
outstanding not to exceed $300 million less any amounts permanently repaid
in accordance with the covenant described under "--Certain Covenants--
Disposition of Proceeds of Asset Sales";
(c) Indebtedness of GroupMAC or any Restricted Subsidiary outstanding on
the Issue Date;
(d) Indebtedness of GroupMAC or any Restricted Subsidiary of GroupMAC
incurred in respect of bankers' acceptances and letters of credit in the
ordinary course of business, including Indebtedness evidenced by letters of
credit issued in the ordinary course of business to support the insurance
or self-insurance obligations of GroupMAC or any of its Restricted
Subsidiaries (including to secure workers' compensation and other similar
insurance coverages), in an aggregate amount not to exceed $30.0 million at
any time, but excluding letters of credit issued in respect of or to secure
money borrowed;
(e) (1) Interest Rate Protection Obligations of GroupMAC or a Guarantor
covering Indebtedness of GroupMAC or a Guarantor and (2) Interest Rate
Protection Obligations of any Restricted Subsidiary covering Permitted
Indebtedness or Acquired
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Indebtedness of such Restricted Subsidiary; provided that, in the case of
either clause (1) or (2), (x) any Indebtedness to which any such Interest
Rate Protection Obligations correspond bears interest at fluctuating
interest rates and is otherwise permitted to be incurred under the
"Limitation on Indebtedness" covenant and (y) the notional principal amount
of any such Interest Rate Protection Obligations that exceeds the principal
amount of the Indebtedness to which such Interest Rate Protection
Obligations relate shall not constitute Permitted Indebtedness;
(f) Indebtedness of a Restricted Subsidiary owed to and held by GroupMAC
or another Restricted Subsidiary, except that (1) any transfer of such
Indebtedness by GroupMAC or a Restricted Subsidiary (other than to GroupMAC
or another Restricted Subsidiary), (2) the sale, transfer or other
disposition by GroupMAC or any Restricted Subsidiary of GroupMAC of Capital
Stock of a Restricted Subsidiary which is owed Indebtedness of another
Restricted Subsidiary such that it shall no longer be a Restricted
Subsidiary and (3) the designation of a Restricted Subsidiary which is owed
Indebtedness of another Restricted Subsidiary as an Unrestricted Subsidiary
shall, in each case, be an incurrence of Indebtedness by such Restricted
Subsidiary subject to the other provisions of the Indenture;
(g) Indebtedness of GroupMAC owed to and held by a Restricted Subsidiary
which is unsecured and subordinated in right of payment to the payment and
performance of the obligations of GroupMAC under the Indenture and the
Notes, except that (1) any transfer of such Indebtedness by a Restricted
Subsidiary (other than to another Restricted Subsidiary) and (2) the sale,
transfer or other disposition by GroupMAC or any Restricted Subsidiary of
GroupMAC of Capital Stock of a Restricted Subsidiary which is owed
Indebtedness of GroupMAC such that it shall no longer be a Restricted
Subsidiary and (3) the designation of a Restricted Subsidiary which is owed
Indebtedness of GroupMAC shall, in each case, be an incurrence of
Indebtedness by GroupMAC, subject to the other provisions of the Indenture;
(h) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within five business days of incurrence;
(i) Indebtedness of GroupMAC or any Restricted Subsidiary, in addition to
that described in clauses (a) through (h) of this definition, in an
aggregate principal amount outstanding at any time not to exceed $20.0
million;
(j) (1) Indebtedness of GroupMAC the proceeds of which are used solely to
refinance (whether by amendment, renewal, extension or refunding )
Indebtedness of GroupMAC or any of its Restricted Subsidiaries incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio test of the
proviso of the "Limitation on Indebtedness" covenant or clauses (a), (c) or
(j) of this definition and (2) Indebtedness of any Restricted Subsidiary of
GroupMAC the proceeds of which are used solely to refinance (whether by
amendment, renewal,
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extension or refunding) Indebtedness of such Restricted Subsidiary incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio test of the
proviso of the "Limitation on Indebtedness" covenant or clauses (a), (c) or
(j) of this definition (in each case other than the Indebtedness to be
refinanced, redeemed or retired as described under "Use of Proceeds"
herein); provided, however, that (x) the principal amount of Indebtedness
incurred pursuant to this clause (j) (or, if such Indebtedness provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the maturity thereof, the original issue
price of such Indebtedness) shall not exceed the sum of principal amount of
Indebtedness so refinanced, plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of such
Indebtedness or the amount of any premium reasonably determined by GroupMAC
as necessary to accomplish such refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of expenses in connection
therewith, and (y) in the case of Indebtedness incurred by GroupMAC
pursuant to this clause (j) to refinance Subordinated Indebtedness, such
Indebtedness (A) has no scheduled principal payment prior to the 91st day
after the Maturity Date, (B) has an Average Life to Stated Maturity greater
than the remaining Average Life to Stated Maturity of the Notes and (C) is
subordinated to the Notes in the same manner and to the same extent that
the Subordinated Indebtedness being refinanced is subordinated to the
Notes;
(k) Indebtedness arising from agreements of GroupMAC or any Restricted
Subsidiary providing for indemnification, adjustment or holdback of
purchase price or similar obligations, in each case, incurred or assumed in
connection with the acquisition or disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; and
(l) Guarantees by GroupMAC or guarantees by a Guarantor of Indebtedness
that was permitted to be incurred under the Indenture.
For purposes of determining compliance with the "Limitation on Indebtedness"
covenant described in the preceding paragraph, (A) in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the clauses of the preceding paragraph, GroupMAC, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one such clause, and (B)
the amount of Indebtedness issued at a price that is less than the principal
amount thereof shall be equal to the amount of the liability in respect thereof
determined in conformity with GAAP.
"Permitted Investments" means any of the following: (1) Investments in
GroupMAC or in a Restricted Subsidiary; (2) Investments in another person, if
as a result of such Investment (A) such other person becomes a Restricted
Subsidiary or (B) such other person is merged or consolidated with or into, or
transfers or conveys all or
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substantially all of its assets to GroupMAC or a Restricted Subsidiary; (3)
Investments representing Capital Stock or obligations issued to GroupMAC or any
of its Restricted Subsidiaries in settlement of claims against any other person
by reason of a composition or readjustment of debt or a reorganization of any
debtor of GroupMAC or such Restricted Subsidiary; (4) Investments in Interest
Rate Protection Agreements on commercially reasonable terms entered into by
GroupMAC or any of its Restricted Subsidiaries in the ordinary course of
business in connection with the operations of the business of GroupMAC or its
Restricted Subsidiaries to hedge against fluctuations in interest rates on its
outstanding Indebtedness; (5) Investments in the Notes; (6) Investments in Cash
Equivalents; (7) Investments acquired by GroupMAC or any Restricted Subsidiary
in connection with an Asset Sale permitted under "--Certain Covenants--
Disposition of Proceeds of Asset Sales" to the extent such Investments are non-
cash proceeds as permitted under such covenant; (8) advances to employees or
officers of GroupMAC or any Restricted Subsidiary in the ordinary course of
business; (9) any Investment to the extent that the consideration therefor is
Capital Stock (other than Redeemable Capital Stock) of GroupMAC; (10) any
loans, payments or other advances made pursuant to any employee benefit plans
(including plans for the benefit of directors) or employment agreements or
other compensation arrangements, in each case as approved by the Board of
Directors of GroupMAC in its good faith judgment, not to exceed $1.0 million at
any one time outstanding; and (11) other Investments not to exceed $25.0
million at any time outstanding.
