<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 10, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.*
(Exact name of registrant as specified in its charter)
--------------------------
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DELAWARE 3714 13-3983670
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
--------------------------
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 332-2335
(Address, including zip code, and telephone number,
including area code, of Registrants' principal offices)
THOMAS C. DINOLFO
TREASURER AND CHIEF FINANCIAL OFFICER
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
3101 S. TAYLOR, P.O. BOX 1024, SHEBOYGAN, WI 53082
TELEPHONE: (920) 458-7724
(Address, including zip code, and telephone number, including area code, of
Agent for Service)
Copy to:
CARTER W. EMERSON, P.C.
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE, CHICAGO, IL 60601
TELEPHONE: (312) 861-2000
*The companies that are listed on the next page are also included in this Form
S-4 Registration Statement as additional Registrants.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The
exchange will occur as soon as practicable after the effective date of this
Registration Statement.
--------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT FEE(1)
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11 1/2% Senior Subordinated Notes due 2009, Series B........... $175,000,000 100% $48,650
Guarantees on Senior Subordinated Notes (2) -- -- (3)
</TABLE>
(1) Calculated in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(2) All subsidiary guarantors are wholly owned subsidiaries of the Registrant
and have each guaranteed the Notes being registered.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to the
guaranties being registered hereby.
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT BECOMES EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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JURISDICTION I.R.S. EMPLOYER
OF IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS* FORMATION NO.
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French Holdings, Inc................................................................. Delaware 39-1850518
J.L. French Corporation.............................................................. Wisconsin 39-1098901
Allotech International, Inc.......................................................... Wisconsin 39-1595832
</TABLE>
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* The address for each of the additional Registrants is c/o J.L. French
Automotive Castings, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402 and
the primary standard industrial classification code number for each of the
additional Registrants is 3714.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 10, 1999
THIS INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT AN OFFER TO BUY
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
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PROSPECTUS [LOGO]
</TABLE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
EXCHANGE OFFER FOR
$175,000,000
11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
- ------------------------------------------------------------
WE ARE OFFERING TO EXCHANGE:
- UP TO $175,000,000 OF OUR NEW 11 1/2% SENIOR SUBORDINATED NOTES DUE 2009,
SERIES B
FOR
- A LIKE AMOUNT OF OUR OUTSTANDING 11 1/2% SENIOR SUBORDINATED NOTES.
MATERIAL TERMS OF EXCHANGE OFFER
- - Expires 5:00 p.m., New York City time, , 1999, unless extended.
- - Not subject to any condition other than that the exchange offer not violate
applicable law or any applicable interpretation of the Staff of the SEC.
- - All outstanding notes that are validly tendered and not validly withdrawn will
be exchanged.
- - Tenders of outstanding notes may be withdrawn any time prior to the expiration
of the exchange offer.
- - The exchange of notes will not be a taxable event for U.S. federal income tax
purposes.
- - We will not receive any proceeds from the exchange offer.
- - The terms of the notes to be issued in the exchange offer are substantially
identical to the outstanding notes, except that the transfer restrictions and
registration rights relating to the outstanding notes will not apply to the
exchange notes.
- - We believe that, subject to some exceptions, the exchange notes may be offered
for sale, resold or otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the Securities Act.
- - There is no existing public market for the outstanding notes or the exchange
notes. We do not intend to list the exchange notes on any securities exchange
or seek approval for quotation through any automated trading system.
- --------------------------------------------------------------------------------
FOR A DISCUSSION OF THE MATERIAL RISKS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF
THIS PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE NOTES
OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1999
<PAGE>
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS, ANY
SUPPLEMENT TO THIS PROSPECTUS AND THE INFORMATION SET FORTH IN THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS IS A PART. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
WE ARE MAKING THIS EXCHANGE OFFER ONLY IN JURISDICTIONS WHERE OFFERS AND SALES
ARE PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR
ANY SUPPLEMENT TO THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE
ON THE FRONT OF THOSE DOCUMENTS.
IN THIS PROSPECTUS, UNLESS OTHERWISE NOTED, REFERENCES TO "FRENCH
AUTOMOTIVE," "WE," "US" AND "OUR" REFER TO J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
AND ITS SUBSIDIARIES, UNLESS THE CONTEXT SUGGESTS OTHERWISE. ANY REFERENCES TO
"J.L. FRENCH" REFER TO FRENCH HOLDINGS, INC. AND IT SUBSIDIARIES, ANY REFERENCES
TO "MORRIS ASHBY" REFER TO MORRIS ASHBY LTD. AND ITS SUBSIDIARIES AND ANY
REFERENCES TO "ANSOLA" REFER TO FUNDICIONES VIUDA DE ANSOLA, S.A. J.L. FRENCH,
MORRIS ASHBY AND ANSOLA ARE WHOLLY OWNED SUBSIDIARIES OF FRENCH AUTOMOTIVE.
------------------------
TABLE OF CONTENTS
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PAGE
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Prospectus Summary................ 1
Risk Factors...................... 10
Forward-Looking Statements May
Prove Inaccurate................ 17
The Exchange Offer................ 18
Use of Proceeds................... 27
Capitalization.................... 28
Selected Financial Data........... 29
Management's Discussion and
Analysis of Results of
Operations and Financial
Condition....................... 31
Business.......................... 37
Management........................ 51
Security Ownership of Certain
Beneficial Owners and
Management...................... 56
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PAGE
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Certain Relationships and Related
Transactions.................... 58
Description of Senior Credit
Facility........................ 61
Description of Notes.............. 63
Certain United States Federal Tax
Considerations.................. 109
Plan of Distribution.............. 112
Legal Matters..................... 113
Independent Public Accountants.... 113
Available Information............. 113
Unaudited Pro Forma Financial
Statements...................... 114
Index to Financial Statements..... F-1
</TABLE>
Until , 1999, all dealers that buy, sell or trade the exchange
notes, whether or not participating in this offering, may be required to deliver
a prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
i
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS THE BASIC INFORMATION ABOUT OUR COMPANY AND
THIS EXCHANGE OFFER. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU IN DECIDING WHETHER TO PARTICIPATE IN THE EXCHANGE OFFER. WE
ENCOURAGE YOU TO READ THIS PROSPECTUS IT ITS ENTIRETY.
SUMMARY OF THE EXCHANGE OFFER
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The Initial Offering of
Outstanding Notes............... We sold the outstanding notes on May 25, 1999 to Banc of
America Securities LLC and Chase Securities Inc. We
collectively refer to these parties in this prospectus
as the initial purchasers. The initial purchasers
subsequently resold the outstanding notes to:
- qualified institutional buyers pursuant to Rule 144A
under the Securities Act and
- qualified buyers outside the United States in reliance
upon Regulation S under the Securities Act.
Registration Rights Agreement..... Simultaneously with the initial sale of the outstanding
notes, we entered into a registration rights agreement
for the exchange offer. In the registration rights
agreement, we agreed, among other things, to use our
reasonable best efforts to file a registration statement
with the SEC and to complete this exchange offer within
180 days of issuing the outstanding notes. The exchange
offer is intended to satisfy your rights under the
registration rights agreement. After the exchange offer
is complete, you will no longer be entitled to any
exchange or registration rights with respect to your
outstanding notes.
The Exchange Offer................ We are offering to exchange the exchange notes, which
have been registered under the Securities Act, for your
outstanding notes, which were issued on May 25, 1999 in
the initial offering. In order to be exchanged, an
outstanding note must be properly tendered and accepted.
All outstanding notes that are validly tendered and not
validly withdrawn will be exchanged. We will issue
exchange notes promptly after the expiration of the
exchange offer.
Resales........................... We believe that the exchange notes issued in the
exchange offer may be offered for resale, resold and
otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act, provided that:
- the exchange notes are being acquired in the ordinary
course of your business;
- you 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 issued to you in the exchange
offer; and
- you are not an affiliate of ours.
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1
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If any of these conditions are not satisfied and you
transfer any exchange notes issued to you in the
exchange offer without delivering a prospectus meeting
the requirements of the Securities Act or without an
exemption from registration of your exchange notes from
such requirements, you may incur liability under the
Securities Act. We will not assume, nor will we
indemnify you against, any such liability.
Each broker-dealer that is issued exchange notes in the
exchange offer for its own account in exchange for
outstanding notes that were acquired by such
broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of the
exchange notes. A broker-dealer may use this prospectus
for an offer to resell, resale or other retransfer of
the exchange notes issued to it in the exchange offer.
Record Date....................... We mailed this prospectus and the related exchange offer
documents to registered holders of outstanding notes on
, 1999.
Expiration Date................... The exchange offer will expire at 5:00 p.m., New York
City time, on , 1999, unless we decide to
extend the expiration date.
Conditions to the Exchange
Offer........................... The exchange offer is not subject to any condition other
than that the exchange offer not violate applicable law
or any applicable interpretation of the Staff of the
SEC.
Procedures for Tendering
Outstanding Notes............... We issued the outstanding notes as global securities.
When the outstanding notes were issued, we deposited the
global notes representing the outstanding notes with
U.S. Bank Trust National Association, as book-entry
depositary. U.S. Bank issued a certificateless
depositary interest in each global note we deposited
with it, which represents a 100% interest in the notes,
to The Depositary Trust Company, known as DTC.
Beneficial interests in the outstanding notes, which are
held by direct or indirect participants in DTC through
the certificateless depositary interest, are shown on
records maintained in book-entry form by DTC.
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2
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You may tender your outstanding notes through book-entry
transfer in accordance with DTC's Automated Tender Offer
Program, known as ATOP. To tender your outstanding notes
by a means other than book-entry transfer, a letter of
transmittal must be completed and signed according to
the instructions contained in the letter. The letter of
transmittal and any other documents required by the
letter of transmittal must be delivered to the exchange
agent by mail, facsimile, hand delivery or overnight
carrier. In addition, you must deliver the outstanding
notes to the exchange agent or comply with the
procedures for guaranteed delivery. See "The Exchange
Offer--Procedures for Tendering Outstanding Notes" for
more information.
Do not send letters of transmittal and certificates
representing outstanding notes to us. Send these
documents only to the exchange agent. See "The Exchange
Offer--Exchange Agent" for more information.
Special Procedures for Beneficial
Owners.......................... If you are the beneficial owner of book-entry interests
and your name does not appear on a security position
listing of DTC as the holder of such book-entry
interests or if you are a beneficial owner of
outstanding notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee and you wish to tender such book-entry interest
or outstanding notes in the exchange offer, you should
contact such person in whose name your book-entry
interests or outstanding notes are registered promptly
and instruct such person to tender on your behalf.
Withdrawal Rights................. You may withdraw the tender of your outstanding notes at
any time prior to 5:00 p.m., New York City time on
, 1999.
Federal Income Tax
Considerations.................. The exchange of outstanding notes will not be a taxable
event for United States federal income tax purposes.
Use of Proceeds................... We will not receive any proceeds from the issuance of
exchange notes pursuant to the exchange offer. We will
pay all of our expenses incident to the exchange offer.
Exchange Agent.................... U.S. Bank is serving as the exchange agent in connection
with the exchange offer.
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3
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
THE FORM AND TERMS OF THE EXCHANGE NOTES ARE THE SAME AS THE FORM AND TERMS
OF THE OUTSTANDING NOTES, EXCEPT THAT THE EXCHANGE NOTES WILL BE REGISTERED
UNDER THE SECURITIES ACT. AS A RESULT, THE EXCHANGE NOTES WILL NOT BEAR THE
LEGENDS RESTRICTING THEIR TRANSFER AND WILL NOT CONTAIN THE REGISTRATION RIGHTS
AND LIQUIDATED DAMAGE PROVISIONS CONTAINED IN THE OUTSTANDING NOTES. THE
EXCHANGE NOTES REPRESENT THE SAME DEBT AS THE OUTSTANDING NOTES. BOTH THE
OUTSTANDING NOTES AND THE EXCHANGE NOTES ARE GOVERNED BY THE SAME INDENTURE. WE
USE THE TERM NOTES IN THIS PROSPECTUS TO REFER COLLECTIVELY TO THE OUTSTANDING
NOTES AND THE EXCHANGE NOTES.
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Issuer............................ J.L. French Automotive Castings, Inc., a Delaware
corporation.
Securities........................ $175 million in principal amount of 11 1/2% senior
subordinated notes due 2009, series B.
Maturity.......................... June 1, 2009.
Interest.......................... Annual rate: 11 1/2%.
Payment frequency--every six months on June 1 and
December 1.
First payment December 1, 1999.
Ranking........................... The exchange notes are senior subordinated debt.
Accordingly, they will rank:
- behind all of our senior debt;
- equally with all of our existing and future
subordinated, unsecured debt that does not expressly
provide that it is subordinated to the exchange
notes;
- ahead of all of our future debt that expressly
provides that it is subordinated to the exchange notes;
and
- behind all of the liabilities of our foreign
subsidiaries.
As of June 30, 1999, the exchange notes were
subordinated to approximately $296.5 million of our
senior debt and were effectively subordinated to an
additional $28.6 million of liabilities of our foreign
subsidiaries.
Guaranties........................ The exchange notes will be unconditionally guaranteed on
a senior subordinated basis by each of our existing and
certain of our future domestic subsidiaries. We refer to
these subsidiaries in this prospectus as the subsidiary
guarantors.
Optional Redemption............... On or after June 1, 2004, we may redeem some or all of
the exchange notes at any time at the redemption prices
described in the section "Description of Notes--Optional
Redemption."
Prior to June 1, 2002, we may redeem up to 35% of the
exchange notes with the proceeds of certain equity
offerings at the price listed in the section
"Description of Notes--Optional Redemption."
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4
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Mandatory Offer to Repurchase..... If we sell some types or amounts of assets or experience
specific kinds of changes in control, we must offer to
repurchase the exchange notes at the prices listed in
the section "Description of Notes--Repurchase at the
Option of Holders."
Basic Covenants of Indenture...... The indenture under which the outstanding notes were
issued will govern the exchange notes. This indenture
contains restrictions which, among other things,
restrict our ability to:
- borrow money;
- pay dividends on stock or repurchase stock;
- make investments;
- use assets as security in other transactions; and
- sell some types and amounts assets or merge with or
into other companies.
</TABLE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
We are one of the world's largest independent designers and manufacturers of
automotive aluminum die cast components and assemblies. Our principal products
are highly engineered, value-added assemblies, consisting of machined aluminum
die cast components and various fastened parts. Our primary product offerings
include engine and drivetrain components and assemblies such as:
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<S> <C>
- - oil pans - ladderframes
- - engine front covers - timing chain housings
- - transmission cases - water pump housings
- - cam covers
</TABLE>
For the year ended December 31, 1998, we had sales of $295.7 million.
We primarily sell to original equipment manufacturers, who are known as
OEMs, with Ford and General Motors accounting for approximately 58% and 20% of
our 1998 sales, respectively. We are a supplier on more than 20 Ford models,
including many of its highest volume vehicles, such as the F-Series and Ranger
trucks, Explorer and Taurus/Sable. We are also a supplier on many of GM's
highest volume vehicles, such as the Silverado and S-10 trucks, Blazer,
Cavalier/Sunfire and Malibu/ Intrigue. In addition, we sell to Tier 1 automotive
suppliers such as Robert Bosch, Delphi Automotive Systems and LucasVarity.
We are one of only a few major suppliers of automotive aluminum die castings
with manufacturing operations in both North America and Europe. We established
our European operations, diversified our customer base and expanded our product
capabilities through our acquisitions of Morris Ashby in January 1998 and Ansola
in April 1998. Morris Ashby, headquartered in the U.K., designs and manufactures
aluminum die cast components and tooling for customers primarily in the U.K. and
Germany. Ansola, headquartered in Spain, designs and manufactures aluminum die
cast components for customers in Germany, Spain, Portugal, Hungary and France.
Both Morris Ashby and Ansola generally manufacture smaller aluminum die castings
than J.L. French, which manufactures medium to large aluminum die castings
ranging in weight from three to nearly 50 pounds.
5
<PAGE>
COMPETITIVE STRENGTHS
We possess a number of competitive strengths that have enabled us to meet
the demands of OEMs for fewer, global suppliers and to benefit from aluminum's
continued replacement of other metals in vehicles.