"Permitted Liens" means the following types of Liens:
(a) any Lien existing as of the date of the Indenture;
(b) Liens securing Indebtedness under the New Credit Agreement;
(c) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by GroupMAC or any Restricted Subsidiary, if such Lien does
not attach to any property or assets of GroupMAC or any Restricted
Subsidiary other than the property or assets subject to the Lien prior to
such incurrence;
(d) Liens in favor of GroupMAC or a Restricted Subsidiary;
(e) Liens on and pledges of the Capital Stock of any Unrestricted
Subsidiary securing any Indebtedness of such Unrestricted Subsidiary;
(f) Liens for taxes, assessments or governmental charges or claims either
(1) not delinquent or (2) contested in good faith by appropriate
proceedings and as to which GroupMAC or its Restricted Subsidiaries shall
have set aside on its books such reserves as may be required pursuant to
GAAP;
(g) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
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(h) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, contracts for utilities, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(i) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(j) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of GroupMAC or
any of its Restricted Subsidiaries;
(k) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(l) purchase money Liens to finance property or assets of GroupMAC or any
Restricted Subsidiary of GroupMAC acquired in the ordinary course of
business; provided, however, that (1) the related purchase money
Indebtedness shall not be secured by any property or assets of GroupMAC or
any Restricted Subsidiary other than the property and assets so acquired
and (2) the Lien securing such Indebtedness shall be created within 90 days
of such acquisition;
(m) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(n) Liens securing refinancing Indebtedness permitted under clause (j) of
the definition of "Permitted Indebtedness"; provided such Liens are not
secured by any property or assets of GroupMAC or any Restricted Subsidiary
other than the property or assets securing such refinanced Indebtedness;
(o) Liens incurred in the ordinary course of business by GroupMAC or any
Restricted Subsidiary with respect to obligations that do not exceed $5
million at any time outstanding;
(p) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of GroupMAC or
any of its Restricted Subsidiaries, including rights of offset and set-off;
(q) Liens securing Interest Rate Protection Obligations which Interest
Rate Protection Obligations relate to Indebtedness that is secured by Liens
otherwise permitted under this Indenture; and
(r) Liens on property or assets of a Foreign Restricted Subsidiary
securing Indebtedness of Foreign Restricted Subsidiaries.
"person" means any individual, corporation, partnership (general or limited),
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
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"Preferred Stock," as applied to any person, means Capital Stock of any class
or series (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over shares
of Capital Stock of any other class or series of such person.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is or upon the happening of an
event or passage of time would be required to be redeemed prior to the Maturity
Date or is redeemable at the option of the holder thereof at any time prior to
the Maturity Date, or is convertible into or exchangeable for debt securities
at any time prior to the Maturity Date; provided that Capital Stock will not
constitute Redeemable Capital Stock solely because the holders thereof have the
right to require GroupMAC to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale.
"Representative" means the agent in respect of the New Credit Agreement.
"Restricted Subsidiary" means any Subsidiary of GroupMAC that is not an
Unrestricted Subsidiary.
"Significant Subsidiary" of any person means a Restricted Subsidiary of such
person which would be a significant subsidiary of such person as of such date
as determined in accordance with the definition in Rule 1-02(w) of Article 1 of
Regulation S-X promulgated by the Commission and as in effect on the date of
the Indenture.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable (including as a result of the exercise of any put
option contained in such instrument).
"Subordinated Indebtedness" means, with respect to GroupMAC, Indebtedness of
GroupMAC which is expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any person, (1) a corporation a majority
of whose Voting Stock is at the time, directly or indirectly, owned by such
person, by one or more Subsidiaries of such person or by such person and one or
more Subsidiaries thereof and (2) any other person (other than a corporation),
including, without limitation, a partnership, limited liability company,
business trust or joint venture, in which such person, one or more Subsidiaries
thereof or such person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, has at least majority
ownership interest entitled to vote in the election of directors, managers or
trustees thereof (or other person performing similar functions). For purposes
of this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
"Unrestricted Subsidiary" means each Subsidiary of GroupMAC designated as
such
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pursuant to and in compliance with the covenant described under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any person (irrespective of whether or not, at the time, stock of any other
class or classes shall have, or might have, voting power by reason of the
happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary of
GroupMAC of which 100% of the outstanding Capital Stock is owned by GroupMAC or
another Wholly-Owned Restricted Subsidiary of GroupMAC or both. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
Book-Entry; Delivery and Form
Notes that were offered and sold originally to QIBs in reliance on Rule 144A
under the Securities Act were represented by a single, permanent global note in
definitive, fully registered book-entry form (a "Rule 144A Global Security")
which was registered in the name of a nominee of DTC and deposited on behalf of
purchasers of the Notes represented thereby with a custodian for DTC for credit
to the respective accounts of the purchasers (or to such other accounts as they
may direct) at DTC.
Notes that were offered and sold originally in reliance on Regulation S were
initially be represented by a single, permanent global note in definitive,
fully registered book-entry form (the "Regulation S Global Security") which was
registered in the name of Cede & Co., as nominee of DTC, and deposited on
behalf of the purchasers of the Notes represented thereby with a custodian for
DTC for credit to the respective accounts of the purchasers or to such other
accounts as they may direct at the Euroclear System ("Euroclear") or Cedel
Bank, societe anonyme ("Cedel"). Prior to the 40th day after the later of the
commencement of the Offering and the Issue Date, interests in the Regulation S
Global Notes were held only through Euroclear or Cedel.
The Global Securities. We expect that, pursuant to procedures established by
DTC, ownership of the Rule 144A Global Security and the Regulation S Global
Security (together, the "Global Securities") will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by DTC
or its nominee with respect to interests of persons who have accounts with DTC
("Participants") and the records of Participants (with respect to interests of
persons other than Participants).
So long as DTC or its nominee is the registered owner or holder of any of the
Notes, DTC or such nominee will be considered the sole owner or holder of such
Notes represented by the Global Securities for all purposes under the Indenture
and under the Notes represented thereby. No beneficial owner of an interest in
the Global Securities will be able to transfer such interest except in
accordance with the applicable procedures of DTC in addition to those provided
for under the Indenture. The laws of some states require that certain persons
take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer
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beneficial interest in a Global Security to such persons will be impaired to
that extent. Because DTC can act only on behalf of Participants, which in turn
act on behalf of Indirect Participants (as defined herein), the ability of a
person having beneficial interests in a Global Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be impaired by the
lack of a physical certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on the Notes
represented by the Global Securities will be made to DTC or its nominee, as the
case may be, as the registered owner thereof. Neither we, the Trustee nor any
paying agent under the Indenture 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 Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of the
principal of, premium, if any, and interest on the Notes represented by the
Global Securities, will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the Global Securities
as shown in the records of DTC or its nominee. We also expect that payments by
Participants to owners of beneficial interests in the Global Securities held
through such Participants will be governed by standing instructions and
customary practice as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payment
will be the responsibility of such Participants and not that of GroupMAC or the
Trustee.
Any beneficial interest in one of the Global Securities that is transferred
to a person who takes delivery in the form of an interest in the other Global
Security will, upon transfer, cease to be an interest in such Global Security
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Security with respect to the applicable Notes for as long as it remains
such an interest.
DTC has advised us that DTC will take any action permitted to be taken by a
Holder of Notes, including the presentation of Notes for exchange as described
below, only at the direction of one or more Participants to whose account the
DTC interests in the Global Securities are credited and only in respect of the
aggregate principal amount as to which such Participant or Participants has or
have given such direction. However, if there is an Event of Default under the
Indenture, DTC will exchange the Global Securities for Certificated Securities,
which it will distribute to its Participants and which will be legended.
DTC has advised us 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 facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and
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dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its participants are
on file with the SEC.
DTC has further advised us that management of DTC is aware that some computer
applications, systems, and the like for processing data that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its participants and other
members of the financial community that it has developed and is implementing a
program so that its systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to security holders,
book-entity deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which DTC reports is complete. Additionally, DTC's
plan includes a testing phase, which DTC expects to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as the DTC's direct and indirect participants and third party vendors from
whom DTC licenses software and hardware, and third party vendors on whom DTC
relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others. DTC
has informed the industry that it is contacting and will continue to contact
third party vendors from whom DTC acquires services to: (1) impress upon them
the importance of such services being Year 2000 compliant; and (2) determine
the extent of their efforts for Year 2000 remediation and, as appropriate,
testing of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the Global Securities among Participants
of DTC, it is under no obligation to perform such procedures, and such
procedures may be discontinued at any time. Neither we nor the Trustee will
have any responsibility for the performance by DTC or its respective direct or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Securities. Interests in the Global Securities will be exchanged
for Certificated Securities if (1) DTC notifies GroupMAC that it is unwilling
or unable to continue as depositary for the Global Securities, or DTC ceases to
be a "Clearing Agency" registered under the Exchange Act, and a successor
depositary is not appointed by GroupMAC within 90 days, or (2) an Event of
Default has occurred and is continuing with respect to the Notes. Upon the
occurrence of any of the events described in the preceding sentence, GroupMAC
will cause the appropriate Certificated Securities to be delivered.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain material United States federal
income tax consequences relevant to the purchase, ownership and disposition of
the Notes and reflects the opinion provided by Bracewell & Patterson, L.L.P.,
counsel to GroupMAC, as to these matters. This discussion is for general
information only and does not address all aspects of federal income taxation
that may be relevant to particular investors in light of their personal
investment circumstances, nor does it address the federal income tax
consequences which may be relevant to certain types of investors subject to
special treatment under the federal income tax laws (for example, certain
financial institutions, insurance companies, tax-exempt entities, broker-
dealers, and taxpayers subject to the alternative minimum tax). In addition,
this discussion does not discuss any aspects of state, local, or foreign tax
laws. This discussion assumes that investors will hold their Notes as "capital
assets" (generally, property held for investment), within the meaning of
Section 1221 of the Internal Revenue Code, and not as part of an integrated
transaction (for example, a hedge, straddle or conversion transaction).
No ruling from the Internal Revenue Service (the "IRS") will be requested
with respect to any of the matters discussed herein. There can be no assurance
that the IRS will not take different positions concerning the matters discussed
below and that such positions would not be sustained. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF NOTES SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR TAX SITUATION AND AS TO ANY
FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS (INCLUDING ANY
POSSIBLE CHANGES IN TAX LAW) AFFECTING THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NOTES.
This discussion is based on the provisions of the Code, existing and proposed
Treasury regulations promulgated thereunder (the "Regulations"), judicial
authority interpreting the Internal Revenue Code, and current administrative
rulings and pronouncements of the IRS now in effect, all of which are subject
to change at any time by legislative, judicial or administrative action. Any
such changes may be retroactively applied in a manner that could result in
federal income tax consequences different from those discussed below and could
adversely affect a holder of Notes.
Exchange of Original Notes for Exchange Notes
The exchange of Original Notes for Exchange Notes should not constitute a
significant modification of the terms of the Original Notes, and, accordingly,
will not be treated as a taxable exchange for United States federal income tax
purposes. Consequently, no gain or loss will be recognized by holders of
Original Notes upon receipt of the Exchange Notes, and ownership of the
Exchange Notes will be considered a continuation of ownership of the Original
Notes. GroupMAC will take this position and intends to report the transaction
in this manner for federal income tax purposes. For purposes of determining
gain or loss upon the subsequent sale or exchange of the Exchange Notes, a
holder will have the same adjusted basis in an Exchange Note as the holder had
in the Original Note exchanged therefor. In addition, a holder's
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holding period for an Exchange Note will include the holding period for the
Original Note exchanged therefor.
The remaining summary of federal income considerations relates to owning and
disposing of Exchange Notes, and also applies to holders of Original Notes who
do not accept the Exchange Offer.
United States Federal Income Taxation of United States Holders
As used herein, the term "United States Holder" means a holder of a Note that
is for United States federal income tax purposes (1) an individual citizen or
resident of the United States, (2) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (3) an estate the income of which is subject to United
States federal income taxation regardless of source, or (4) a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have the authority to
control all substantial decisions of the trust.
Stated Interest. Stated interest on the Notes will generally be taxable to a
United States Holder as ordinary income from domestic sources at the time it is
paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
Amortizable Bond Premium. If a United States Holder purchases a Note for an
amount that is greater than the sum of all payments payable on the Note after
the purchase date, other than qualified stated interest, such United States
Holder will be considered to have purchased such Note with "amortizable bond
premium" equal in amount to such excess. A United States Holder may elect to
amortize such bond premium over the remaining term of such Note (or if it
results in a smaller amount of amortizable bond premium, until an earlier call
date, and in such case by reference to the amount payable on that date).