- LOW COST, VERTICALLY-INTEGRATED MANUFACTURER: We are the only independent
automotive aluminum die caster in North America with captive aluminum
smelting capabilities, and we have in-house tool and die making
capabilities which support our manufacturing operations.
- VALUE-ADDED MANUFACTURING SERVICES: We believe that we have the most
extensive machining and assembly capabilities among independent automotive
aluminum die casters.
- BROAD RANGE OF GLOBAL MANUFACTURING CAPABILITIES: The breadth of our
global manufacturing capabilities enables us to compete for virtually any
automotive aluminum die casting business in the world.
- ADVANCED PRODUCT DESIGN AND ENGINEERING CAPABILITIES: Our extensive design
and engineering capabilities have resulted in strong, collaborative
customer relationships.
- WELL POSITIONED ON HIGH VOLUME PRODUCT PLATFORMS: We are a supplier on
many of the highest volume product platforms, including the top three and
12 of the top 20 selling vehicles in the U.S. in 1998.
- INDUSTRY LEADING PRODUCT QUALITY: During 1998, we produced finished
aluminum die cast components and assemblies with less than 44 defective
parts per million, which we believe is among the lowest defect rates in
the automotive aluminum die casting industry.
- PROVEN MANAGEMENT TEAM: The 18 most senior members of our management
average over 20 years of experience in the automotive industry and our
chief executive officer, Charles M. Waldon, has over 30 years of
experience in the automotive aluminum die casting industry.
BUSINESS STRATEGY
Our strategic objective is to become the leading global supplier of aluminum
die castings to OEMs. With the acquisitions of Morris Ashby and Ansola, we have
the capability to globally manufacture a complete range of automotive aluminum
die cast engine and drivetrain components and assemblies. Key elements of our
strategy include the following:
- Continuing to increase our large aluminum casting business
- Maximizing the profitability of Morris Ashby and Ansola
- Pursuing continuous operating improvements
- Diversifying our customer base
- Designing and engineering high value-added assemblies
- Continuing to develop global supply capabilities by expanding into new
geographic markets
- Pursuing strategic acquisitions
Our principal executive offices are located at 4508 IDS Center, Minneapolis,
Minnesota 55402, and our telephone number is (612) 332-2335.
6
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RECENT DEVELOPMENTS
In March 1999, we entered into a non-binding letter of intent to acquire a
Mexican supplier of aluminum die castings to DaimlerChrysler and GM for
approximately $13 million. Completion of this acquisition is subject to our
satisfactory completion of due diligence, negotiation of a definitive agreement,
regulatory approval and the approval of our senior lenders. If we complete this
acquisition, we would expect closing to occur in the third quarter of 1999. We
expect that we would finance this acquisition with cash on hand and available
borrowings under our revolving credit facility.
THE RECAPITALIZATION
On April 21, 1999, we completed a recapitalization in which a group of
equity investors, including affiliates of Onex Corporation and J2R Corporation,
acquired approximately 87% of our common stock for $156.0 million in cash. Our
stockholders prior to the recapitalization retained approximately 13% of our
common stock and, together with holders of outstanding options, received an
aggregate of $370.3 million in cash in connection with our redemption of their
other equity interest, plus an additional $5.9 million based upon a post-closing
determination of our total working capital as of the closing date of the
recapitalization. As part of the recapitalization, we:
- borrowed $295.0 million under a new secured senior credit facility and
$130.0 million under a new senior subordinated credit facility;
- repaid $184.0 million of our existing indebtedness;
- paid $6.9 million in fees and expenses incurred in connection with the
recapitalization; and
- retained approximately $10.9 million of borrowing proceeds for working
capital purposes.
We collectively refer to these transactions in this prospectus as the
recapitalization. See "Certain Relationships and Related Transactions--The
Recapitalization" for additional information.
THE EQUITY INVESTORS
Hidden Creek is a private industrial management company that focuses
exclusively on the automotive and heavy truck parts supply industries. Hidden
Creek is a partnership comprised of Onex and J2R and is based in Minneapolis,
Minnesota. Onex is a publicly owned holding company based in Canada with annual
revenues of approximately $6.0 billion. Hidden Creek provides strategic,
financial and acquisition functions for its affiliated companies.
7
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SUMMARY HISTORICAL FINANCIAL DATA
We derived the following historical financial information from the
consolidated financial statements of French Automotive for the nine months ended
December 31, 1996 and for the years ended December 31, 1997 and 1998 and the six
months ended June 30, 1998 and 1999. The unaudited financial data at June 30,
1999, for the six months ended June 30, 1998 and 1999 include adjustments, all
of which are normal recurring adjustments, which our management considers
necessary for a fair presentation of our results for these unaudited periods.
The results of operations for the six months ended June 30, 1999 are not
necessarily indicative of the results of operations which we expect for the full
1999 calendar year.
You should read the following summary together with the "Management's
Discussion and Analysis of Results of Operations and Financial Condition" for
French Automotive and the audited and unaudited financial statements and the
related notes and the unaudited pro forma financial statements and related notes
contained elsewhere in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED SIX MONTHS ENDED
ENDED DECEMBER 31, JUNE 30,
DECEMBER 31, -------------------- --------------------
1996 1997 1998(1) 1998(1) 1999
------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Sales................................................. $ 106,941 $ 169,510 $ 295,690 $ 145,563 $ 165,689
Cost of sales......................................... 75,697 116,522 221,040 108,467 123,406
------------ --------- --------- --------- ---------
Gross profit........................................ 31,244 52,988 74,650 37,096 42,283
Selling, general and administrative expenses.......... 3,359 5,649 16,802 8,882 10,228
Recapitalization expenses............................. -- -- -- -- 21,151
Amortization of intangible assets..................... 18,692 20,680 16,861 8,484 5,505
------------ --------- --------- --------- ---------
Operating income.................................... 9,193 26,659 40,987 19,730 5,399
Interest expense...................................... 11,973 13,981 20,533 8,844 13,823
------------ --------- --------- --------- ---------
Income (loss) before income taxes and extraordinary
loss.............................................. (2,780) 12,678 20,454 10,886 (8,424)
Provision (benefit) for income taxes.................. (1,126) 4,954 8,299 4,376 (3,369)
------------ --------- --------- --------- ---------
Income (loss) before extraordinary loss............. (1,654) 7,724 12,155 6,510 (5,055)
Extraordinary loss.................................... -- -- 805 805 8,112
------------ --------- --------- --------- ---------
Net income (loss)..................................... $ (1,654) $ 7,724 $ 11,350 $ 5,705 $ (13,167)
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
OTHER FINANCIAL DATA:
Depreciation.......................................... $ 7,188 $ 10,357 $ 19,176 $ 9,051 $ 11,060
Amortization.......................................... 18,692 20,680 16,861 8,484 5,505
Capital expenditures.................................. 2,995 24,530 34,640 16,815 10,727
EBITDA(2)............................................. 35,073 57,696 77,024 37,265 21,964
EBITDA margin......................................... 32.8% 34.0% 26.0% 25.6% 13.3%
Net cash provided by (used in):
Operating activities................................ 26,721 29,629 39,055 11,378 (8,927)
Investing activities................................ (230,760) (24,530) (109,418) (88,555) (12,157)
Financing activities................................ 225,665 (12,287) 59,871 70,971 43,296
Ratio of earnings to fixed charges(3)................. 0.8x 1.8x 1.9x 2.1x 0.4x
</TABLE>
8
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<TABLE>
<CAPTION>
AS OF JUNE
30, 1999
-------------
<S> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents.......................................................................... $ 27,357
Working capital.................................................................................... 74,643
Total assets....................................................................................... 438,708
Total debt......................................................................................... 471,476
Total stockholders' deficit........................................................................ (78,335)
</TABLE>
- ------------------------------
(1) Includes the results of operations of (i) Morris Ashby from January 12, 1998
and (ii) Ansola from April 30, 1998, their respective dates of acquisition.
(2) EBITDA is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. This belief is based, in part, on our
negotiations with our lenders who have required that the interest payable
under our senior credit facility be based, in part, on our ratio of
consolidated senior funded indebtedness to EBITDA. EBITDA does not take into
account our working capital requirements, debt service requirements and
other commitments and, accordingly, is not necessarily indicative of amounts
that may be available for discretionary use.
(3) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of debt issuance costs and one-third of
rental expense, deemed representative of that portion of rental expense
estimated to be attributable to interest. The pro forma ratio of earnings to
fixed charges for the year ended December 31, 1998 and the six months ended
June 30, 1999 would have been 0.9x and 1.3x, respectively.
9
<PAGE>
RISK FACTORS
YOU SHOULD READ AND CONSIDER CAREFULLY EACH OF THE FOLLOWING FACTORS, AS
WELL AS THE OTHER INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS, BEFORE MAKING A DECISION TO PARTICIPATE IN THE EXCHANGE OFFER.
RISKS ASSOCIATED WITH THE EXCHANGE OFFER
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES--YOU MAY NOT BE ABLE TO SELL
YOUR EXCHANGE NOTES
The exchange notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
- the liquidity of any such market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which the holders would be able to sell their exchange notes.
If such a market were to exist, the exchange notes may trade at higher or lower
prices than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar debentures and our
financial performance.
We understand that the initial purchasers presently intend to make a market
in the notes. However, they are not obligated to do so, and any market-making
activity with respect to the notes may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Securities Exchange Act, and may be
limited during the exchange offer or the pendency of an applicable shelf
registration statement. There can be no assurance that an active trading market
will exist for the exchange notes or that such trading market will be liquid.
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES, YOUR OUTSTANDING NOTES WILL
CONTINUE TO BE SUBJECT TO THE EXISTING TRANSFER RESTRICTIONS AND YOU MAY BE
UNABLE TO SELL YOUR OUTSTANDING NOTES
We did not register the outstanding notes, nor do we intend to do so
following the exchange offer. Outstanding notes that are not tendered will
therefore continue to be subject to the existing transfer restrictions and may
be transferred only in limited circumstances under the securities laws. If you
do not exchange your outstanding notes, you will lose your right to have your
outstanding notes registered under the federal securities laws. As a result, if
you hold outstanding notes after the exchange offer, you may be unable to sell
your outstanding notes.
YOUR OUTSTANDING NOTES WILL NOT BE ACCEPTED FOR EXCHANGE IF YOU FAIL TO FOLLOW
THE EXCHANGE OFFER PROCEDURES
We will issue exchange notes pursuant to this exchange offer only after a
timely receipt of your outstanding notes, a properly completed and duly executed
letter of transmittal and all other required documents. Therefore, if you want
to tender your outstanding notes, please allow sufficient time to ensure timely
delivery. We are under no duty to give notification of defects or irregularities
with respect to the tenders of outstanding notes for exchange.
In addition, if you tender your outstanding notes in the exchange offer for
the purpose of participating in a distribution of the exchange notes, you may be
deemed to have received restricted securities, and if so, you will be required
to comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
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<PAGE>
RISKS RELATED TO THE NOTES
OUR BUSINESS MAY BE ADVERSELY IMPACTED AS A RESULT OF OUR SUBSTANTIAL LEVERAGE
We have a significant amount of indebtedness. As of June 30, 1999, we had
approximately $471.5 million of outstanding debt and approximately $78.3 million
of stockholders' deficit. In addition, we will be able to incur substantial
additional indebtedness in the future. The terms of the indenture do not fully
prohibit us from doing so. We are permitted to incur additional borrowings of up
to $67.8 million less outstanding letters of credit, subject to certain
financial covenants, under our senior credit facility.
Our indebtedness could have several important consequences for you,
including but not limited to the following:
- it may be difficult for us to satisfy our obligations with respect to the
notes;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities,
general corporate purposes or other purposes may be impaired;
- a substantial portion of our cash flow from operations must be dedicated
to the payment of principal and interest on our indebtedness;
- we may be more vulnerable to economic downturns, may be limited in our
ability to withstand competitive pressures and may have reduced
flexibility in responding to changing business, regulatory and economic
conditions; and
- fluctuations in market interest rates will affect the cost of our
borrowings to the extent not covered by interest rate hedge agreements
because a portion of our indebtedness is payable at variable rates.
WE MAY BE UNABLE TO GENERATE SUFFICIENT CASH TO SERVICE OUR INDEBTEDNESS
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond our control. We believe that, based upon current levels of operations, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that we will
continue to be successful in implementing our business strategy and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purpose. There is no assurance that refinancings or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
would be permitted by the terms of the indenture or our senior credit facility.
In the event that we are unable to refinance our senior credit facility or raise
funds through asset sales, sales of equity or otherwise, our ability to pay
principal of, and interest on, the notes would be impaired.
WE ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS AND COVENANTS UNDER OUR SENIOR CREDIT
FACILITY
Our senior credit facility contains numerous restrictive covenants,
including, but not limited to, covenants that restrict our ability to incur
indebtedness, pay dividends, create liens, sell assets, engage in certain
mergers and acquisitions and refinance indebtedness. In addition, our senior
credit facility also requires us to maintain certain financial ratios. Our
ability to comply with the covenants and other terms of the senior credit
facility, to satisfy our other debt obligations and to make cash payments with
respect to the notes will depend on our future operating performance. In the
event that we fail to comply with the various covenants contained in our senior
credit facility, we would be in default
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<PAGE>
thereunder, and in any such case, the maturity of substantially all of our
long-term indebtedness could be accelerated.
A default under the indenture would also constitute an event of default
under our senior credit facility. In addition, the lenders under the senior
credit facility could elect to declare all amounts borrowed thereunder, together
with accrued interest, to be due and payable. If we were unable to repay such
borrowings, such lenders could proceed against our assets, which secure our
borrowings under the senior credit facility. If the indebtedness under the
senior credit facility were to be accelerated, there can be no assurance that
our assets would be sufficient to repay such indebtedness and the notes in full.
The senior credit facility prohibits the repayment, purchase, redemption,
defeasance or other payment of any of the principal of the notes at any time
prior to their stated maturity. See "Description of Senior Credit Facility" and
"Description of Notes."
THE NOTES AND GUARANTIES ARE UNSECURED SUBORDINATED OBLIGATIONS
The indebtedness evidenced by the notes will be an unsecured obligation of
French Automotive, and the indebtedness evidenced by the subsidiary guaranties
will be unsecured obligations of the subsidiary guarantors. The payment of
principal of, premium (if any), and interest on the notes will be subordinated
in right of payment to all of our senior indebtedness, including the payment of
the senior credit facility, and the payment of the subsidiary guaranties will be
subordinated in right of payment to all senior indebtedness of the subsidiary
guarantors, including the subsidiary guarantors' respective guarantees of the
senior credit facility. As of June 30, 1999, our senior indebtedness was
approximately $296.5 million.
By reason of the subordination provisions of the indenture, in the event of
insolvency, liquidation, reorganization, dissolution or other winding-up of
French Automotive, or any of the subsidiary guarantors, holders of our senior
indebtedness, or of any of the subsidiary guarantors, as the case may be, will
have to be paid in full before we make payments in respect of the notes or
before any of the subsidiary guarantors make payment in respect of the
subsidiary guaranties. In addition, no payment will be able to be made in
respect of the notes during the continuance of a payment default on senior debt
and may be prohibited for up to 179 consecutive days in the event of some
specified non-payment defaults on senior debt. See "Description of
Notes--Subordination."
WE CONDUCT ALL OF OUR OPERATIONS THROUGH SUBSIDIARIES AND NOT ALL OF OUR
SUBSIDIARIES ARE SUBSIDIARY GUARANTORS
We conduct all of our operations through subsidiaries. Distributions and
intercompany transfers from our subsidiaries to us may be restricted by
covenants contained in debt agreements and other agreements to which our
subsidiaries may be subject and may be restricted by other agreements entered
into in the future and by applicable law. There can be no assurance that the
operating results of our subsidiaries at any given time will be sufficient to
make distributions to us.
The subsidiary guarantors include only our existing and certain future
domestic subsidiaries. Therefore, the notes are effectively subordinated to all
existing and future liabilities, including trade payables, of our foreign
subsidiaries. As a result, our right, and consequently any right of the holders
of the notes, to participate in any distribution of assets of our foreign
subsidiaries upon the liquidation, reorganization or insolvency of any such
subsidiary will be subject to the prior claims of such subsidiaries' creditors.