Under Regulations issued December 30, 1997, if bond premium is amortized, the
amount of interest on the Note included in the United States Holder's income
for each accrual period ending on an interest payment date or on the stated
maturity of the Note, as the case may be, will be reduced by a portion of the
bond premium allocable to such accrual period based on the Note's yield to
maturity (or earlier call date, if reference to such call date produces a
smaller amount of amortizable bond premium). If the amortizable bond premium
allocable to such accrual period exceeds the amount of interest allocable to
such accrual period, such excess would be allowed as a deduction for such
accrual period, but only to the extent of the United States Holder's prior
inclusion in income of interest payments on the Note. Any excess above such
prior interest inclusions is generally carried forward to the next accrual
period. A United States Holder who elects to amortize bond premium must reduce
such United States Holder's tax basis in the Notes as described under "--
Disposition of Notes." If such an election to amortize bond premium is not
made, a United States Holder must include the full amount of each interest
payment on the Note in income in accordance with its regular method of
accounting and will receive a tax benefit from the bond premium only in
computing such United States Holder's gain or loss upon disposition of the
Note.
An election to amortize bond premium will apply to all taxable debt
obligations then
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held or subsequently acquired by the electing United States Holder on or after
the first day of the first taxable year to which the election applies and may
not be revoked without the consent of the IRS. A United States Holder should
consult with such United States Holder's tax advisor with respect to the
general applicability of the amortizable bond premium rules of Section 171 of
the Internal Revenue Code to such United States Holder, and whether such United
States Holder should make an election under these rules.
Market Discount. If a United States Holder purchases a Note for an amount
that is less than its stated redemption price at maturity (i.e., the sum of all
payments on the Note other than stated interest payments), the amount of the
difference will be treated as "market discount" for federal income tax
purposes, unless such difference is less than a de minimis amount as specified
by the Internal Revenue Code. Under the market discount rules, a United States
Holder will be required to treat any principal payment on, or any gain on the
sale, exchange, retirement or other disposition of a Note as ordinary income to
the extent of the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such
payment or disposition. In addition, the United States Holder may be required
to defer, until maturity of the Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or maintained to purchase or carry such Note.
The Notes provide for optional redemption and (in the case of a Change in
Control) mandatory offers to purchase, in whole or in part, prior to maturity.
If the Notes were redeemed, a United States Holder generally would be required
to include in gross income as ordinary income the portion of the gain
recognized on the redemption attributable to accrued market discount, if any.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Notes, unless the
United States Holder elects to accrue market discount on a constant interest
method. A United States Holder of a Note may elect to include market discount
in income currently as it accrues (under either a ratable or constant interest
method). This election to include currently, once made, applies to all market
discount obligations acquired in or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS. If a
United States Holder of Notes makes such an election, the foregoing rules with
respect to the recognition of ordinary income on sales and other dispositions
of instruments, and with respect to the deferral of interest deductions
incurred or maintained to purchase or carry such Notes, would not apply.
Disposition of Notes. Upon the sale, exchange, retirement, redemption or
other disposition of a Note, a United States Holder will recognize taxable gain
or loss equal to the difference between (1) the amount of cash and the fair
market value of property received in exchange therefor (except to the extent
such amount is attributable to accrued but unpaid interest, which amount will
generally be taxable as ordinary income) and (2) the United States Holder's
adjusted tax basis in the Note. A United States Holder's adjusted tax basis in
a Note will generally equal the United States Holder's purchase price for such
Note, increased by any market discount previously included in income by the
United States Holder and decreased by any principal payments received by the
United States Holder, and any amortizable
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bond premium deducted over the term of the Note. Any gain or loss recognized on
the sale, exchange, retirement or other disposition of a Note will generally be
capital gain or loss (except to the extent of any accrued market discount).
Under recently enacted legislation, capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation which may vary depending upon the holding period of such
capital assets. The deduction of capital losses is subject to certain
limitations. A United States Holder should consult such United States Holder's
tax advisor regarding the treatment of capital gains or losses.
Backup Withholding. Certain non-corporate United States Holders of Notes may
be subject to backup withholding at the rate of 31% with respect to interest
payments on the Notes and cash payments received in certain circumstances upon
the disposition of such Notes. Generally, backup withholding is applied only
when the taxpayer (1) fails to furnish or certify its correct taxpayer
identification number to the payor in the manner required, (2) is notified by
the IRS that it has failed to report payments of interest and dividends
properly, or (3) under certain circumstances, fails to certify that it has not
been notified by the IRS that it is subject to backup withholding for failure
to report interest and dividend payments. Any amounts withheld under the backup
withholding rules will be allowed as a refund or credit against a United States
Holder's United States federal income tax liability, provided that such United
States Holder furnished the required information to the IRS.
United States Federal Income Taxation of Non-United States Holders
This section discusses certain special rules applicable to a holder of Notes
that is a Non-United States Holder. For purposes of this discussion, a "Non-
United States Holder" means a holder of Notes that is not (1) an individual
citizen or resident of the United States, (2) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, (3) an estate the income of which is subject
to United States federal income taxation regardless of source, or (4) a trust
whose administration is subject to the primary supervision of a United States
court and which has one or more United States persons who have the authority to
control all substantial decisions of the trust.
Receipt of Stated Interest by Non-United States Holder. Subject to the
discussion of backup withholding set forth below, payments of interest
(including original issue discount) to a Non-United States Holder who is the
beneficial owner of a Note generally will not be subject to the 30% U.S.
withholding tax under the portfolio interest exemption of the Internal Revenue
Code; provided, that (1) beneficial owner of the Note does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of GroupMAC entitled to vote within the meaning of Section
871(h)(3) of the Internal Revenue Code and the Regulations thereunder; (2) such
beneficial owner is not a controlled foreign corporation that is related to
GroupMAC through stock ownership; (3) such beneficial owner is not a bank whose
receipt of interest on a Note is described in Section 881(c)(3)(A) of the
Internal Revenue Code; and (4) such beneficial owner satisfies the
certification requirement (described generally below) set forth in Section
871(h) (in the case of individuals) or Section 881(c) (in the case of foreign
corporations) of the Internal Revenue Code and the Regulations thereunder.
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To satisfy the certification requirement referred to in (4) above, the
beneficial owner of a Note, or a financial institution holding the Note on
behalf of such owner, must provide, in accordance with specified procedures,
GroupMAC or its paying agent, as the case may be, with a statement to the
effect that the beneficial owner is a Non-United States Holder. Such
requirement generally will be met if (1) the beneficial owner provides such
beneficial owner's name and address, signs under penalties of perjury, and
certifies that such beneficial owner is a Non-United States Holder (which
certification may be made on IRS Form W-8 (or substitute Form W-8)) or (2) a
securities clearing organization, a bank or other financial institution holding
the Note on behalf of the beneficial owner certifies, under penalties of
perjury, that such statement has been received by it and furnishes GroupMAC or
its paying agent, as the case may be, with a copy thereof.
If the Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described above, payments of premium, if any,
and interest made to Non-United States Holders with respect to the Notes will
be subject to a 30% United States withholding tax unless the beneficial owner
of a Note provides GroupMAC or its paying agent, as the case may be, with, and
keeps current (1) a properly executed IRS Form 1001 (or successor form)
claiming an exemption from United States withholding tax under a United States
income tax treaty, or (2) a properly executed IRS Form 4224 (or successor form)
claiming such premium and/or interest is exempt from United States withholding
tax because such premium and/or interest is effectively connected with the
conduct of a United States trade or business by the Non-United States Holder,
in which case the premium and/or interest will be subject to the United States
federal income tax on net income at the rates applicable to United States
persons generally (and with respect to corporate holders and under certain
circumstances, the 30% branch profits tax).
The U.S. Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
the final regulations do not significantly alter the substantive withholding
and information reporting requirements described above, but instead unify
current certification procedures and forms and clarify reliance standards. The
final regulations are generally effective for payments made after December 31,
1999, subject to certain transition rules. Non-United States Holders should
consult their tax advisors regarding the application of these rules to their
particular situations, the availability of an exemption therefrom and the
procedure for obtaining such an exemption, if available.
Gain on Disposition of Notes. A Non-United States Holder will generally not
be subject to United States federal income tax with respect to gain recognized
on disposition of the Notes unless (1) the gain is effectively connected with a
trade or business of the Non-United States Holder in the United States, (2) in
the case of a Non-United States Holder that is an individual, such holder is
present in the United States for 183 or more days in the taxable year of the
disposition and certain other requirements are met, or (3) the Non-United
States Holder is subject to tax pursuant to provisions of the United States
federal income tax law applicable to certain United States expatriates.
Information Reporting and Backup Withholding. In general, no United States
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information reporting or backup withholding tax will be required with respect
to payments of principal or interest made by GroupMAC to Non-United States
Holders if the certification described above in (4) under "--Receipt of Stated
Interest by Non-United States Holder" has been received and the payor does not
have actual knowledge that the beneficial owner is a United States person.
Payments of principal or interest to the beneficial owner of a Note by a
United States office of a custodian, nominee or agent, or the payment by a
United States office of a broker of the proceeds of a sale of the Note, is
subject to both backup withholding and information reporting unless the
beneficial owner certifies under penalties of perjury that such owner is a Non-
United States Holder or otherwise establishes an exemption.
In general, backup withholding and information reporting will not apply if
payments on a Note are paid or collected by a foreign office of a custodian,
nominee, or other foreign agent on behalf of the beneficial owner of such Note,
or if a foreign office of a broker (as defined in applicable Regulations) pays
the proceeds of the sale of a Note to the owner thereof. If, however, such
nominee, custodian, agent or broker is, for United States federal income tax
purposes, a United States person, or a controlled foreign corporation, or a
foreign person 50% or more of whose gross income for certain periods is derived
from activities that are effectively connected with the conduct of a trade or
business in the United States, or, for taxable years beginning after December
31, 1999, a foreign partnership, in which one or more United States persons, in
the aggregate, own more than 50% of the income or capital interests in the
partnership or which is engaged in a trade or business in the United States,
such payments will not be subject to backup withholding, but will be subject to
information reporting unless (1) such nominee, custodian, agent or broker has
documentary evidence in its records that the beneficial owner is a Non-United
States Holder and certain other conditions are met, or (2) the beneficial owner
otherwise establishes an exemption, provided such broker does not have actual
knowledge that the payee is a United States person. Non-United States Holders
should consult their tax advisors regarding the application of these rules to
their particular situations, the availability of an exemption therefrom and the
procedure for obtaining such an exemption, if available.
The Treasury Department has issued final Regulations regarding the backup
withholding and information reporting rules discussed above. In general, the
final Regulations, which are generally effective for payments made after
December 31, 1999, subject to certain transition rules, do not alter the
substantive withholding and information reporting requirements but instead
unify current forms and procedures.
Any amounts withheld under backup withholding will be allowed as a credit
against such Non-United States Holder's United States federal income tax
liability and may entitle such holder to a refund, provided the required
information is furnished to the IRS.
LEGAL MATTERS
Certain legal matters with respect to the issuance and sale of the Notes
offered hereby will be passed upon for us by Bracewell & Patterson, L.L.P.,
Houston, Texas.
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EXPERTS
The historical financial statements of Group Maintenance America Corp., Group
Maintenance America Corp. and Subsidiaries, Premex, Inc. and Subsidiary, Barr
Electric Corp., Atlantic Industrial Constructors, Inc., Romanoff Electric
Corp., Continental Electrical Construction Co., Trinity Contractors, Inc. and
Trinity Air Technologies, L.P., Stephen C. Pomeroy, Inc., Air Systems, Inc. and
Cardinal Contracting Corporation, to the extent and for the periods indicated
in their reports, have been incorporated by reference herein in reliance upon
the reports of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
Group Maintenance America Corp. files annual, quarterly and other reports,
proxy statements and other information with the SEC. Our current SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
Because our Common Stock is listed on the New York Stock Exchange, our
reports, proxy statements and other information can be reviewed and copied at
the office of that exchange at 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this offering memorandum, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until
we sell all of the Notes:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998, as
amended by Form 10-K/A;
2. Our Quarterly Report for the quarter ended March 31, 1999; and
3. Our Current Reports on Form 8-K filed June 14, 1999, May 10, 1999, April
16, 1999, January 19, 1999, January 5, 1999, November 25, 1998, November
4, 1998, October 28, 1998, September 15, 1998, June 26, 1998 and May 22,
1998 and on Form 8-K/A dated January 19, 1999, December 22, 1998 (two
reports were filed on such date and both reports are incorporated by
reference), September 21, 1998 and July 20, 1998 (two reports were filed
on such date and both reports are incorporated by reference).
You may request a copy of these filings (in most cases, without exhibits) at
no cost, by writing or telephoning us at the following address:
Investor Relations
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
(713) 860-1000
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ANNEX A
GROUP MAINTENANCE AMERICA CORP.
LETTER OF TRANSMITTAL
<PAGE>
LETTER OF TRANSMITTAL
To Tender for Exchange
9 3/4% Senior Subordinated Notes due 2009
of
GROUP MAINTENANCE AMERICA CORP.
Pursuant to the Prospectus dated June 17, 1999
- --------------------------------------------------------------------------------
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 16, 1999,
UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (THE "EXPIRATION
DATE"). TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
State Street Bank & Trust Company
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand:
<S> <C> <C>
State Street Bank & Trust Company (617) 664-5290 State Street Bank & Trust Company
P.O. Box 778 Two Avenue de Lafayette
Boston, Massachusetts 02102-0078 Confirm by Telephone: 5th Floor, Corporate Trust Window
Attention: Kellie Mullen Boston, Massachusetts 02111-1724
(617) 664-5587 Attention: Kellie Mullen
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES TO
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders ("Holders") of 9 3/4%
Senior Subordinated Notes due 2009 (the "Original Notes") of Group Maintenance
America Corp. (the "Company") if: (i) certificates representing Original Notes
are to be physically delivered to the Exchange Agent herewith by such Holders;
(ii) tender of Original Notes is to be made by book-entry transfer to the
Exchange Agent's account at The Depository Trust Company ("DTC") pursuant to
the procedures set forth under the caption "The Exchange Offer--Procedures for
Tendering Original Notes--Book-Entry Delivery Procedures" in the Prospectus
dated June 17, 1999 (the "Prospectus"); or (iii) tender of Original Notes is
to be made according to the guaranteed delivery procedures set forth under the
caption "The Exchange Offer--Procedures for Tendering Original Notes--
Guaranteed Delivery" in the Prospectus, and, in each case, instructions are
not being transmitted through the DTC Automated Tender Offer Program ("ATOP").