For certain financial data regarding our non-guarantor subsidiaries, see
footnote 14 to our consolidated financial statements.
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<PAGE>
THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO PURCHASE THE NOTES UPON A CHANGE
OF CONTROL
We will be required to offer to repurchase all notes that are outstanding at
a price equal to 101% of the notes' principal amount plus accrued and unpaid
interest upon the occurrence of the following change-of-control events:
- a person other than Onex or J2R and their affiliates gains 50% of the
voting power of our common stock;
- all or substantially all of our assets are sold to a person other than
Onex or J2R and their affiliates;
- we adopt a plan of liquidation or dissolution;
- the first date on which the members of our board of directors at the time
the indenture was adopted, and persons elected by such directors, cease to
constitute a majority of our board of directors; or
- a merger in which our common stock is converted into property other than
voting stock and the holders of our common stock immediately prior to such
transaction cease to hold a majority of the common stock of the surviving
corporation.
We would fund any repurchase obligation with our available cash, cash generated
from other sources such as borrowings, sales of equity or funds provided by a
new controlling person. However, we cannot assure you that there will be
sufficient funds available for any required repurchases of the notes if a change
of control occurs.
In addition, our senior credit facility prohibits us from repurchasing the
notes after a change of control until we first repay our debt under the senior
credit facility in full. If we fail to repurchase the notes in that
circumstance, we will go into default under both the notes and the senior credit
facility. Any future debt that we incur may also contain restrictions on
repayment which come into effect upon a change of control. If a change of
control occurs, we cannot assure you that we will have sufficient funds to
satisfy all of our debt obligations. These buyback requirements may also delay
or make it harder for others to obtain control of French Automotive. In
addition, certain important corporate events, such as leveraged
recapitalizations, that would increase the level of our indebtedness, would not
necessarily constitute a change of control under the indenture. See "Description
of Notes--Repurchase at the Option of Holders--Change of Control" for additional
information.
IF A COURT WERE TO FIND THAT THE ISSUANCE OF THE NOTES OR THE SUBSIDIARY
GUARANTIES CONSTITUTED A FRAUDULENT CONVEYANCE, SUCH COURT COULD AVOID OUR
OBLIGATIONS UNDER THE NOTES OR THE SUBSIDIARY GUARANTORS' OBLIGATIONS UNDER
THE SUBSIDIARY GUARANTIES
A significant portion of the net proceeds of the initial offering of the
outstanding notes was used to repay indebtedness incurred in connection with the
recapitalization. If a bankruptcy case or lawsuit is initiated by our unpaid
creditors, the debt which we incurred to finance the recapitalization and the
debt represented by the notes may be reviewed under federal bankruptcy law and
comparable provisions of state fraudulent transfer laws. Under these laws, the
debt could be voided, or claims in respect of the debt could be subordinated to
all of our other debts or of the subsidiary guarantors if, among other things,
we or the subsidiary guarantors, at the time we incurred the indebtedness:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such debt; and
- were insolvent or rendered insolvent by reason of such incurrence; or
- were engaged in a business or transaction for which their remaining assets
constituted unreasonably small capital; or
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<PAGE>
- intended to incur, or believed that they would incur, debts beyond their
ability to pay such debts as they mature.
In addition, any payment by us or a subsidiary guarantor could be voided and
required to be returned to us or the subsidiary guarantor, as the case may be,
or to a fund for the benefit of us or the subsidiary guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a debtor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of all of its assets; or
- if the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they became due.
We believe that we received fair market value for the indebtedness incurred
in connection with the recapitalization and for the notes. On the basis of
historical financial information, recent operating history and other factors, we
believe that, following the recapitalization and the initial offering of the
outstanding notes, we were not insolvent, did not have unreasonably small
capital for the business in which we were engaged and did not incur debts beyond
our ability to pay such debts as they mature. There can be no assurance,
however, as to what standard a court would apply in making such determinations
or that a court would agree with our conclusions in this regard.
RISKS RELATING TO FRENCH AUTOMOTIVE AND THE AUTOMOTIVE SUPPLY INDUSTRY
WE ARE DEPENDENT ON FORD AND GM AS OUR LARGEST CUSTOMERS
Our sales to Ford and GM represented approximately 58% and 20%,
respectively, of our 1998 sales. The loss of Ford or GM as a customer would have
a material adverse effect on us. The contracts we have entered into with many of
our customers provide for supplying the customers' requirements for a particular
platform, rather than for manufacturing a specific quantity of units. Such
contracts range from one year to the life of the platform, usually three to
seven years, and do not require the purchase by the customer of any minimum
number of units. Therefore, the loss of any one of such customers or a
significant decrease in demand for certain key platforms sold by any of our
major customers could have a material adverse effect on us.
There is substantial and continuing pressure from OEMs to reduce costs,
including the cost of products purchased from outside suppliers such as French
Automotive. If we are unable to generate sufficient production cost savings in
the future to offset price reductions, our gross margin could be adversely
affected.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS
We generate a significant portion of our sales and incur a significant
portion of our expenses in currencies other than dollars. To the extent that we
are unable to match sales received in foreign currencies with costs paid in the
same currency, exchange rate fluctuations could have an adverse effect on our
financial results. Certain additional risks are inherent in international
operations, including:
- foreign customers may have longer payment cycles than customers in the
United States;
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<PAGE>
- tax rates in certain foreign countries may exceed those in the United
States and foreign earnings may be subject to withholding requirements or
the imposition of tariffs, exchange controls or other restrictions; and
- large organizations spread throughout various countries are more difficult
to manage.
As we continue to expand our business globally, our success will be
dependent, in part, on our ability to anticipate and effectively manage these
and other risks. We cannot assure you that these and other factors will not have
a material adverse effect on our international operations or our business as a
whole.
WE MAY BE ADVERSELY IMPACTED BY WORK STOPPAGES AND OTHER LABOR MATTERS
Many OEMs and their suppliers have unionized work forces. Work stoppages or
slow-downs experienced by OEMs or their suppliers could result in slow-downs or
closures of assembly plants where our products are included in assembled
vehicles. For example, strikes by the United Auto Workers led to the shut down
of most of GM's North American assembly plants in June and July 1998. We
estimate that this work stoppage at GM's facilities had an unfavorable impact of
approximately $4.6 million and $1.4 million on our 1998 sales and EBITDA,
respectively. In the event that one or more of our customers experiences a
material work stoppage, such work stoppage could have a material adverse effect
on our business. In addition, although none of our North American employees and
few of our European employees are members of unions, we cannot assure you that
we will not encounter unionization efforts or other types of conflicts with our
employees in the future.
WE MAY BE ADVERSELY AFFECTED BY THE IMPACT OF ENVIRONMENTAL AND SAFETY
REGULATIONS TO WHICH WE ARE SUBJECT
We are subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. We cannot
assure you that we are at all times in complete compliance with all such
requirements. We have made and will continue to make capital and other
expenditures to comply with environmental regulations. If a release of hazardous
substances occurs on or from one of our properties or any associated offsite
disposal location, or if contamination is discovered at any of our current or
former properties, we may be held liable, and the amount of such liability could
be material. We are currently addressing environmental contamination matters at
our Presteigne, U.K.; Cheshunt, U.K.; and San Andres de Echevarria, Spain
facilities. See "Business-- Environmental Matters."
ONEX CURRENTLY CONTROLS ALL MATTERS SUBMITTED TO A STOCKHOLDER VOTE
As a result of the terms of a stockholders agreement, Onex currently
controls 87% of the voting power of our outstanding common stock. Therefore,
Onex is able to control the vote on all matters submitted to a stockholder vote,
including the election of directors, amendments to our certificate of
incorporation and our by-laws and approval of significant corporate mergers. See
"Certain Relationships and Related Transactions--Investor Stockholders
Agreement." Some decisions about our operations or financial structure may
present conflicts of interests between Onex and the holders of the notes. For
example, Onex may be willing to approve acquisitions, divestitures or
transactions undertaken by us that it believes could increase the value of its
equity investment in French Automotive. These kinds of transactions, however,
may increase the financial risk to note holders.
CYCLICALITY AND SEASONALITY COULD ADVERSELY AFFECT US
The automotive market is highly cyclical and is dependent on consumer
spending. The most recent industry downturn was in the early 1990s. Economic
factors adversely affecting automotive production and consumer spending could
adversely impact us. In addition, our business is somewhat seasonal. We
typically experience decreased sales and operating income during the third
calendar quarter of each
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<PAGE>
year due to the impact of scheduled OEM plant shutdowns in July and August for
vacations and new model changeovers.
WE OPERATE IN THE HIGHLY COMPETITIVE AUTOMOTIVE SUPPLY INDUSTRY
The automotive supply industry is highly competitive. Some of our
competitors are companies, or divisions or subsidiaries of companies, that are
larger and have greater financial and other resources than we do. In addition,
with respect to certain of our products, some of our competitors are divisions
of our OEM customers. There can be no assurance that our products will be able
to compete successfully with the products of these other companies.
We principally compete for new business both at the beginning of the
development of new platforms and upon the redesign of existing platforms by our
major customers. New platform development generally begins two to five years
prior to the marketing of such platforms to the public. The failure to obtain
new business on new platforms or to retain or increase business on redesigned
existing platforms could adversely affect our business. In addition, as a result
of the relatively long lead times required for many of our complex castings, it
may be difficult in the short term for us to obtain new sales to replace any
unexpected decline in sales of existing products. We may incur significant
expense in preparing to meet anticipated customer requirements which may not be
recovered.
WE MAY EXPERIENCE DIFFICULTIES IN INTEGRATING ACQUIRED BUSINESSES
As part of our business strategy, we intend to pursue strategic
acquisitions. We currently have executed non-binding letters of intent with
respect to two possible acquisitions. We cannot assure you that we will succeed
in consummating any such acquisitions. If any such acquisitions are consummated,
we cannot assure you that such acquisitions will be successfully integrated or
operated profitably. Acquisitions can present significant challenges to
management due to the increased time and resources required to properly
integrate management, employees, accounting controls, personnel and
administrative functions. We cannot assure you that we will not encounter such
difficulties or that we will be able to realize the benefits that we hope to
achieve from future strategic acquisitions.
WE MAY BE ADVERSELY IMPACTED BY THE YEAR 2000 ISSUE
We are currently working to resolve the potential impact of the year 2000 on
the processing of time-sensitive information by our computerized information
systems. Any of our programs that have time-sensitive software may recognize
"00" as the year 1900 rather than the year 2000. This could result in
miscalculations, classification errors or system failures.
While our various operations are at different stages of Year 2000 readiness,
we have completed our global compliance review and, based on the information
available to date, we do not anticipate any significant readiness problems with
respect to our systems. The most reasonably likely worst case scenario that we
currently anticipate with respect to Year 2000 is the failure of some of our
suppliers, including utilities suppliers, to be ready. This could cause a
temporary interruption of materials or services that we need to make our
products, which could result in delayed shipments to customers and lost sales
and profits for us. We have completed an assessment of our critical suppliers
and have made plans to assure that we will have an adequate supply of materials
on hand to cover contingencies.
The outcome of our Year 2000 program is subject to a number of risks and
uncertainties, some of which (such as the availability of qualified computer
personnel and the Year 2000 responses of third parties) are beyond our control.
Therefore, there can be no assurances that we will not incur material
remediation costs beyond the above anticipated future costs, or that our
business, financial condition or results of operations will not be significantly
impacted if Year 2000 problems with our systems, or with the products or systems
of other parties with whom we do business, are not resolved in a timely manner.
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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This prospectus contains forward-looking statements that are subject to
risks and uncertainties. You should not place undue reliance on those statements
because they only speak as of the date of this prospectus. Forward-looking
statements include information concerning our possible or assumed future results
of operations, including descriptions of our business strategy. These statements
often include words such as "believe," "expect," "anticipate," "intend," "plan,"
"estimate" or similar expressions. These statements are based on certain
assumptions that we have made in light of our experience in the industry as well
as our perceptions of historical trends, current conditions, expected future
developments and other factors we believe are appropriate in the circumstances.
As you read and consider this prospectus, you should understand that these
statements are not guarantees of performance or results. They involve risks,
uncertainties and assumptions. Although we believe that these forward-looking
statements are based on reasonable assumptions, you should be aware that many
factors could affect our actual financial results or results of operations and
could cause actual results to differ materially from those in the
forward-looking statements. These factors include:
- general economic or business conditions affecting the automotive industry
(which is dependent on consumer spending) being less favorable than
expected;
- our failure to develop or successfully introduce new products;
- increased competition in the automotive components supply market;
- unforeseen problems associated with international sales, including gains
and losses from foreign currency exchange;
- implementation of or changes in the laws, regulations or policies
governing the automotive industry that could negatively affect the
automotive components supply industry;
- our failure to complete or successfully integrate additional strategic
acquisitions; and
- various other factors beyond our control.
All future written and oral forward-looking statements by us or persons
acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Except for our ongoing obligations to
disclose material information as required by the federal securities laws, we do
not have any obligation or intention to release publicly any revisions to any
forward-looking statements to reflect events or circumstances in the future or
to reflect the occurrence of unanticipated events. YOU SHOULD ALSO READ
CAREFULLY THE FACTORS DESCRIBED IN THE "RISK FACTORS" SECTION OF THIS
PROSPECTUS.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We originally sold the outstanding notes on May 25, 1999 to the initial
purchasers pursuant to the purchase agreement. The initial purchasers
subsequently placed the outstanding notes with (1) qualified institutional
buyers in reliance on Rule 144A under the Securities Act and (2) qualified
buyers outside the United States in reliance upon Regulation S under the
Securities Act.
As a condition of the purchase agreement, we entered into the registration
rights agreement. The registration rights agreement provides that:
(1) we will file a registration statement relating to the exchange offer
(the "exchange offer registration statement") with the SEC on or prior to
90 days after the closing date of the initial offering of the outstanding
notes;
(2) we will use our best efforts to have the exchange offer registration
statement declared effective by the SEC on or prior to 180 days after the
closing date of the initial offering of the outstanding notes; and
(3) unless the exchange offer would not be permitted by applicable law or
SEC policy, we will commence the exchange offer and use our best
reasonable efforts to issue on or prior to 30 business days after the
date on which the exchange offer registration statement was declared
effective by the SEC, exchange notes in exchange for all outstanding
notes tendered prior thereto in the exchange offer.
For each outstanding note surrendered to us in the exchange offer, the holder of
such outstanding note will receive an exchange note having a principal amount
equal to that of the surrendered note. Interest on each outstanding note will
accrue from the last interest payment date on which interest was paid on the
outstanding note surrendered in exchange therefor or, if no interest has been
paid on such outstanding note, from the date of its original issue. Interest on
each exchange note will accrue from the date of its original issue.
Under existing interpretations of the Staff of the SEC contained in several
no-action letters to third parties, the exchange notes will in general be freely
tradeable after the exchange offer without further registration under the
Securities Act. However, any purchaser of outstanding notes who is our affiliate
or who intends to participate in the exchange offer for the purpose of
distributing the exchange notes:
(1) will not be able to rely on the interpretation of the Staff of the SEC;
(2) will not be able to tender its outstanding 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
exchange notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the registration rights
agreement, each holder accepting the exchange offer is required to represent to
us in the letter of transmittal or agent's message that:
(1) the exchange notes are to be acquired by the holder or the person
receiving such exchange notes, whether or not such person is the holder,
in the ordinary course of business;
(2) the holder or any such other person (other than a broker-dealer referred
to in the next sentence) is not engaging and does not intend to engage,
in distribution of the exchange notes;
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(3) the holder or any such other person has no arrangement or understanding
with any person to participate in the distribution of the exchange notes;
(4) neither the holder nor any such other person is our affiliate within the
meaning of Rule 405 under the Securities Act; and
(5) the holder or any such other person acknowledges that if such holder or
any other person participates in the exchange offer for the purpose of
distributing the exchange notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
any resale of the exchange notes and cannot rely on those no-action
letters.