The undersigned hereby acknowledges receipt of the Prospectus. All capitalized
terms used herein and not defined shall have the meanings ascribed to them in
the Prospectus.
Holders of Original Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the
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terms of the Offer as to execution and delivery of a Letter of Transmittal by
the participant identified in the Agent's Message. DTC participants may also
accept the Exchange Offer by submitting a notice of guaranteed delivery through
ATOP.
Delivery of documents to DTC does not constitute delivery to the Exchange
Agent.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, then such Holder must tender such Original Notes
according to the guaranteed delivery procedures set forth under the caption
"The Exchange Offer--Procedures for Tendering Original Notes--Guaranteed
Delivery" in the Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
- --------------------------------------------------------------------------------
TENDER OF ORIGINAL NOTES
- --------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:_______________________________________________
Account Number:______________________________________________________________
Transaction Code Number:_____________________________________________________
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):_____________________________________________
Window Ticket Number (if any):_______________________________________________
Date of Execution of Notice of Guaranteed Delivery:__________________________
Name of Eligible Institution that Guaranteed Delivery:_______________________
- --------------------------------------------------------------------------------
A-2
<PAGE>
List below the Original Notes to which this Letter of Transmittal relates.
The name(s) and address(es) of the registered Holder(s) should be printed, if
not already printed below, exactly as they appear on the Original Notes
tendered hereby. The Original Notes and the principal amount of Original Notes
that the undersigned wishes to tender would be indicated in the appropriate
boxes. If the space provided is inadequate, list the certificate number(s) and
principal amount(s) on a separately executed schedule and affix the schedule to
this Letter of Transmittal.
DESCRIPTION OF ORIGINAL NOTES
<TABLE>
- ------------------------------------------------------
<CAPTION>
Name(s) and
Address(es)
of
Registered
Holder(s)
(Please
fill in if Aggregate
blank) See Principal Principal
Instruction Certificate Amount Amount
3. Number(s)* Represented** Tendered**
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<S> <C> <C> <C>
Total
Principal
Amount of
Original
Notes
- ------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount
represented by the Original Notes described above will be deemed to be
tendered. See Instruction 4.
A-3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Group Maintenance America Corp. (the
"Company"), upon the terms and subject to the conditions set forth in its
Prospectus dated June 17, 1999 (the "Prospectus"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which
together constitute the "Exchange Offer"), the principal amount of Original
Notes indicated in the foregoing table entitled "Description of Original
Notes" under the column heading "Principal Amount Tendered." The undersigned
represents that it is duly authorized to tender all of the Original Notes
tendered hereby which it holds for the account of beneficial owners of such
Original Notes ("Beneficial Owner(s)") and to make the representations and
statements set forth herein on behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the principal
amount of Original Notes tendered herewith in accordance with the terms and
subject to the conditions of the Exchange Offer, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company, all right, title
and interest in and to all of the Original Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company) with
respect to such Original Notes, with full powers of substitution and
revocation (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Original Notes and all evidences
of transfer and authenticity to, or transfer ownership of, such Original Notes
on the account books maintained by DTC to, or upon the order of, the Company,
(ii) present such Original Notes for transfer of ownership on the books of the
Company, and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Original Notes, all in accordance with the terms
and conditions of the Exchange Offer as described in the Prospectus.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that:
(1) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being
acquired by the undersigned and any Beneficial Owner(s) in the
ordinary course of business of the undersigned and any Beneficial
Owner(s),
(2) the undersigned and each Beneficial Owner are not participating, do
not intend to participate, and have no arrangement or understanding
with any person to participate, in the distribution of the Exchange
Notes,
(3) except as indicated below, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), of the
Company, and
(4) the undersigned and each Beneficial Owner acknowledge and agree
that (x) any person participating in the Exchange Offer with the
intention or for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the
Exchange Notes acquired by such person with a registration statement
containing the selling securityholder information required by Item
507 of Regulation S-K of the Securities and Exchange Commission (the
"Commission") and cannot rely on the interpretation of the Staff of
the Commission set forth in the no-action letters that are noted in
the section of the Prospectus entitled "The Exchange Offer--
Registration Rights" and (y) any broker-dealer that pursuant to the
Exchange Offer receives Exchange Notes for its own account in
exchange for Original Notes which it acquired for its own account as
a result of market-making activities or other trading activities must
deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Notes.
If the undersigned is a broker-dealer that will receive Exchange Notes for
its own account in exchange for Original Notes that were acquired as the
result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale
of such Exchange Notes. By so
A-4
<PAGE>
acknowledging and by delivering a prospectus, a broker-dealer shall not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The undersigned understands that tenders of Original Notes may be withdrawn
by written notice of withdrawal received by the Exchange Agent at any time
prior to the Expiration Date in accordance with the Prospectus. In the event of
a termination of the Exchange Offer, the Original Notes tendered pursuant to
the Exchange Offer will be returned to the tendering Holders promptly (or, in
the case of Original Notes tendered by book-entry transfer, such Original Notes
will be credited to the account maintained at DTC from which such Original
Notes were delivered). If the Company makes a material change in the terms of
the Exchange Offer or the information concerning the Exchange Offer or waives a
material condition of such Exchange Offer, the Company will disseminate
additional Exchange Offer materials and extend such Exchange Offer, if and to
the extent required by law.
The undersigned understands that the tender of Original Notes pursuant to any
of the procedures set forth in the Prospectus and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer. The Company's acceptance for exchange of Original Notes
tendered pursuant to any of the procedures described in the Prospectus will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
For purposes of the Exchange Offer, the undersigned understands that validly
tendered Original Notes (or defectively tendered Original Notes with respect to
which the Company has, or has caused to be, waived such defect) will be deemed
to have been accepted by the Company if, as and when the Company gives oral or
written notice thereof to the Exchange Agent.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby, and that when such tendered Original Notes are accepted for
purchase by the Company, the Company will acquire good title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned and each Beneficial Owner will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned understands that the delivery and surrender of any Original
Notes is not effective, and the risk of loss of the Original Notes does not
pass to the Exchange Agent or the Company, until receipt by the Exchange Agent
of this Letter of Transmittal, or a manually signed facsimile hereof, properly
completed and duly executed, together with all accompanying evidences of
authority and any other required documents in form satisfactory to the Company.
All questions as to form of all documents and the validity (including time of
receipt) and acceptance of tenders and withdrawals of Original Notes will be
determined by the Company, in its sole discretion, which determination shall be
final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions," the
undersigned hereby requests that any Original Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and in the case of Original Notes tendered by book-entry
transfer, by credit to the account of DTC), and Exchange Notes issued in
exchange for Original Notes pursuant to the Exchange Offer be issued to the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Original Notes
representing principal amounts not tendered or not accepted for exchange and
Exchange Notes issued in exchange for Original Notes pursuant to the Exchange
Offer be delivered to the undersigned at the address shown below the
undersigned's signature(s).
A-5
<PAGE>
In the event that the "Special Issuance Instructions" box or the "Special
Delivery Instructions" box is, or both are, completed, the undersigned hereby
requests that any Original Notes representing principal amounts not tendered
or not accepted for purchase be issued in the name(s) of, certificates for
such Original Notes be delivered to, and Exchange Notes issued in exchange for
Original Notes pursuant to the Exchange Offer be issued in the name(s) of, and
be delivered to, the person(s) at the address(es) so indicated, as applicable.
The undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" box or "Special Delivery Instructions" box to
transfer any Original Notes from the name of the registered Holder(s) thereof
if the Company does not accept for exchange any of the principal amount of
such Original Notes so tendered.
[_] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
IS AN AFFILIATE OF THE COMPANY.
[_] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED SUCH NOTES DIRECTLY FROM THE
COMPANY OR AN AFFILIATE OF THE COMPANY.
[_] CHECK HERE AND COMPLETE THE LINES BELOW IF YOU OR ANY BENEFICIAL OWNER FOR
WHOM YOU HOLD ORIGINAL NOTES TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED
SUCH NOTES IN MARKET-MAKING OR OTHER TRADING ACTIVITIES. IF THIS BOX IS
CHECKED, THE COMPANY WILL SEND 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO TO YOU OR SUCH BENEFICIAL
OWNER AT THE ADDRESS SPECIFIED IN THE FOLLOWING LINES.
Name: _______________________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
A-6
<PAGE>
- ------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if Original
Notes in a principal amount not
tendered or not accepted for
exchange are to be issued in the
name of, or Exchange Notes are to
be issued in the name of, someone
other than the person(s) whose
signature(s) appear(s) within this
Letter of Transmittal or issued to
an address different from that
shown in the box entitled
"Description of Original Notes"
within this Letter of Transmittal.
Issue: [_] Original Notes
[_] Exchange Notes
(check as applicable)
Name_______________________________
(Please Print)
Address____________________________
(Please Print)
___________________________________
(Zip Code)
___________________________________
(Tax Identification or Social
Security Number)
(See Substitute Form W-9 herein)
- ------------------------------------
- ------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if Original
Notes in a principal amount not
tendered or not accepted for
exchange or Exchange Notes are to
be sent to someone other than the
person(s) whose signature(s)
appear(s) within this Letter of
Transmittal or to an address
different from that shown in the
box entitled "Description of
Original Notes" within this Letter
of Transmittal.
Issue: [_] Original Notes
[_] Exchange Notes
(check as applicable)
Name_______________________________
(Please Print)
Address____________________________
(Please Print)
___________________________________
(Zip Code)
___________________________________
(Tax Identification or Social
Security Number)
(See Substitute Form W-9 herein)
- ------------------------------------
A-7
<PAGE>
PLEASE SIGN HERE
(To be completed by all tendering Holders of Original Notes
regardless of whether Original Notes are being physically delivered herewith)
This Letter of Transmittal must be signed by the registered Holder(s)
exactly as name(s) appear(s) on certificate(s) for Original Notes or, if
tendered by a participant in DTC exactly as such participant's name appears
on a security position listing as owner of Original Notes, or by the
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
(See guarantee requirement below)
Dated: ________________________________________________________________, 1999
Name(s):_____________________________________________________________________
-----------------------------------------------------------------------------
(Please Print)
Capacity (Full Title)________________________________________________________
Address:_____________________________________________________________________
-----------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:______________________________________________
Tax Identification or Social Security Number:________________________________
(Complete Accompanying Substitute Form W-9)
Signature Guarantee
(If Required--See Instructions 1 and 5)
Authorized Signature_________________________________________________________
Name of Firm_________________________________________________________________
[place seal here]
A-8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Signature Guarantees. Signatures of this Letter of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered hereby are
tendered (i) by a registered Holder of Original Notes (or by a participant in
DTC whose name appears on a security position listing as the owner of such
Original Notes) that has not completed either the box entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions" on
this Letter of Transmittal, or (ii) for the account of an Eligible
Institution. If the Original Notes are registered in the name of a person
other than the signer of this Letter of Transmittal, if Original Notes not
accepted for exchange or not tendered are to be returned to a person other
than the registered Holder or if Exchange Notes are to be issued in the name
of or sent to a person other than the registered Holder, then the signatures
on this Letter of Transmittal accompanying the tendered Original Notes must be
guaranteed by an Eligible Institution as described above. See Instruction 5.
2. Delivery of Letter of Transmittal and Original Notes. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Original Notes are to be physically delivered to the Exchange Agent herewith
by such Holders; (ii) tender of Original Notes is to be made by book-entry
transfer to the Exchange Agent's account at DTC pursuant to the procedures set
forth under the caption "The Exchange Offer--Procedures for Tendering Original
Notes--Book-Entry Delivery Procedures" in the Prospectus; or (iii) tender of
Original Notes is to be made according to the guaranteed delivery procedures
set forth under the caption "The Exchange Offer--Procedures for Tendering
Original Notes--Guaranteed Delivery" in the Prospectus. All physically
delivered Original Notes, or a confirmation of a book-entry transfer into the
Exchange Agent's account at DTC of all Original Notes delivered
electronically, as well as a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), any required signature
guarantees and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at one of its addresses set forth on
the cover page hereto on or prior to the Expiration Date, or the tendering
Holder must comply with the guaranteed delivery procedures set forth below.
Delivery of documents to DTC does not constitute delivery to the Exchange
Agent.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Holder must tender such Original Notes
pursuant to the guaranteed delivery procedures set forth under the caption
"The Exchange Offer--Procedures for Tendering Original Notes--Guaranteed
Delivery" in the Prospectus. Pursuant to such procedures, (i) such tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Company, or an Agent's Message with respect to guaranteed
delivery that is accepted by the Company, must be received by the Exchange
Agent, either by hand delivery, mail, telegram, or facsimile transmission, on
or prior to the Expiration Date; and (iii) the certificates for all tendered
Original Notes, in proper form for transfer (or confirmation of a book-entry
transfer or all Original Notes delivered electronically into the Exchange
Agent's account at DTC pursuant to the procedures for such transfer set forth
in the Prospectus), together with a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) and any other
documents required by this Letter of Transmittal, or in the case of a book-
entry transfer, a properly transmitted Agent's Message, must be received by
the Exchange Agent within two business days after the date of the execution of
the Notice of Guaranteed Delivery.
The method of delivery of this Letter of Transmittal, the Original Notes and
all other required documents, including delivery through DTC and any
acceptance or Agent's Message delivered through ATOP, is at the election and
risk of the tendering Holder and, except as otherwise provided in this
Instruction 2, delivery will be deemed made only when actually received by the
Exchange Agent. If
A-9
<PAGE>
delivery is by mail, it is suggested that the Holder use properly insured,
registered mail with return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to such date.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Original Notes for exchange.