As indicated above, each broker-dealer that receives an exchange note for its
own account in exchange for outstanding notes must acknowledge that it (A)
acquired the outstanding notes for its own account as a result of market-making
activities or other trading activities, (B) has not entered into any arrangement
or understanding with us or any of our affiliates within the meaning of Rule 405
under the Securities Act to distribute the exchange notes to be received in the
exchange offer and (C) will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such exchange notes. For a
description of the procedures for resales by these broker-dealers, see "Plan of
Distribution."
In the event that changes in the law or the applicable interpretations of
the Staff of the SEC do not permit us to effect an exchange offer, or if for any
other reason we do not meet the time periods set forth in the second paragraph
of this section, we will:
(1) file a shelf registration statement covering resales of the outstanding
notes;
(2) use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act; and
(3) use our reasonable best efforts to keep effective the shelf registration
statement until two years after the closing date of the initial offering.
We will, in the event of the filing of the shelf registration statement, provide
to each applicable holder of the outstanding notes copies of the prospectus
which is a part of the shelf registration statement, notify each such holder
when the shelf registration statement has become effective and take certain
other actions as are required to permit unrestricted resale of the outstanding
notes. A holder of the outstanding notes that sells such outstanding 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 that are applicable
to such a holder, including certain indemnification obligations. In addition,
each holder of the outstanding 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 its outstanding notes
included in the shelf registration statement and to benefit from the provisions
set forth in the following paragraph.
If:
(1) we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for such
filing;
(2) any of such registration statements is not declared effective by the SEC
on or prior to the date specified for such effectiveness; or
(3) we fail to consummate the exchange offer within 30 business days after
the registration statement becomes effective; or
19
<PAGE>
(4) the shelf registration statement or the exchange offer registration
statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of any notes that are subject to
transfer restrictions under the Securities Act during the periods
specified in the registration rights agreement (each such event referred
to in clauses (a) through (d) above a "registration default"),
then we will pay additional interest, to each holder of notes, with respect to
the first 90-day period immediately following the occurrence of the first
registration default in an amount equal to $.05 per week per $1,000 principal
amount of notes held by such holder. The amount of the additional interest will
increase by an additional $.05 per week per $1,000 principal amount of notes
with respect to each subsequent 90-day period until all registration defaults
have been cured, up to a maximum amount of additional interest, if any, for all
registration defaults of $.50 per week per $1,000 principal amount of notes. We
will pay all accrued additional interest on each interest payment date to the
global note holder by wire transfer of immediately available funds or by federal
funds check and to holders of certificated securities by wire transfer to the
accounts specified by them or by mailing checks to their registered addresses if
no such accounts have been specified. Following the cure of all registration
defaults, the accrual of additional interest will cease.
Following the consummation of the exchange offer, holders of the outstanding
notes who were eligible to participate in the exchange offer but who did not
tender their outstanding notes will not have any further registration rights and
such outstanding notes will continue to be subject to restrictions on transfer
under the securities laws. Accordingly, the liquidity of the market for such
outstanding notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date of the exchange offer. We will issue $1,000 principal amount
of exchange notes in exchange for each $1,000 principal amount of outstanding
notes accepted in the exchange offer. Holders may tender some or all of their
outstanding notes pursuant to the exchange offer. However, outstanding notes may
be tendered only in integral multiples of $1,000.
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that:
(1) the exchange notes bear a Series B designation and a different CUSIP
Number from the outstanding notes;
(2) the exchange notes have been registered under the Securities Act and
hence will not bear legends restricting their transfer; and
(3) the holders of the exchange notes will not be entitled to the rights
under the registration rights agreement, including the provisions
providing for an increase in the interest rate on the outstanding notes
in certain circumstances relating to the timing of the exchange offer,
all of which rights will terminate when the exchange offer is terminated.
The exchange notes will evidence the same debt as the outstanding notes and will
be entitled to the benefits of the indenture.
As of the date of this prospectus, $175,000,000 aggregate principal amount
of the outstanding notes were outstanding. We have fixed the close of business
on , 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.
Holders of outstanding notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the indenture in connection
with the exchange offer. We intend to
20
<PAGE>
conduct the exchange offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the SEC thereunder.
We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders for the purpose
of receiving the exchange notes from us.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, the certificates for any such unaccepted outstanding
notes will be returned, without expense, to the tendering holder thereof as
promptly as practicable after the expiration of the exchange offer.
Holders who tender outstanding 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
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" will mean 5:00 p.m., New York City time, on
, 1999, unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" will mean the latest date and time to
which the exchange offer is extended.
In order to extend the exchange offer, we will file with the SEC a
post-effective amendment to the registration statement. We will also notify the
exchange agent of any extension by oral or written notice and will mail to the
registered holders an 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
outstanding notes, to extend the exchange offer or to terminate the exchange
offer if any of the conditions set forth below under "--Conditions" will not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the exchange agent or (2) to amend the terms of the exchange
offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from their date of issuance. Holders
of outstanding notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
exchange notes. Such interest will be paid with the first interest payment on
the exchange notes on December 1, 1999. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange notes.
Interest on the exchange notes is payable semi-annually on each June 1 and
December 1, commencing on December 1, 1999.
PROCEDURES FOR TENDERING
Only a holder of outstanding notes may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the letter of transmittal or cause The
Depository Trust Company to transmit an agent's message (as defined below) in
connection with a book-entry transfer, and mail or otherwise deliver such letter
of transmittal or such facsimile, together with the outstanding notes and any
other required documents, to the exchange agent prior to 5:00 p.m., New York
City time, on the expiration date. To be tendered effectively, the outstanding
21
<PAGE>
notes, letter of transmittal or an agent's message and other required documents
must be completed and received by the exchange agent at the address set forth
below under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
expiration date. Delivery of the outstanding notes may be made by book-entry
transfer in accordance with the procedures described below. Confirmation of such
book-entry transfer must be received by the exchange agent prior to the
expiration date.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent forming a part of a confirmation of a
book-entry, which states that DTC has received an express acknowledgment from
the participant in DTC tendering the outstanding notes that such participant has
received and agrees: (1) to participate in ATOP; (2) to be bound by the terms of
the letter of transmittal; and (3) that we may enforce such agreement against
such participant.
By executing the letter of transmittal, each holder will make to us the
representations set forth above in the third paragraph under the heading "--
Purpose and Effect of the Exchange Offer."
The tender by a holder and our acceptance thereof will constitute agreement
between such holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal or
agent's message.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of the Medallion System unless the
outstanding notes tendered pursuant thereto are tendered (1) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the letter of transmittal or
(2) for the account of an eligible institution. In the event that signatures on
a letter of transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed in this prospectus, such outstanding
notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered holder as such registered holder's name appears on such
outstanding notes with the signature thereon guaranteed by an eligible
institution.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to us of its authority to so act must be submitted with the letter
of transmittal.
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the outstanding
notes at DTC for the purpose of facilitating the exchange offer, and subject to
the establishment thereof, any financial institution that is a participant in
DTC may make book-entry delivery of outstanding notes by causing DTC to transfer
such outstanding notes into the exchange agent's account with respect to the
outstanding notes in
22
<PAGE>
accordance with DTC's procedures for such transfer. Although delivery of the
outstanding notes may be effected through book-entry transfer into the exchange
agent's account at DTC, unless an agent's message is received by the exchange
agent in compliance with ATOP, an appropriate letter of transmittal properly
completed and duly executed with any required signature guarantee and all other
required documents must in each case be transmitted to and received or confirmed
by the exchange agent at its address set forth below on or prior to the
expiration date, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under such procedures. Delivery
of documents to DTC does not constitute delivery to the exchange agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered outstanding notes and withdrawal of tendered
outstanding 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 outstanding notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right in our sole discretion to waive any defects, irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within such time as we will determine. Although we intend to
notify holders of defects or irregularities with respect to tenders of
outstanding notes, neither we, the exchange agent nor any other person will
incur any liability for failure to give such notification. Tenders of
outstanding notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and (1) whose outstanding
notes are not immediately available, (2) who cannot deliver their outstanding
notes, the letter of transmittal or any other required documents to the exchange
agent or (3) who cannot complete the procedures for book-entry transfer, prior
to the expiration date, may effect a tender if:
(A) the tender is made through a member firm of the Medallion System;
(B) prior to the expiration date, the exchange agent receives from a member
firm of the Medallion System a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the holder, the
certificate number(s) of such outstanding notes and the principal amount
of outstanding notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three New York Stock Exchange
trading days after the expiration date, the letter of transmittal (or
facsimile thereof) together with the certificate(s) representing the
outstanding notes (or a confirmation of book-entry transfer of such
outstanding notes into the exchange agent's account at DTC), and any
other documents required by the letter of transmittal will be deposited
by the eligible institution with the exchange agent; and
(C) such properly completed and executed letter of transmittal (of facsimile
thereof), as well as the certificate(s) representing all tendered
outstanding notes in proper form for transfer (or a confirmation of
book-entry transfer of such outstanding notes into the exchange agent's
account at DTC), and all other documents required by the letter of
transmittal are received by the exchange agent upon five New York Stock
Exchange trading days after the expiration date.
Upon request to the exchange agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
23
<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
To withdraw a tender of outstanding notes in the exchange offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received by
the exchange agent at its address set forth in this prospectus prior to 5:00
p.m., New York City time, on the expiration date. Any such notice of withdrawal
must:
(1) specify the name of the person who deposited the outstanding notes to be
withdrawn;
(2) identify the outstanding notes to be withdrawn, including the
certificate number(s) and principal amount of such outstanding notes, or,
in the case of outstanding notes transferred by book-entry transfer, the
name and number of the account at DTC to be credited;
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such outstanding notes were tendered
(including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
outstanding notes register the transfer of such outstanding notes into
the name of the person withdrawing the tender; and
(4) specify the name in which any such outstanding notes are to be
registered, if different from that of the person who deposited the
outstanding notes to be withdrawn.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us and our determination will be
final and binding on all parties. Any outstanding 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 outstanding
notes so withdrawn are validly retendered. Any outstanding notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn
outstanding notes may be retendered by following one of the procedures described
above under "--Procedures for Tendering" at any time prior to the expiration
date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange notes for, any outstanding notes,
and may terminate or amend the exchange offer as provided in this prospectus
before the acceptance of such outstanding notes, if:
(1) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our sole judgment, might materially impair our ability to
proceed with the exchange offer or any material adverse development has
occurred in any existing action or proceeding with respect to us or any
of our subsidiaries; or
(2) any law, statute, rule, regulation or interpretation by the Staff of the
SEC is proposed, adopted or enacted, which, in our sole judgment, might
materially impair our ability to proceed with the exchange offer or
materially impair the contemplated benefits of the exchange offer to us;
or
(3) any governmental approval has not been obtained, which approval we will,
in our sole discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
If we determine in our sole discretion that any of the conditions are not
satisfied, we may:
24
<PAGE>
(1) refuse to accept any outstanding notes and return all tendered
outstanding notes to the tendering holders;
(2) extend the exchange offer and retain all outstanding notes tendered
prior to the expiration of the exchange offer, subject, however, to the
rights of holders to withdraw such outstanding notes (see "--Withdrawal
of Tenders"); or
(3) waive such unsatisfied conditions with respect to the exchange offer and
accept all properly tendered outstanding notes which have not been
withdrawn.
EXCHANGE AGENT
U.S. Bank Trust National Association 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 Notice of Guaranteed Delivery should be directed to the exchange
agent addressed as follows:
U.S. BANK TRUST NATIONAL ASSOCIATION
180 EAST FIFTH STREET
ST. PAUL MINNESOTA 55101
ATTN: SPECIALIZED FINANCE DEPARTMENT
BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
(651) 244-1537
FOR INFORMATION OR CONFIRMATION BY TELEPHONE:
(651) 244-1572
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
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 our and our affiliates' officers and
regular employees.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
We will pay the cash expenses to be incurred in connection with the exchange
offer. Such expenses include fees and expenses of the exchange agent and
trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes as a result of the exchange offer. The expenses of the
exchange offer will be deferred and charged to expense over the term of the
exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities. Accordingly, such
outstanding notes may be resold only:
25
<PAGE>
(1) to us (upon redemption thereof or otherwise);
(2) so long as the outstanding notes are eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the meaning
of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A, in accordance with Rule 144 under the
Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to us);
(3) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act; or
(4) pursuant to an effective registration statement under the Securities
Act, in each case in accordance with any applicable securities laws of
any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of exchange notes, based on interpretations by the
Staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not such person is the holder, other than a person that is our affiliate within
the meaning of Rule 405 under the Securities Act, in exchange for outstanding
notes in the ordinary course of business and who is not participating, does not
intend to participate, and has no arrangement or understanding with any person
to participate, in the distribution of the exchange notes, will be allowed to
resell the exchange notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the exchange notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires exchange notes in the exchange offer for the
purpose of distributing or participating in a distribution of the exchange
notes, such holder cannot rely on the position of the Staff of the SEC expressed
in such no-action letters or any similar interpretive letters, and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each broker-dealer that receives exchange notes
for its own account in exchange for outstanding notes, where such outstanding
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.
26
<PAGE>
USE OF PROCEEDS
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement. We will not receive any cash proceeds from
the issuance of the exchange notes. In consideration for issuing the exchange
notes, we will receive the outstanding notes, which have the same principal
amount and the same form and terms, except as otherwise described in this
prospectus.
We received approximately $169.6 million in net proceeds from the initial
sale of the outstanding notes. We used these proceeds together with $0.4 million
of cash on hand to repay the $130.0 million outstanding under the subordinated
financing facility and to repay approximately $2.5 million of the tranche A term
loan outstanding and approximately $37.5 million of the tranche B term loan
outstanding under our senior credit facility. See "Capitalization" and
"Description of Senior Credit Facility." Affiliates of the initial purchasers
were lenders under the subordinated financing facility and are lenders under the
senior credit facility.
27
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1999 the consolidated
capitalization of French Automotive. This table should be read in conjunction
with the financial statements and related notes appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
Cash and cash equivalents.................................................................... $ 27,357
--------
--------
Long-term debt, including current maturities:
Senior credit facility:
Revolving credit facility(1)............................................................. $ 7,231
Tranche A term loan...................................................................... 102,059
Tranche B term loan...................................................................... 152,105
--------
Total under senior credit facility................................................... 261,395
--------
Other senior indebtedness.................................................................. 35,081
--------
Total senior debt.................................................................... 296,476
--------
Notes...................................................................................... 175,000
--------
Total debt........................................................................... 471,476
Total stockholders' deficit.................................................................. (78,335)
--------
Total capitalization................................................................. $ 393,141
--------
--------
</TABLE>
- ------------------------------
(1) Our revolving credit facility provides for borrowings of up to $75.0 million
less outstanding letters of credit.
28
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data with respect to
French Automotive and its predecessor J.L. French Corporation for each of the
periods indicated. The selected historical financial data for French
Automotive's predecessor for the year ended December 31, 1994 have been derived
from its unaudited combined financial statements and, for the year ended
December 31, 1995, from its audited combined financial statements. The selected
historical financial data for French Automotive's predecessor for the three
months ended March 31, 1996 have been derived from its unaudited combined
financial statements. The selected historical financial data for French
Automotive for the nine months ended December 31, 1996 and for the years ended
December 31, 1997 and 1998 have been derived from French Automotive's audited
consolidated financial statements. The unaudited consolidated financial data at
June 30, 1999 and for the six months ended June 30, 1998 and 1999 include
adjustments, all of which are normal recurring adjustments, which our management
considers necessary for a fair presentation of our results for these unaudited
periods. The results of operations for the six months ended June 30, 1999 are
not necessarily indicative of the results of operations which we expect for the
full 1999 calendar year. The selected historical consolidated financial data
should be read in conjunction with "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and the consolidated financial
statements and notes thereto all included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------- FRENCH AUTOMOTIVE
---------------------------------------------------------
YEARS ENDED THREE MONTHS NINE MONTHS YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, ENDED ENDED DECEMBER 31, JUNE 30,
-------------------- MARCH 31, DECEMBER 31, -------------------- --------------------
1994 1995 1996 1996 1997 1998(1) 1998(1) 1999
--------- --------- ------------- ------------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................ $ 114,087 $ 136,061 $ 36,062 $ 106,941 $ 169,510 $ 295,690 $ 145,563 $ 165,689
Cost of sales.................... 78,290 102,706 27,314 75,697 116,522 221,040 108,467 123,406
--------- --------- ------------- ------------- --------- --------- --------- ---------
Gross profit................... 35,797 33,355 8,748 31,244 52,988 74,650 37,096 42,283
Selling, general and
administrative expenses........ 4,468 4,227 2,610 3,359 5,649 16,802 8,882 10,228
Recapitalization expenses........ -- -- -- -- -- -- -- 21,151
Amortization of intangible
assets......................... -- -- -- 18,692 20,680 16,861 8,484 5,505
--------- --------- ------------- ------------- --------- --------- --------- ---------
Operating income............... 31,329 29,128 6,138 9,193 26,659 40,987 19,730 5,399
Interest expense................. 330 1,885 350 11,973 13,981 20,533 8,844 13,823
--------- --------- ------------- ------------- --------- --------- --------- ---------
Income (loss) before income
taxes and extraordinary
item......................... 30,999 27,243 5,788 (2,780) 12,678 20,454 10,886 (8,424)
Provision (benefit) for income
taxes.......................... 73 108 27 (1,126) 4,954 8,299 4,376 (3,369)
--------- --------- ------------- ------------- --------- --------- --------- ---------
Income (loss) before
extraordinary item........... 30,926 27,135 5,761 (1,654) 7,724 12,155 6,510 (5,055)
Extraordinary item............... -- -- -- -- -- 805 805 8,112
--------- --------- ------------- ------------- --------- --------- --------- ---------
Net income (loss)................ $ 30,926 $ 27,135 $ 5,761 $ (1,654) $ 7,724 $ 11,350 $ 5,705 $ (13,167)
--------- --------- ------------- ------------- --------- --------- --------- ---------
--------- --------- ------------- ------------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
Depreciation..................... $ 5,706 $ 8,231 $ 2,715 $ 7,188 $ 10,357 $ 19,176 $ 9,051 $ 11,060
Amortization..................... -- -- -- 18,692 20,680 16,861 8,484 5,505
Capital expenditures............. 18,424 13,114 3,615 2,995 24,530 34,640 16,815 10,727
EBITDA(2)........................ 37,035 37,359 8,853 35,073 57,696 77,024 37,265 21,964
Net cash provided by (used in):
Operating activities........... 21,502 39,533 12,726 26,721 29,629 39,055 11,378 (8,927)
Investing activities........... (18,424) (13,114) (3,615) (230,760) (24,530) (109,418) (88,555) (12,157)
Financing activities........... (4,553) (20,374) (12,089) 225,665 (12,287) 59,871 70,971 43,296
Ratio of earnings to fixed
charges(3)..................... 94.9x 15.5x 16.7x 0.8x 1.8x 1.9x 2.1x 0.4x
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents........ $ 1,430 $ 7,479 $ 4,494 $ 21,626 $ 14,438 $ 4,128 $ 5,146 $ 27,357
Working capital.................. 28,176 23,672 20,162 23,698 23,894 22,233 24,471 74,643
Total assets..................... 77,262 81,037 74,041 240,872 235,202 404,793 403,447 438,708
Total debt....................... 26,765 28,691 25,602 144,669 134,391 211,580 221,400 471,476
Total stockholders' investment
(deficit)...................... 36,956 40,259 37,755 72,640 76,807 124,688 119,155 (78,335)
</TABLE>
29
<PAGE>
- ------------------------------
(1) Includes the results of operations of (i) Morris Ashby from January 12, 1998
and (ii) Ansola from April 30, 1998.
(2) EBITDA is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. This belief is based, in part, on our
negotiations with our lenders who have required that the interest payable
under our senior credit facility be based, in part, on our ratio of
consolidated senior debt to EBITDA. EBITDA does not take into account our
working capital requirements, debt service requirements and other
commitments and, accordingly, is not necessarily indicative of amounts that
may be available for discretionary use.
(3) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of debt issuance costs and one-third of
rental expense, deemed representative of that portion of rental expense
estimated to be attributable to interest. The pro forma ratio of earnings to
fixed charges for the year ended December 31, 1998 and the six months ended
June 30, 1999 would have been 0.9x and 1.3x, respectively.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
We ordinarily begin working on products awarded for new or redesigned
platforms two to five years prior to initial vehicle production. During such
period, we incur (1) costs related to the design and engineering of such
products, (2) costs related to production of the tools and dies used to
manufacture the products and (3) start-up costs associated with the initial
production of such product. In general, design and engineering costs are
expensed in the period in which they are incurred. Costs incurred in the
production of the tools and dies are generally capitalized and reimbursed by the
customer prior to production. Start-up costs, which are generally incurred 30 to
60 days immediately prior to and immediately after production, are expensed as
incurred.
The contracts we enter into typically: (1) range from one year to the life
of the platform, (2) are on a sole-source basis, (3) do not require the purchase
by the customer of any minimum number of units, (4) are at fixed prices subject
to annual price reductions or renegotiation and (5) provide for price
adjustments related to changes in the cost of aluminum.
ACQUISITIONS
We acquired Morris Ashby in January 1998 and Ansola in April 1998. Both
acquisitions were accounted for using the purchase method of accounting and
their operating results have been included in our consolidated operating results
since their respective date of acquisition.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain items
to sales for French Automotive for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED DECEMBER YEAR ENDED DECEMBER ENDED
31, 31, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
--------------- --------- --------- --------- ---------
Sales...................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.............................................. 70.8 68.7 74.8 74.5 74.5
----- --------- --------- --------- ---------
Gross profit............................................. 29.2 31.3 25.2 25.5 25.5
Selling, general and administrative expenses............... 3.1 3.3 5.7 6.1 6.2
Recapitalization expenses.................................. -- -- -- -- 12.8
Amortization of intangible assets.......................... 17.5 12.3 5.7 5.8 3.3
----- --------- --------- --------- ---------
Operating income......................................... 8.6 15.7 13.8 13.6 3.2
Interest expense........................................... 11.2 8.2 6.9 6.1 8.3
----- --------- --------- --------- ---------
Income (loss) before provision for income taxes.......... (2.6) 7.5 6.9 7.5 (5.1)
Provision (benefit) for income taxes....................... (1.1) 2.9 2.8 3.0 (2.0)
----- --------- --------- --------- ---------
Income (loss) before extraordinary item................ (1.5)% 4.6% 4.1% 4.5% (3.1)%
----- --------- --------- --------- ---------
----- --------- --------- --------- ---------
</TABLE>
Our gross margins declined from 1997 to 1998 primarily due to: (1) costs
associated with the accelerated launch of the Ford F-Series truck transmission
case; (2) the effects of the GM strike; and (3) the acquisitions of Morris Ashby
and Ansola. Launch costs associated with the F-Series truck transmission case
were approximately $7.1 million in 1998 and we estimate the GM strike reduced
gross profit by approximately $1.4 million during 1998. Morris Ashby and Ansola
have historically generated lower gross margins than J.L. French, primarily due
to their product mix and their non-automotive business. Major initiatives
currently underway at Morris Ashby and Ansola aimed at operating improvements
include: (1) improving cycle times to levels more consistent with J.L. French;
31
<PAGE>
(2) increasing machining and assembly operations; and (3) manufacturing products
for new European business.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 TO SIX MONTHS ENDED JUNE 30,
1998
SALES. Sales for the first half of 1999 increased by $20.1 million, or
13.8%, to $165.7 million from $145.6 million for the prior period. Approximately
$6.7 million of the increase was the result of the acquisition of Ansola in
April 1998. The remaining increase was due to new business that began during
1998, principally transmission cases for Ford.
COST OF SALES. Cost of sales for the first half of 1999 increased by $14.9
million, or 13.8%, to $123.4 million from $108.5 million for the prior period.
Cost of sales as a percentage of sales was 74.5% for both periods. Gross margins
for the first half of 1999 showed improvements primarily as a result of
manufacturing process improvements, including increased productivity levels and
reduced scrap rates. These improvements were partially offset by (1) a decline
in the European economy and related automotive production, (2) historically
lower margins at Ansola and Morris Ashby which were included in the full six
month results for 1999, and (3) a change in our product mix to produce more
parts with slightly lower margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $1.3 million to $10.2 million for the first
half of 1999 from $8.9 million for the prior period. The increase was due
primarily to selling, general and administrative expenses associated with the
expanded scope of operations, including expenses related to the acquisition of
Ansola, which was acquired in April 1998. As a percentage of sales, selling,
general and administrative expenses were 6.2% for the first half of 1999
compared to 6.1% for the prior period.
RECAPITALIZATION EXPENSES. The recapitalization expenses of $21.2 million
recorded during the second quarter of 1999 represent payments made to option
holders in excess of the exercise price. The options were repurchased in
connection with the recapitalization.
AMORTIZATION OF INTANGIBLE ASSETS. Amortization expense decreased from $8.5
million for the first half of 1998 to $5.5 million for the first half of 1999,
as a result of reduced amortization of capitalized customer relationships,
partially offset by an increase in goodwill amortization from the acquisition of
Ansola and increased amortization of deferred debt costs related to borrowings
under our senior credit facility and the outstanding notes. Goodwill is being
amortized on a straight-line basis over 40 years.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 1999
was $13.8 million compared to $8.8 million for the same period in 1998. The
increase was due principally to borrowings incurred in connection with the
recapitalization.
PROVISION (BENEFIT) FOR INCOME TAXES. The effective income tax rate was
40.0% for the tax benefit arising in the six months ended June 30, 1999 compared
to 40.2% for the same period in 1998. The increase in the effective income tax
rate related primarily to higher state income taxes and the effect of non
deductible goodwill amortization.
EXTRAORDINARY LOSS. We recorded an extraordinary loss of $0.8 million and
$8.1 million for the six months ended June 30, 1998 and 1999, respectively.
These losses were the result of the write-off of deferred financing fees
associated with certain credit facilities that were repaid during such periods.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
SALES. Sales for 1998 increased by $126.2 million, or 74.4%, to $295.7
million from $169.5 million for 1997. Approximately $87.7 million of the
increase in sales related to the acquisitions of Morris Ashby and Ansola.
Approximately $43.1 million of the increase was the result of new business,
32
<PAGE>
principally transmission cases for Ford. These increases were partially offset
by the effects of the strike at GM in June and July 1998 which decreased sales
by approximately $4.6 million for 1998.
COST OF SALES. Cost of sales for 1998 increased by $104.5 million, or
89.7%, to $221.0 million from $116.5 million for 1997. Cost of sales as a
percentage of sales for 1998 was 74.8% compared to 68.7% for 1997. The decline
in gross margin was the result of non-recurring costs of approximately $7.1
million associated with the launch of the Ford transmission cases during 1998,
approximately $1.4 million related to the effects of the GM strike in June and
July 1998 and the lower gross margins at Morris Ashby and Ansola.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $11.2 million to $16.8 million for 1998
from $5.6 million for 1997. As a percentage of sales, selling, general and
administrative expenses were 5.7% for 1998 compared to 3.3% for 1997. The
increase in selling, general and administrative expenses is due primarily to
incremental expenses associated with Morris Ashby and Ansola, costs related to
developing global engineering and design capabilities, such as increased
personnel and travel expenses, and non-capitalizable professional fees related
to the acquisitions of Morris Ashby and Ansola.
AMORTIZATION OF INTANGIBLE ASSETS. Amortization expense decreased from
$20.7 million for 1997 to $16.9 million for 1998, as a result of reduced
amortization on capitalized customer relationships, partially offset by
increases in goodwill amortization from the acquisitions of Morris Ashby and
Ansola.
INTEREST EXPENSE. Interest expense for 1998 was $20.5 million compared to
$14.0 million for 1997. The increase was due principally to borrowings incurred
related to the acquisitions of Morris Ashby and Ansola.
PROVISION FOR INCOME TAXES. The effective income tax rate was 40.6% for
1998 compared to 39.1% for 1997. The effective rates differed from the statutory
rates primarily as a result of higher foreign tax rates, state taxes and
non-deductible goodwill amortization associated with the Morris Ashby
acquisition.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO NINE MONTHS ENDED DECEMBER 31,
1996
SALES. Sales for 1997 increased by 58.6% to $169.5 million from $106.9
million for 1996. The increase is due to increased production on models served
by French Automotive, principally light trucks, new program awards, including
the Ford F-Series truck and GM S-10 truck, and the negative impact of the GM
strike on 1996 sales.
COST OF SALES. Cost of sales for 1997 increased by 53.9% to $116.5 million
from $75.7 million for 1996. As a percentage of sales, cost of sales decreased
to 68.7% for 1997 from 70.8% for 1996, resulting in an improved gross margin.
The higher margin in 1997 was a result of continued cost reduction efforts,
including manufacturing productivity improvements at our Gateway facility, and
the non-recurring, negative impact of the GM strike on 1996 gross margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 64.7% to $5.6 million for 1997 from $3.4
million for 1996. As a percentage of sales, selling, general and administrative
expenses increased to 3.3% for 1997 from 3.1% for 1996. This increase was due
principally due to an increase in management and directors' fees.
INTEREST EXPENSE. Interest expense for 1997 increased by 16.7% to $14.0
million from $12.0 million for 1996. The increase was due principally to
borrowings incurred related to the acquisition of J.L. French by Windward.
PROVISION (BENEFIT) FOR INCOME TAXES. The effective income tax rate for
1997 was 39.1% for 1997 compared to a tax benefit of 40.5% for 1996.
33
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first half of 1999, we used cash from operations of $8.9 million,
compared to the cash flow generated of $11.4 million for the first half of 1998.
Cash generated from operations before changes in working capital items was $14.1
million for the first half of 1999 compared to $25.0 million for the same period
in 1998. Increases in working capital used cash of $23.0 million during the
first half of 1999 compared to $13.6 million in the same period in 1998. The
increases in working capital are primarily the result of the timing of cash
receipts and cash payments.
Net cash used in investing activities was $12.2 million during the first
half of 1999 as compared to $88.6 million for the same period in 1998. Capital
expenditures totaled $12.2 million in the first half of 1999 and $16.8 million
in the first half of 1998 and were primarily for equipment and dedicated tooling
purchases related to new or replacement programs.
Net cash provided by financing activities totaled $43.3 million for the
first half of 1999 compared with $71.0 million for the same period in 1998. The
1999 financing activities represent cash provided through net borrowings. The
1998 financing activities represent $35.7 million of cash provided from the sale
of common stock to certain of the then existing stockholders and $14.3 million
of borrowings associated with the acquisition of Morris Ashby.
On April 21, 1999, we completed a recapitalization in which a group of
equity investors, including affiliates of Onex and J2R, acquired approximately
87% of our common stock for $156.0 million in cash. Stockholders prior to the
recapitalization retained approximately 13% of our common stock and, together
with holders of outstanding options, received an aggregate of $370.3 million in
cash in connection with our redemption of their other equity interest, plus an
additional $5.9 million based upon a post-closing determination of our total
working capital as of the closing date of the recapitalization.
In connection with the recapitalization, French Automotive and certain of
our direct and indirect subsidiaries entered into the senior credit facility.
The senior credit facility provides for aggregate borrowings of approximately
$370.0 million, including (a) approximately $105.0 million of term loans,
consisting of (1) a $70.0 million U.S. dollar-denominated term loan to French
Automotive, (2) a pound sterling-denominated term loan to French Automotive in
an amount equal to the pound sterling equivalent (determined as of the date such
loan was made) of U.S. $17.5 million and (3) a pound sterling-denominated term
loan to Morris Ashby in an amount equal to the pound sterling equivalent
(determined as of the date such loan was made) of U.S. $17.5 million
(collectively, the "tranche A term loan"); (b) a $190.0 million tranche B term
loan; and (c) a $75.0 million revolving credit facility. In connection with the
recapitalization, we borrowed $295.0 million under the senior credit facility.
As of June 30, 1999, we had available borrowings under the senior credit
facility of approximately $42.3 million.