3. Inadequate Space. If the spare provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Original Notes
should be listed on a separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by any Original Note submitted, such Holders must fill in the
principal amount that is to be tendered in the column entitled "Principal
Amount Tendered." The minimum permitted tender is $1,000 in principal amount
of Original Notes. All other tenders must be in integral multiples of $1,000
in principal amount. In the case of a partial tender of Original Notes, as
soon as practicable after the Expiration Date, new certificates for the
remainder of the Original Notes that were evidenced by such Holder's old
certificates will be sent to such Holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal. The entire principal amount
that is represented by Original Notes delivered to the Exchange Agent will be
deemed to have been tendered, unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
Holder(s) of the Original Notes tendered hereby, the signatures must
correspond with the name(s) as written on the face of the certificate(s)
without alteration, enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in DTC whose name is shown as the owner
of the Original Notes tendered hereby, the signature must correspond with the
name shown on the security position listing as the owner of the Original
Notes.
If any of the Original Notes tendered hereby are registered in the name of
two or more Holders, all such Holders must sign this Letter of Transmittal. If
any of the Original Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Original Note or instrument of transfer
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Company of such person's authority to so
act must be submitted.
When this Letter of Transmittal is signed by the registered Holder(s) of the
Original Notes listed herein and transmitted hereby, no endorsements of
Original Notes or separate instruments of transfer are required unless
Exchange Notes are to be issued, or Original Notes not tendered or exchanged
are to be issued, to a person other than the registered Holder(s), in which
case signatures on such Original Notes or instruments of transfer must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed other than by the registered
Holder(s) of the Original Notes listed herein, the Original Notes must be
endorsed or accompanied by appropriate instruments of transfer, in either case
signed exactly as the name(s) of the registered Holder(s) appear on the
Original Notes and signatures on such Original Notes or instruments of
transfer are required and must be guaranteed by an Eligible Institution,
unless the signature is that of an Eligible Institution.
6. Special Issuance and Delivery Instructions. If certificates for Exchange
Notes or unexchanged or untendered Original Notes are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or if
Exchange Notes or such Original Notes are to be sent to someone other than the
signer of this
A-10
<PAGE>
Letter of Transmittal or to an address other than that shown herein, the
appropriate boxes on this Letter of Transmittal should be completed. All
Original Notes tendered by book-entry transfer and not accepted for payment
will be returned by crediting the account at DTC designated herein as the
account for which such Original Notes were delivered.
7. Transfer Taxes. Except as set forth in this Instruction 7, the Company
will pay or cause to be paid any transfer taxes with respect to the transfer
and sale of Original Notes to it, or to its order, pursuant to the Exchange
Offer. If Exchange Notes, or Original Notes not tendered or exchanged are to be
registered in the name of any persons other than the registered owners, of if
tendered Original Notes are registered in the name of any persons other than
the persons signing this Letter of Transmittal, the amount of any transfer
taxes (whether imposed on the registered Holder or such other person) payable
on account of the transfer to such other person must be paid to the Company or
the Exchange Agent (unless satisfactory evidence of the payment of such taxes
or exemption therefrom is submitted) before the Exchange Notes will be issued.
8. Waiver of Conditions. The conditions of the Exchange Offer may be amended
or waived by the Company, in whole or in part, at any time and from time to
time in the Company's sole discretion, in the case of any Original Notes
tendered.
9. Substitute Form W-9. Each tendering owner of a Note (or other payee) is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided hereafter under "Important Tax Information," and to
certify that the owner (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering owner (or other payee) to a $50 penalty imposed by the Internal
Revenue Service and 31% federal income tax withholding. The box in Part 3 of
the Substitute Form W-9 may be checked if the tendering owner (or other payee)
has not been issued a TIN and has applied for a TIN or intends to apply for a
TIN in the near future. If the box in Part 3 is checked and the Exchange Agent
is not provided with a TIN by the time of payment, the Exchange Agent will
withhold 31% until a TIN is provided to the Exchange Agent.
10. Broker-dealers Participating in the Exchange Offer. If no broker-dealer
checks the last box on page 7 of this Letter of Transmittal, the Company has no
obligation under the Registration Rights Agreement to allow the use of the
Prospectus for resales of the Exchange Notes by broker-dealers or to maintain
the effectiveness of the Registration Statement of which the Prospectus is a
part after the consummation of the Exchange Offer.
11. Requests for Assistance or Additional Copies. Any questions or requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the
Exchange Agent at the telephone numbers and location listed above. A Holder or
owner may also contact such Holder's or owner's broker, dealer, commercial bank
or trust company or nominee for assistance concerning the Exchange Offer.
IMPORTANT: This Letter of Transmittal (or a facsimile hereof), together with
certificates representing the Original Notes and all other required documents
or the Notice of Guaranteed Delivery, must be received by the Exchange Agent on
or prior to the Expiration Date.
A-11
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Original Notes whose tendered
Original Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other recipient of
Exchange Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, any interest on Exchange Notes paid to such owner or
other recipient may be subject to 31% backup withholding tax.
Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (a "Form W-8"), signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding, the owner is required to notify the Exchange
Agent of the owner's current TIN (or the TIN of any other payee) by completing
the following form, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such owner is awaiting a TIN), and that (i) the owner has not
been notified by the Internal Revenue Service that the owner is subject to
backup withholding as a result of failure to report all interest or dividends
or (ii) the Internal Revenue Service has notified the owner that the owner is
no longer subject to backup withholding.
What Number to Give the Exchange Agent
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Original
Notes. If the Original Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9,"
for additional guidance on which number to report.
A-12
<PAGE>
- --------------------------------------------------------------------------------
PAYER'S NAME:
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social security
TIN IN THE BOX AT RIGHT AND number(s) or
CERTIFY BY SIGNING AND Employer
DATING BELOW. Identification
Number(s)
SUBSTITUTE ----------------------
--------------------------------------------------------
Form W-9 Part 2--Certifications--Under penalties of perjury, I
certify that:
Department of the
Treasury (1) The number shown on this form is my correct
Internal Revenue taxpayer identification number (or I am waiting
Service for a number to be issued to me), and
Payor's Request for (2) I am not subject to backup withholding because:
Taxpayer (a) I am exempt from backup withholding, or (b)
Identification I have not been notified by the Internal Revenue
Number ("TIN") Service (IRS) that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to
backup withholding.
Certification Instructions--You must cross out
item (2) above if you have been notified by the
IRS that you are currently subject to backup
withholding because of under reporting interest
or dividends on your tax return.
--------------------------------------------------------
Part 3--
SIGNATURE ________________________
DATE _____________________________ Awaiting TIN [_]
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31%.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable cash payments made to me will be
withheld until I provide a taxpayer identification number.
Signature____________________________________________ Date ____________________
A-13
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