As of June 30, 1999, rates on borrowings under the senior credit facility
varied from 7.5% to 7.9%. Borrowings under the tranche A term loan are due and
payable April 21, 2005 and borrowings under the tranche B term loan are due and
payable on October 21, 2006. The revolving credit facility is available until
April 21, 2005. The senior credit facility is secured by all of the assets of
and guaranteed by all of our material present and future subsidiaries, in each
case with exceptions for certain foreign subsidiaries and to the extent
permitted by applicable law. We used approximately $2.5 million of the proceeds
of the offering to repay a portion of the tranche A term loan and approximately
$37.5 million of the net proceeds of the offering to repay a portion of the
tranche B term loan under the senior credit facility. See "Use of Proceeds."
In addition, in connection with the recapitalization, we also entered into a
subordinated financing facility providing for borrowings of $130.0 million,
which was fully drawn in connection with the recapitalization. The subordinated
financing facility had a final maturity of October 21, 2008. We used
approximately $129.6 million of the net proceeds of the initial offering of the
outstanding notes plus $0.4 million of cash to fully repay the subordinated
financing facility.
34
<PAGE>
Our principal source of liquidity is cash flow generated from operations and
borrowings under our $75.0 million revolving credit facility. Our principal use
of liquidity is to meet debt service requirements, finance our capital
expenditures and provide working capital. We expect that capital expenditures in
1999 will be approximately $26 million, of which approximately $8 million will
be used for maintenance purposes. The balance of the 1999 capital expenditures
will be used for equipment purchases and facility improvements to support new
business awards. Our debt service obligations could have important consequences
to you as a holder of the notes. See "Risk Factors--Our Business May Be
Adversely Impacted as a Result of Our Substantial Leverage."
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Some of these factors are
beyond our control. We believe that, based upon current levels of operations, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that we will
continue to be successful in implementing our business strategy and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purpose. There is no assurance that refinancings or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
would be permitted by the terms of the indenture or the senior credit facility.
In the event that we are unable to refinance the senior credit facility or raise
funds through asset sales, sales of equity or otherwise, our ability to pay
principal of, and interest on, the notes would be impaired.
SEASONALITY
French Automotive typically experiences decreased sales and operating income
during the third calendar quarter of each year due to production shutdowns at
OEMs for model changeovers and vacations.
EFFECTS OF INFLATION
Inflation potentially affects us in two principal ways. First, a portion of
our debt is tied to prevailing short-term interest rates which may change as a
result of inflation rates, translating into changes in interest expense. Second,
general inflation can impact material purchases, labor and other costs. While
the contracts with our customers allow us to pass through increases in the price
of aluminum, we do not have the ability to pass through inflation-related cost
increases for labor and other costs. In the past few years, however, inflation
has not been a significant factor.
MARKET RISK
We are exposed to various market risks arising from adverse changes in
market rates and prices, such as foreign currency exchange and interest rates.
We do not enter into derivatives or other financial instruments for trading or
speculative purposes. Our strategy for management of currency risk relies
primarily upon conducting our operations in such countries' respective currency
and we may, from time to time, engage in hedging programs intended to reduce our
exposure to currency fluctuations. The counterparties are major financial
institutions.
We manage our interest rate risk by balancing the amount of our fixed and
variable debt. For fixed rate debt, interest rate changes affect the fair market
value of such debt but do not impact earnings or cash flows. Conversely for
variable rate debt, interest rate changes generally do not affect the fair
market value of such debt, but do impact future earnings and cash flows,
assuming other factors are held constant. At June 30, 1999, all of our debt
other than the outstanding notes was variable rate debt. Holding other variables
constant (such as foreign exchange rates and debt levels), a one percentage
point increase in interest rates would be expected to have an estimated impact
on pre-tax earnings and cash flows for the remainder of the year of
approximately $1.5 million.
35
<PAGE>
FOREIGN CURRENCY TRANSACTIONS
A portion of our sales is derived from manufacturing operations in the U.K.
and Spain. The results of operations and the financial position of our
operations in these countries are principally measured in their respective
currency and translated into U.S. dollars. The effects of foreign currency
fluctuations in such countries are somewhat mitigated by the fact that expenses
are generally incurred in the same currencies in which sales are generated. The
reported income of these operations will be higher or lower depending on a
weakening or strengthening of the U.S. dollar against the respective foreign
currency.
Some of our assets are located in foreign countries and are translated into
U.S. dollars at currency exchange rates in effect as of the end of each period,
with the effect of such translation reflected as a separate component of
stockholders' investment. Accordingly, our consolidated stockholders' investment
will fluctuate depending upon the weakening or strengthening of the U.S. dollar
against the respective foreign currency.
YEAR 2000
We are currently working to resolve the potential impact of the year 2000 on
the processing of time-sensitive information by our computerized information
systems. Any of our programs that have time-sensitive software may recognize
"00" as the year 1900 rather than the year 2000. This could result in
miscalculations, classification errors or system failures.
While our various operations are at different stages of Year 2000 readiness,
we have completed our global compliance review. Because we have already made
substantial investments in computerized systems that are Year 2000 compliant, we
do not anticipate any significant readiness problems with respect to our systems
and believe that future costs associated with Year 2000 compliance will be less
than $200,000.
All of our facilities have completed the inventory and assessment of their
internal information technology ("IT") and non-IT systems (including business,
operating and factory floor systems) and are working on remediation, as
appropriate, for these systems. The remediation may include repair, replacement,
or upgrading of specific systems and components, with priorities based on a
business risk assessment. Remediation activities for our internal systems are
substantially complete and contingency plans, as needed, will be completed
before the end of the year.
The most reasonably likely worst case scenario that we currently anticipate
with respect to Year 2000 is the failure of some of our suppliers, including
utilities suppliers, to be ready. This could cause a temporary interruption of
materials or services that we need to make our products, which could result in
delayed shipments to customers and lost sales and profits to us. We have
completed an assessment of our critical suppliers and have made plans to assure
that we will have an adequate supply of materials on hand to cover
contingencies.
The outcome of our Year 2000 program is subject to a number of risks and
uncertainties, some of which (such as the availability of qualified computer
personnel and the Year 2000 responses of third parties) are beyond our control.
Therefore, there can be no assurances that we will not incur material
remediation costs beyond the above anticipated future costs, or that our
business, financial condition, or results of operations will not be
significantly impacted if Year 2000 problems with our systems, or with the
products or systems of other parties with whom we do business, are not resolved
in a timely manner.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," becomes effective for years beginning after June 15, 2000. SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge criteria are met. Special accounting for qualifying hedges allow a
derivative's gains or losses to offset related results on the hedged item in the
income statement and requires that a company must formally document, designate
and assess the effectiveness of transactions that receive hedge accounting. We
have not yet quantified the impact of adopting SFAS No. 133 and have not yet
determined the timing or method of adoption.
36
<PAGE>
BUSINESS
GENERAL
We are one of the world's largest independent designers and manufacturers of
aluminum die cast components and assemblies for OEMs. Our principal products are
highly-engineered, value-added assemblies, consisting of machined aluminum die
cast components and various fastened parts. Our primary product offerings
include engine and drivetrain components and assemblies such as:
<TABLE>
<S> <C>
- - oil pans - ladderframes
- - engine front covers - timing chain housings
- - transmission cases - water pump housings
- - cam covers
</TABLE>
Our world-class design and manufacturing operations in the United States, the
U.K. and Spain and our sales and service offices throughout the world position
us as a premier full-service global supplier.
We primarily sell to OEMs, with Ford and GM accounting for approximately 58%
and 20% of our 1998 sales, respectively. We are a supplier on more than 20 Ford
models, including many of its highest volume vehicles, such as the F-Series and
Ranger trucks, Explorer and Taurus/Sable, its top four selling vehicles, and the
Expedition, Windstar and Contour/Mystique. We are also a supplier on many of
GM's highest volume vehicles, such as the Silverado and S-10 trucks, Blazer,
Cavalier/Sunfire and Malibu/ Intrigue. In addition, we sell to Tier 1 automotive
suppliers such as Robert Bosch, Delphi Automotive Systems and LucasVarity. We
supply substantially all of the products we sell to our automotive customers on
sole-source basis.
We believe that we are among the lowest cost, most efficient producers of
automotive aluminum die cast components and assemblies in the world. Our low
cost structure and high level of efficiency is driven by our investment in
highly customized equipment, our continuous focus on process improvements and
our vertically-integrated manufacturing operations. The majority of the products
we manufacture require annual volumes in excess of 100,000 units over production
lives as long as seven years. As a result, we are able to continuously modify
our equipment and production processes in order to increase efficiency, while
maintaining high quality standards. We believe that our productivity levels for
high volume castings are among the highest in our industry. In addition, we are
vertically-integrated, possessing the only captive aluminum smelting
capabilities among independent aluminum die casters in North America, which
reduces our material costs, increases our supply base and provides us greater
control over quality. We also possess a broad range of capabilities that include
design and engineering, tool and die making, precision machining, engineered
assembly and testing operations. We believe that we have the most extensive
machining capabilities among independent automotive aluminum die casters,
allowing us to supply highly-engineered, value-added assemblies.
INDUSTRY TRENDS
Our performance and growth is directly related to certain trends within the
automotive market, including increases in aluminum content per vehicle, the
growth of outsourcing, consolidation of the component supply industry and
increases in global sourcing.
INCREASING ALUMINUM CONTENT PER VEHICLE. The average aluminum content per
vehicle in North America increased from 97 pounds in 1977 to 224 pounds in 1998.
The increase in aluminum content per vehicle has created significant
opportunities for the automotive aluminum die casting industry. The factors
driving the growth in demand for cast aluminum parts in the automotive sector
include: (1) the light weight of aluminum; (2) favorable strength-to-weight
ratio of an aluminum cast versus ferrous cast or stamped metal parts; and (3)
aluminum's styling characteristics versus other materials, as seen in products
such as the aluminum wheels introduced over the last five years. However, the
primary driving
37
<PAGE>
force behind the growth in aluminum applications in the automotive sector is
vehicle weight reduction. OEMs are replacing ferrous metals, such as iron and
steel, with aluminum as a means of reducing vehicle weight and increasing fuel
efficiency in order to satisfy government mandated fuel economy standards.
OUTSOURCING. In order to improve the efficiency of their core operations of
vehicle assembly, marketing and distribution, OEMs are increasing the percentage
of outsourced components in their manufacturing processes. This outsourcing
trend is evident in the die casting area where the in-house die casting
operations of the OEMs are often inefficient and utilize outdated technology.
OEMs increasingly look to their suppliers to assume the production of parts that
were previously manufactured internally and to perform the additional machining
and assembly functions necessary to make these parts production-line-ready.
SUPPLIER CONSOLIDATION. During the 1990s, OEMs have continued to reduce
their supplier base in certain product segments, awarding sole-source contracts
to full-service suppliers. As a result, OEMs currently work with a smaller
number of full-service suppliers each of which supplies a greater proportion of
the total vehicle. Suppliers with sufficient size, geographic scope and
financial resources are best positioned to be these full service suppliers. For
full-service suppliers such as us, this environment provides an opportunity to
grow by obtaining business previously provided by non full-service suppliers and
by acquiring suppliers that further enhance product, manufacturing and service
capabilities. OEMs rigorously evaluate suppliers on the basis of product
quality, cost control, reliability of delivery, product design capability,
financial strength, new technology implementation, quality and condition of
facilities and overall management. Suppliers that obtain superior ratings are
considered for sourcing new business; while those that do not generally continue
their existing contracts, but normally do not receive additional business.
Although these factors have already resulted in consolidation of component
suppliers in certain segments, we believe that the aluminum die casting industry
is in the early stages of consolidation, providing opportunities for further
consolidation. This is particularly true of the aluminum die casting industry in
Europe, where there are many suppliers in this segment with relatively small
market shares.
GLOBAL SOURCING. Regions such as Asia, Latin America and Eastern Europe are
expected to experience significant growth in vehicle demand over the next ten
years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" which can be
designed in one vehicle center but produced and sold in many different
geographic markets, thereby allowing OEMs to reduce design costs and take full
advantage of low-cost manufacturing locations. OEMs increasingly are requiring
their suppliers to have the capability to design and manufacture their products
in multiple geographic markets.
LARGE ALUMINUM CASTING CAPABILITY
In response to customer demand, we have expanded our capabilities to include
the production of large die cast components. In December 1996, we were awarded a
contract from Ford to manufacture transmission cases for its F-Series trucks,
the highest volume vehicle sold in North America. The transmission cases weigh
over 45 pounds and are the largest components we manufacture. In order to
produce these large castings, we invested approximately $40 million to expand
our Gateway facility in Sheboygan, Wisconsin by adding 120,000 square feet of
production space and purchasing six new 3,500 ton die casting machines.
We produced our first transmission case for the F-Series truck in November
1997 and reached full production for this component in the second half of 1998,
meeting an accelerated launch schedule established by Ford. In 1998, we produced
approximately 308,000 transmission cases and in 1999 we expect to produce
approximately 580,000 units. As a result of our success with the F-Series truck
transmission case and available capacity at our Gateway facility, Ford awarded
us a contract to supply a
38
<PAGE>
portion of the transmission cases for the Ford Ranger truck and Explorer. We are
currently ramping up production for this component and expect to produce
approximately 180,000 units in 1999 and approximately 270,000 units in 2000.
Our demonstrated ability to manufacture large castings solidified our
position as a key supplier to Ford and positioned us for significant new
business with Ford and other OEMs in transmission cases and other large castings
such as engine blocks. We believe only four other independent manufacturers have
the capability to produce these large castings. To accommodate full production
of the Ford Ranger and Explorer transmission cases and other anticipated new
business from Ford and GM, we recently acquired three additional 3,500 ton die
casting machines.
COMPETITIVE STRENGTHS
We possess a number of competitive strengths that have enabled us to meet
the demands of OEMs for fewer, global suppliers and to benefit from aluminum's
continued replacement of other metals in vehicles.
- LOW COST, VERTICALLY-INTEGRATED MANUFACTURER: We believe that our
vertically-integrated operations and highly efficient manufacturing
processes make us the lowest cost manufacturer of high volume, long
production run automotive aluminum die cast components and assemblies in
North America. We are the only independent automotive aluminum die caster
in North America with captive aluminum smelting capabilities, reducing our
material costs. In addition, we have in-house tool and die making
capabilities which support our manufacturing operations. We work closely
with our equipment vendors to design robust, highly customized equipment,
which is specifically adapted to our manufacturing processes. Given our
focus on high volume, long production run products, we are able to
continuously enhance the efficiency of our equipment and improve our
manufacturing processes, which has resulted in industry leading
productivity, as measured by factors such as faster cycle times and
reduced scrap rates and equipment down time.
- VALUE-ADDED MANUFACTURING SERVICES: We believe that we have the most
extensive machining and assembly capabilities among independent automotive
aluminum die casters. These services increase the value-added content of
our products and allow us to deliver production-line-ready components and
assemblies, which are increasingly required by OEMs. We machined and
assembled approximately 80% of the products we manufactured in North
America in 1998. Since many of our competitors have limited machining and
assembly capabilities, our capabilities provide us with a competitive
advantage with respect to service and quality and enhance our
profitability.
- BROAD RANGE OF GLOBAL MANUFACTURING CAPABILITIES: The breadth of our
global manufacturing capabilities enables us to compete for virtually any
automotive aluminum die casting business in the world. We produce
components and assemblies ranging in weight from 0.5 to nearly 50 pounds
with aluminum die casting machines that range in size, as measured in
lock-up force, from 120 to 3,500 tons. With the acquisitions of Morris
Ashby and Ansola, we now have the capability to design, engineer and
manufacture in Europe as well as North America. Our global manufacturing
capabilities represent a competitive advantage, as only a few suppliers
can meet the full aluminum die casting requirements of OEMs and only one
other independent supplier can meet these requirements globally.
- ADVANCED PRODUCT DESIGN AND ENGINEERING CAPABILITIES: Our extensive design
and engineering capabilities have resulted in strong, collaborative
customer relationships that typically begin when we provide input on the
engineering of new or redesigned products. In 1997, Ford awarded us its
Full-Service Supplier Status, which acknowledged our contribution to
Ford's design and engineering process and solidified our continued
involvement in design-stage engineering
39
<PAGE>
projects. Our Full-Service Supplier Status contributed to our selection by
Ford to participate in the design process for the new I4/I5 world engine
platform for Ford and Mazda. Over the last five years, we have not lost a
production order relating to any product for which we were the design
source.
- WELL POSITIONED ON HIGH VOLUME PRODUCT PLATFORMS: We are a supplier on
many of the highest volume product platforms, including the top three and
12 of the top 20 selling vehicles in the U.S. in 1998. In addition, we
believe that approximately half of our 1998 North American sales were
derived from products manufactured for light vehicles. In recent years,
light vehicles have experienced greater sales growth than passenger cars.
High volume light vehicle platforms and models on which we have content
include the Ford F-Series and Ranger trucks, Explorer, Expedition and
Windstar and the GM Silverado and S-10 trucks and Blazer. We also supply
products for high volume passenger cars including Ford's Taurus/Sable and
Contour/Mystique and GM's Cavalier/Sunfire and Malibu/Intrigue.
- INDUSTRY LEADING PRODUCT QUALITY: Our customers recognize us for our high
product quality and low levels of defective parts. Quality control begins
during the smelting process with metallurgic analysis and continues
through the manufacturing, machining and assembly processes through visual
and automated quality inspections. During 1998, we produced finished
aluminum die cast components and assemblies with less than 44 defective
parts per million, which we believe is among the lowest defect rates in
the automotive aluminum die casting industry. Our facilities in the United
States are ISO 9001 and QS-9000 certified and our facilities in the U.K.
and Spain are ISO 9000 and QS-9000 certified. We are a Ford Q1 supplier
and a GM S.P.E.A.R.1 supplier.
- PROVEN MANAGEMENT TEAM: Our management has a proven track record of
achieving profitable growth and significant industry experience. Our sales
increased from $114.1 million in 1994 to $295.7 million in 1998,
representing a 26.9% compound annual growth rate. Over the same period, we
have consistently maintained EBITDA margins above 26%. The 18 most senior
members of our management average over 20 years of experience in the
automotive industry and our chief executive officer, Charles M. Waldon,
has over 30 years of experience in the automotive aluminum die casting
industry.
BUSINESS STRATEGY
Our strategic objective is to become the leading global supplier of aluminum
die castings to OEMs. With the acquisitions of Morris Ashby and Ansola, we have
the capability to globally manufacture a complete range of automotive aluminum
die cast engine and drivetrain components and assemblies. Key elements of our
strategy include the following:
- CONTINUE TO INCREASE LARGE ALUMINUM CASTING BUSINESS: We invested
approximately $40 million in our Gateway facility over the past two years
in order to meet Ford's need for a high quality, reliable supplier of
transmission cases for its F-Series trucks. As a result of our success in
meeting Ford's accelerated launch schedule for these transmission cases,
we were awarded transmission case business for the Ford Ranger and
Explorer. We believe that we are well positioned to meet the demands of
Ford, GM and other OEMs for larger aluminum castings, including additional
transmission cases and engine blocks.
- MAXIMIZE PROFITABILITY OF ACQUIRED OPERATIONS: We believe that significant
operating improvements remain to be realized at Morris Ashby and Ansola
and we have implemented several initiatives to maximize the profitability
of these operations. In order to concentrate on our core, higher margin
automotive business, we are phasing out the non-automotive aluminum die
castings
40
<PAGE>
manufactured at Morris Ashby and Ansola, which represented approximately
6% of our 1998 sales. Other major initiatives currently underway at Morris
Ashby and Ansola include:
- Improving cycle times to levels currently experienced at J.L. French,
which would represent an estimated 30% improvement from current levels;
- Increasing machining and assembly operations to levels currently
performed at J.L. French, which will increase the value-added content
of their products; and
- Manufacturing products for new European business, which historically
would have been produced at J.L. French, at Morris Ashby and Ansola,
which is expected to increase capacity utilization at their operations.
- PURSUE CONTINUOUS OPERATING IMPROVEMENTS: We continuously seek to enhance
our manufacturing equipment and processes to maximize throughput, product
quality and timeliness of delivery and to minimize scrap and equipment
down time. Utilizing the expertise of our manufacturing and engineering
personnel, we regularly upgrade our production equipment and processes
through substantial investments in both new equipment and modifications of
existing equipment. The machinery used throughout our manufacturing
processes is robust and highly customized and, in conjunction with our
maintenance program, allows us to operate with faster cycle times and to
reduce scrap rates and equipment down time. This operating philosophy has
allowed J.L. French to achieve productivity levels across all product
lines that we believe are significantly higher than those of our
competitors.
- ESTABLISH RELATIONSHIPS WITH NEW CUSTOMERS: We seek to diversify our
customer base and increase volume by selectively pursuing relationships
with new customers. Historically we have focused on strengthening our
relationships with Ford and GM. As we continue to expand globally and
increase the range of castings we produce, we actively pursue
relationships with other global OEMs. For example, we recently obtained
our first firm order from Audi.
- DESIGN AND ENGINEER HIGH VALUE-ADDED ASSEMBLIES: Our technical design and
engineering capabilities and our efficient manufacturing operations enable
us to secure sole-source relationships for large, highly-engineered
products, primarily assemblies that require machining and attachment of
various parts. These products typically represent higher dollar content
per vehicle and generate higher margins than non-machined or assembled
components.
- CONTINUE TO DEVELOP GLOBAL SUPPLY CAPABILITIES: In 1998, over 70% of total
worldwide passenger vehicle production occurred outside North America. To
meet OEMs' increasing preference for full-service suppliers with global
capabilities, we expanded our manufacturing operations into new geographic
markets through our strategic acquisitions of Morris Ashby and Ansola.
Continued global expansion is fundamental to our strategy of becoming the
leading supplier of aluminum die cast assemblies for OEMs world-wide. We
anticipate that our future international expansion will occur in Latin
America, the Asia-Pacific region and Europe.
- PURSUE STRATEGIC ACQUISITIONS: We compete in a growing, highly fragmented,
worldwide market that provides numerous potential acquisition
opportunities. Together with Hidden Creek, we have substantial experience
in completing and integrating acquisitions within the automotive supply
industry and believe that this experience helps us select and pursue
acquisition opportunities that meet our criteria of: (1) broadening our
geographic coverage and strengthening our ability to supply products on a
global basis; (2) adding new customers; (3) increasing both the number of
models for which we supply products and the content level on existing
models; and (4) providing additional and complementary product,
manufacturing and technical capabilities.
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<PAGE>
PRODUCTS
The following table sets forth the percentage of sales derived from the sale
of certain products in 1998:
PERCENTAGE OF SALES BY PRODUCT CATEGORY
<TABLE>
<CAPTION>
YEAR ENDED
PRODUCT CATEGORY DECEMBER 31, 1998
- --------------------------------------------------------------------------- ---------------------
<S> <C>
Medium to Large Automotive Aluminum Die Castings
Oil Pans................................................................. 33%
Engine Front Covers...................................................... 14%
Transmission Cases....................................................... 8%
Ladderframes............................................................. 2%
Timing Chain Housings.................................................... 2%
Cam Covers............................................................... 2%
Water Pump Housings...................................................... 1%
Small Automotive Aluminum Die Castings..................................... 17%
Tooling.................................................................... 15%
Other Products............................................................. 6%
---
Total.................................................................... 100%
---
---
</TABLE>
Set forth below is a brief description of our principal products and their
applications:
OIL PANS. An aluminum oil pan is attached to the engine block for the
primary purpose of serving as a reservoir for oil used in the lubrication of
engine galleries and bearings. The oil pan is an example of a product that was
at one time inexpensively stamped from steel but has been converted to a higher
cost aluminum casting due to the multiple benefits provided by aluminum.
Aluminum oil pans offer several significant benefits which offset their higher
cost, including: (1) better sealing characteristics; (2) greater structural
integrity; (3) better harmonics resulting in reduced vibration and a quieter
engine; and (4) better heat dissipation characteristics. In 1998, we produced,
on average, over 14,000 oil pans per day. Oil pans range in weight from five to
12 pounds.
ENGINE FRONT COVERS. The engine front cover bolts over the crankshaft
snout, holding the oil seal at the front of the crankshaft in place. In 1998, we
produced, on average, over 9,500 engine front covers per day. Engine front
covers range in weight from four to eight pounds.
TRANSMISSION CASES. The transmission case houses the clutches, bands,
gearsets and inner ends of the transmission shafts. We began producing
transmission cases in November 1997 and reached our current level of production
in the second half of 1998. In 1999, we expect to produce, on average, over
2,000 transmission cases per day. Such transmission cases weigh over 45 pounds.
LADDERFRAMES. The ladderframe is an intermediate structure between the
engine block and a stamped-steel oil pan. It provides similar structural
integrity and harmonics characteristics as an aluminum oil pan. Its design
incorporates a windage baffle which protects the lubrication of the crankshaft,
replacing a stamped steel component. We began production of ladderframes in
1998. In 1998, we produced, on average, 500 ladderframes per day. Ladderframes
weigh approximately 11 pounds.
TIMING CHAIN HOUSINGS. The timing chain housing bolts over the crankshaft
snout, holding in place the oil seal at the front of the crankshaft. The timing
chain housing is similar to an engine front cover, except that it is used in
engines that have a gear or chain type crankshaft drive. In 1998, we
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<PAGE>
produced, on average, over 1,000 timing chain housings per day. Timing chain
housings weigh approximately six pounds.
CAM COVERS. The cam cover is the overhead housing for the camshaft. In
1998, we produced, on average, over 500 units per day. Cam covers range in
weight from seven to eight pounds.
WATER PUMP HOUSINGS. The water pump housing forms the main body of the
water pump, a mechanism that forces water through the engine block, cylinder
head, intake manifold, hoses and radiator. In 1998, we produced, on average,
over 2,000 water pump housings per day. Water pump housings weigh approximately
three pounds.
SMALL AUTOMOTIVE ALUMINUM DIE CASTINGS. As a result of our acquisitions of
Morris Ashby and Ansola, we generated approximately 17% of our 1998 sales from
production of over 150 small automotive aluminum die cast components (generally
weighing less than three pounds).
TOOLING. We generated approximately 15% of our 1998 sales from aluminum die
cast tooling in connection with our sales of aluminum die castings, as well as
directly to third parties.
OTHER PRODUCTS. Also as a result of our acquisitions of Morris Ashby and
Ansola, we generated approximately 6% of our 1998 sales from non-automotive
aluminum die cast components, primarily small home appliances and white goods
parts. We intend to phase-out all non-automotive product offerings over the next
two to three years.
CUSTOMERS AND MARKETING
The North American automotive market is dominated by GM, Ford and
DaimlerChrysler, with Japanese and other foreign manufacturers accounting for
approximately 20% of the market. Our principal customers include OEMs, Tier 1
automotive suppliers and, to a lesser extent, European white good manufacturers.
Approximately 78% of our 1998 sales were derived from OEMs, largely Ford and GM,
which we supply on a global basis. Our second largest category of customers is
Tier 1 automotive suppliers, such as ACD Trident, Boge, Robert Bosch, Breed
Technologies, Continental, Delphi Automotive Systems, Happich, LucasVarity,
Knorr Brense, Nastech and Phoenix. Sales to these customers are made principally
through our European operations and represented approximately 16% of our 1998
sales.
The following is a summary of our significant customers for each of our last
three years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
CUSTOMER 1996 1997 1998
- ------------------------------------------------------------------------- ----- ----- -----
Ford..................................................................... 58% 60% 58%
GM....................................................................... 42% 39% 20%
Tier 1 Suppliers......................................................... -- -- 16%
Other.................................................................... -- 1% 6%
--- --- ---
Total.................................................................. 100% 100% 100%
--- --- ---
--- --- ---
</TABLE>
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<PAGE>
In 1998, more than 70% of total worldwide passenger vehicle production
occurred outside of North America. Largely as a result of our acquisitions of
Morris Ashby and Ansola, we derive a significant amount of our sales from
outside of North America. Set forth below is a summary of our 1998 sales to
customers located in the following geographic regions:
<TABLE>
<CAPTION>
YEAR ENDED
REGION DECEMBER 31, 1998
- --------------------------------------------------------------------------- ---------------------
<S> <C>
North America.............................................................. 63%
Europe..................................................................... 36%
Other...................................................................... 1%
---
Total.................................................................... 100%
---
---
</TABLE>
Our customers award contracts for a particular car or truck platform, which
may include more than one model. Such contracts range from one year to the life
of the platform, which is generally three to seven years, and do not require the
purchase by the customer of any minimum number of units.
The following table presents an overview of the major models for which we
have orders to supply products on current vehicles:
<TABLE>
<CAPTION>
CUSTOMER COMPONENT OR ASSEMBLY VEHICLE
- ---------------------------- ------------------------------- -------------------------------
<S> <C> <C>
OEMS:
Ford...................... Oil Pan Escort/Tracer
2.5L Modular Oil Pan Contour/Mystique, Ranger, Mazda
3.8/4.2L Oil Pan Mustang, F-Series, Windstar
4.6L 4V Cam Cover Mustang, Continental
3.8/4.2L Front Cover Mustang, F-Series, Windstar
3.0L Front Cover Taurus/Sable
3.8/4.2L Water Pump Housing Mustang, F-Series, Windstar
3.0L Oil Pan Taurus/Sable
4.6/5.4/6.8L Front Cover Mustang, Town Car, Grand
Marquis/Crown Victoria, F-
Series
Transmission Case F-Series
Transmission Case Ranger/Explorer
Zeta Oil Pan Mondeo, Contour/ Mystique,
Fiesta/Ka
Sigma Oil Pan Fiesta/Ka
1.3L HCS Oil Pan Escort, Fiesta/Ka
Zetec Ladderframe Mondeo, Contour/ Mystique,
Fiesta/Ka
2.0/2.4/3.0L Cam Carrier Light truck diesel engine
Brackets Various
Bearing Caps Various
Ford (Hungary, Brazil).... Housing for 1.1-2.9 KW starter Various
motors
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
CUSTOMER COMPONENT OR ASSEMBLY VEHICLE
- ---------------------------- ------------------------------- -------------------------------
<S> <C> <C>
Ford (Portugal)........... Housing for airbag electronic Various
control units
Ford (Spain).............. Bottom covers and heatsinks for Various
electronic systems
Ford (Jaguar)............. Cam covers Various
Fascia panels (ashtrays) Various
GM........................ 3.1L Oil Pan Century, Regal, Skylark,
Lumina, Cutlass, Achieva, Grand
Prix, Grand Am, Malibu, Monte
Carlo, Intrigue
2.4L Timing Chain Housing Cavalier, Achieva, Skylark,
Grand Am, Sunfire
4.3L Oil Pan Van, Sports Van, Blazer, Astro,
GMT800, S-10, GMC Jimmy,
Vandura, Safari, Bravada
3.8L Oil Pan Camaro, Firebird, Riviera, Park
Avenue, Century, Regal
TIER 1 SUPPLIERS:
ACD Trident............... Motor subassembly components Various
Boge...................... Vibration control cast mounts Various
for engines
Breed Technologies........ Self-return safety belt Various
spoolers
Delphi Automotive Steering system housings and Various GM
Systems................. engine covers
Happich................... Roof rack center brackets Various Opel and Mercedes
Knorr Brense.............. Braking systems Various heavy trucks
LucasVarity............... Housings Various
Nastech................... Steering column components Various Volkswagen
Phoenix................... Drive-shaft control mounts Various
Phoenix, Continental...... Vibration-control cast mounts Opel Astra
for engines and gear boxes
Robert Bosch.............. Electronic circuit housings Various
(ABS, Airbag, etc.)
</TABLE>
We typically pursue new business opportunities that have the three key
characteristics summarized below:
- HIGH VOLUME PRODUCTION, LONG PRODUCTION RUNS. Production runs for our
targeted parts typically last seven years with desired production ranging
from 16 to 24 hours a day, five to six days a week.
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- HIGHLY-ENGINEERED COMPONENTS WITH EXTENSIVE MACHINING AND ASSEMBLY
REQUIREMENTS. Components requiring extensive machining operations and
engineered assembly provide the opportunity for enhanced profitability
because of the strength and efficiency of our machining and assembly
operations. Our ability to deliver production-line-ready components
enhances our role in the production process while increasing our
importance to OEMs.
- SOLE SOURCE SUPPLY RELATIONSHIPS. We typically do not pursue contracts
which involve more than one supplier or internal OEM competition.
DESIGN AND ENGINEERING SUPPORT
We work with our customers' engineering and development teams at the
beginning of the design process for new components and assemblies or the
redesign process for existing components and assemblies in order to maximize
production efficiency and quality. These processes may take place from one to
five years prior to the commencement of production. On average, development of a
new component takes 12 to 24 months during the design phase, while the
re-engineering of an existing part may take from one to six months, depending on
the extent of the redesign. Early design involvement can result in a product
that meets or exceeds the customer's design and performance requirements and is
more efficient to manufacture. In addition, our involvement enhances our
position for bidding on such business.
Consistent with our value-added engineering focus, we have developed strong
relationships with the engineering departments of our customers. These
relationships not only help identify new business opportunities, but also enable
us to compete based on the quality of our products and services, rather than
exclusively on price.
We are currently involved in the design stage of several products for our
customers and will begin production of these products in the years 2000 to 2002.
For example, we are presently working with engineers at Ford and Mazda to design
the new I4/I5 world engine platform. Following full ramp up, we expect our sales
from this engine platform to be nearly $20.0 million per year.
MANUFACTURING
The entire production process from aluminum scrap or ingot to
production-line-ready aluminum die cast product typically takes under four
hours, depending upon the amount of machining and assembly associated with the
particular component. Although our production facilities currently utilize
slightly different processes, we are establishing uniform processes to elevate
the efficiency of Morris Ashby and Ansola to that of J.L. French.
OPERATIONS MANAGEMENT. We are in the process of implementing operations
management systems at Morris Ashby and Ansola which will closely resemble the
systems utilized by our North American operations. J.L. French uses a system
which enables management to track its production and costs every two hours.
Inefficiencies in production are detected and remedied quickly. Similarly,
factory workers are highly incentivized to operate efficiently. Workers are
evaluated based on their production rate for completed salable components and
are monitored for inefficient production or the production of defective
components.
Morris Ashby and Ansola use cellular manufacturing techniques. This
product-specific method enables the operator to obtain timely information about
components being produced in the machine cell, leading to rapid responses to
problems. Production at Morris Ashby is controlled through the use of
proprietary software programs, which monitor each production operation. This
PC-based system monitors up to 25 critical parameters during each cycle,
compares the results to preset parameters and instructs the robotic extractor to
segregate any castings that are produced outside the process
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<PAGE>
parameters for further analysis. Information on parameters is accumulated for
future use to correct problems, improve efficiency and implement process
designs.
ALUMINUM SMELTING. J.L. French's manufacturing process begins with the
smelting of aluminum. Smelting is the process of refining metal and altering its
chemical composition by adding or removing elements. By having this expertise
in-house, J.L. French is able to purchase lower grade, less expensive, scrap
aluminum and refine it to a level suitable for high quality aluminum die
castings. The potential financial benefit of adding secondary smelting
capabilities at Morris Ashby and Ansola is currently being reviewed. These
operations currently melt purchased 380 grade aluminum for use in manufacturing.
CASTING PROCESS. Once the aluminum has been melted and properly formulated,
die cast products are made primarily by using the high pressure die casting
process, which is most commonly used for high volume, thin-wall applications. In
this process, molten aluminum alloy is "shot" into a mold. Pressure of up to
20,000 pounds per square inch is applied to the aluminum within the die to
maximize consistency and to eliminate air pockets. The aluminum is then quickly
cooled and solidified. The casting is then removed from the die and the process
is repeated. This process from molten aluminum to solidified casting represents
one cycle.
Once the castings have cooled, excess aluminum is trimmed from the
component's edges and recycled for remelting and use in another casting. The
"cast and trimmed" component is then visually inspected. If the component passes
this test, it is ready for shot blasting, a process whereby the exterior
surfaces of the component are blasted with steel shot to remove any sharp edges.
Cast and trimmed components are gauged and leak tested prior to shipment. We
sell some cast and trimmed components, but generally seek to perform additional
machining and assembly to yield a higher profit margin.
The large casting operations at J.L. French and a significant portion of the
operations at Morris Ashby and Ansola use robotics. The benefits of robotics
include: (1) the ability to operate in a high temperature or otherwise inclement
environment; (2) the ability to handle larger castings without fatigue; (3)
consistency of performance; and (4) labor savings. Management selectively
determines which operations should incorporate robotics based on a cost/benefit
analysis.
MACHINING. We utilize a mix of specially designed dedicated machining
centers and computer numerically controlled ("CNC") machines in our machining
operations. Because of its concentration on high volume programs, J.L. French
uses mostly dedicated machining centers while Morris Ashby and Ansola use CNC
machines, some of which are dedicated to a specific product. Machining
capabilities differ by facility, but generally our machining capabilities
include: face milling; bore and ream; drill and ream; drill and tap; drill, ream
and burnish; hollow milling; contour milling; slit sawing; rotary grinding and
routing.
TESTING. Most of our machined parts are subjected to a pressurized leak
test and measured on a virtual condition gauge to determine functionality on key
features. On a sample basis, some parts undergo destructive testing to determine
mechanical strength at critical points.
ASSEMBLY. During 1998, we performed machining and assembly operations on
approximately 80% of our products manufactured in North America. In addition,
our European operations are increasingly performing assembly operations on
manufactured components. During the assembly process, purchased parts such as
drain plugs, screws, helicoils and gaskets are assembled onto the cast part.
Once assembled, all parts are again visually inspected. Part numbers and bar
codes are then applied before the part is shipped to the customer. Management
believes that our extensive and efficient machining and assembly capabilities
are a core competency which provides us with an advantage over our competitors,
many of which do not offer machining and assembly services.
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<PAGE>
PRODUCT DELIVERY. As a Tier 1 supplier, we are responsible for
manufacturing our products on a just-in-time basis. Shipments are generally made
by common carrier, as arranged by the customer. To facilitate this delivery
system, we utilize direct computer links to our customers. This on-line, real
time capability enables us to meet just-in-time manufacturing requirements and
to minimize inventories, carrying costs and fixed costs for OEMs and ourselves.
QUALITY. We believe that we are one of the highest quality manufacturers in
the automotive aluminum die casting industry and that the number of defective
parts per million pieces shipped to our customers is among the lowest in the
industry. The strength of our overall design, production and delivery
capabilities is reflected in the supplier quality ratings received from our
major customers. J.L. French holds Ford's Q1 award and GM's S.P.E.A.R.1. Since
receiving these initial awards, we have successfully maintained our quality
ratings, which are subject to annual review, by meeting our customers' specific
standards and performance parameters, including maximum allowable defective
parts per million. Retention of Q1 and S.P.E.A.R.1 status is instrumental in
obtaining new business and maintaining existing programs with our customers. In
addition to customer quality recognition, each of our operations are ISO and QS
certified, which is required to be a Tier 1 supplier.
COMPETITION
The aluminum die casting industry is highly competitive and fragmented. We
principally compete for new business at the beginning of the development of new
models and upon the redesign of existing models. New model development generally
begins two to five years before marketing of such models to the public. Once a
producer has been designated to supply parts for a new program, an OEM usually
will continue to purchase those parts from the designated producer for the life
of the program. Competitive factors in the market for our products include
product quality and reliability, cost, timely delivery, technical expertise and
development capability, new product innovation and customer service. Our major
competitors are Ryobi Die Casting (USA), Inc., Nelson Metal Products, Global
Technologies, Amcan, Toralcast, Bocar/Auma and Ganton Technologies, as well as
the internal aluminum casting operations of GM and DaimlerChrysler.
RAW MATERIALS AND SUPPLIERS
Our principal raw material is aluminum. We deal with a number of aluminum
suppliers and brokers and limit our dealings to parties who have consistently
delivered aluminum which meets specified levels of quality and grade. As
commodities, aluminum scrap and ingot can be purchased from any of a number of
sources with relatively small differences in price between suppliers.
Due to its large production volume, J.L. French has the necessary scale to
economically operate a captive secondary aluminum processing operation at each
of its two plants. We purchase less costly scrap aluminum and off-grade aluminum
ingot and refine the metal to the required specifications. Unlike our
competitors who lack the ability to upgrade aluminum alloy, J.L. French's
secondary aluminum smelting capability enables it to lower raw material costs
and to control the quality of its processed aluminum. J.L. French has the
capacity to process and upgrade up to 110 million pounds of aluminum per year,
which currently exceeds its production requirements.
Our contracts with customers typically provide for price adjustments related
to changes in the cost of aluminum alloy, as quoted on the London Metals
Exchange. With respect to Ford and GM, these adjustments are made every two and
three months, respectively. As a result, we have limited exposure to aluminum
market price fluctuations. In late 1997, Ford implemented an initiative in the
United States whereby it seeks to reduce its exposure to aluminum price
volatility through forward purchases on behalf of its suppliers. Since March
1998, J.L. French has sourced approximately half of its aluminum scrap
requirements for Ford at a fixed price from a source selected by Ford.
48
<PAGE>
In the process of manufacturing production-line-ready parts, we must
purchase certain sub-components from manufacturers specified by our OEM
customers, including helicoils, drain plugs and gaskets. We seek competitive
bids on the parts we purchase if two potential Tier 2 manufacturers of the part
are each approved as a supplier to the OEM.
We employ just-in-time manufacturing and sourcing systems to meet customer
requirements for faster deliveries and to minimize our need to carry significant
inventory levels. We have not experienced any significant shortages of raw
materials and normally do not carry inventories of raw materials or finished
products in excess of those reasonably required to meet production and shipping
schedules.
EMPLOYEES
As of June 30, 1999, we had approximately 2,000 employees. Overall,
approximately 11% of our employees are salaried and the balance are hourly.
While none of the employees at our J.L. French operations are unionized, several
of Morris Ashby's and Ansola's operations either recognize a union or have
employees that are members of unions as individuals.
PROPERTIES
Our corporate office is located in Minneapolis, Minnesota and our operating
headquarters is located at the Taylor Drive facility in Sheboygan, Wisconsin.
The following table provides information regarding our principal facilities:
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION TYPE SQUARE FOOTAGE INTEREST
- -------------------------------------------------- ----------------------------------- -------------- ---------
<S> <C> <C> <C>
Sheboygan, Wisconsin.............................. Operating Headquarters/Die Casting 260,000 Owned
Plant (Taylor Drive)
Sheboygan, Wisconsin.............................. Die Casting Plant (Gateway) 240,000 Owned
Witham, England................................... Administrative/Die Casting Plant 125,000 Leased
Presteigne, Wales................................. Die Casting Plant 55,000 Owned
Cheshunt, England................................. Die Casting Plant 45,000 Leased
Birmingham, England............................... Die Casting Plant 8,000 Owned
Brighouse, England................................ Toolmaking Plant 4,000 Owned
San Andres de Echevarria, Spain................... Administrative/Die Casting Plant 54,000 Owned
</TABLE>
We also have sales and service offices located in Ashland, Ohio; Dearborn,
Michigan; Chihuahua and Ramos, Mexico; Sao Paulo, Brazil; Bridgend, England;
Valencia, Spain; Cologne and Dusseldorf, Germany; and Hiroshima, Japan.
We believe that substantially all of our property and equipment is in good
condition and that we have sufficient capacity to meet our current manufacturing
needs. Utilization of our facilities varies with North American and European
light vehicle production and general economic conditions in such regions. All of
our properties in the United States and the U.K. are pledged as collateral to
secure the repayment of our senior credit facility.
LEGAL PROCEEDINGS
From time to time, we are involved in various disputes and litigation
matters that arise in the ordinary course of business. The litigation process is
inherently uncertain and it is possible that the resolution of these disputes
and lawsuits could have a material adverse effect on us. We believe,
49
<PAGE>
however, that the ultimate resolution of any pending litigation, individually or
in the aggregate, will not have a material adverse effect on us.
ENVIRONMENTAL MATTERS
We are subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. We cannot
assure you that we are at all times in complete compliance with all such
requirements. Although we have made and will continue to make capital and other
expenditures to comply with environmental requirements, we do not expect to
incur material capital expenditures for environmental controls in 1999 or 2000.
Certain of our operations generate hazardous substances and wastes. If a release
of hazardous substances occurs on or from our properties or any associated
offsite disposal location, or if contamination is discovered at any of our
current or former properties, we may be held liable, and the amount of such
liability could be material.
We plan to remove an underground storage tank and address associated
contamination at our Presteigne, U.K. facility. We are also studying how to
upgrade the drainage systems at our Cheshunt, U.K. facility and address
petroleum contamination that may be associated with past drainage. The cost of
these matters is currently not expected to be material, unless contamination is
discovered that is much more extensive than has been estimated by our
environmental consultants.
As part of our acquisition of Ansola, the sellers of Ansola agreed to
indemnify us, subject to certain limitations, for environmental liabilities
resulting from the sellers' operation of Ansola, including a specific indemnity
for clean up of certain areas of contamination identified at the San Andres de
Echevarria, Spain facility during our due diligence. An escrow was established
in the amount of 230 million pesetas (about $1.6 million) to secure the sellers'
environmental and other indemnification obligations. The escrow decreases in
steps beginning in April 1999 and expires in July 2003. In light of the
decreasing escrow, we plan to address the areas of contamination in 1999 and
obtain indemnification from the sellers. We cannot assure you that the sellers
will have the ability to indemnify us for amounts exceeding the escrow.
50
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our
directors, executive officers and key employees as of June 30, 1999:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
S. A. ("Tony") Johnson............................... 59 Chairman and Director
Charles M. Waldon.................................... 50 President, Chief Executive Officer and Director
Thomas C. Dinolfo.................................... 49 Treasurer and Chief Financial Officer
Paul Buckley......................................... 54 Managing Director of Morris Ashby
Juan Manuel Orbea.................................... 47 General Manager of Ansola
Donald W. Porritt.................................... 50 Director of Corporate Business Development
Lowell Shoaf......................................... 55 Technical Director
Stephen Southern..................................... 52 Director of Worldwide Sales and Marketing
Robert H. Barton III................................. 66 Director
Dugald K. Campbell................................... 52 Director
A. Kipp Koester...................................... 61 Director
John E. Lindahl...................................... 54 Director
Carl E. Nelson....................................... 39 Vice President, Secretary and Director
Eric J. Rosen........................................ 38 Director
Karl F. Storrie...................................... 61 Director
</TABLE>
S. A. ("TONY") JOHNSON has served as Chairman and a Director of French
Automotive since the recapitalization. Mr. Johnson is the founder, Chief
Executive Officer and President of Hidden Creek. Mr. Johnson is also a general
partner of J2R Partners III. Prior to forming Hidden Creek, Mr. Johnson served
from 1985 to 1989 as Chief Operating Officer of Pentair, Inc., a diversified
industrial company. Mr. Johnson served as Chairman and a director of Automotive
Industries Holding, Inc., a supplier of interior trim components to the
automotive industry, from May 1990 to August 1995. Mr. Johnson is also Chairman
and a director of Tower Automotive, Inc., a leading designer and producer of
structural components and assemblies for the global automotive industry, and
Dura Automotive Systems, Inc., a manufacturer of driver control systems, window
systems and door systems for the global automotive industry.
CHARLES M. WALDON has served as President, Chief Executive Officer and a
Director of French Automotive since April 1996. Mr. Waldon joined J.L. French in
1983 and became Executive Vice President--Manufacturing in 1987. Prior to
joining J.L. French, Mr. Waldon was employed for 16 years by GM in its aluminum
die castings operations in Bedford, Indiana.
THOMAS C. DINOLFO has served as Treasurer and Chief Financial Officer of
French Automotive since April 1996. Before joining J.L. French, Mr. Dinolfo was
associated with Crucible Materials Corporation for ten years as Corporate
Controller and, prior to that time, was employed by KPMG Peat Marwick.
PAUL BUCKLEY has served as the Managing Director of Morris Ashby since 1996.
Mr. Buckley joined Morris Ashby in 1976 as an assistant to the General Manager.
Prior to joining Morris Ashby, Mr. Buckley was the service manager for USI
Engineering, a manufacturer of the Vertacast die casting machine. He has served
as National President of the Die Casting Society, and is currently serving as
the National Executive of the Light Metal Founders Association, the trade body
of die casting in the United Kingdom.
JUAN MANUEL ORBEA has served as the General Manager of Ansola since 1977.
From 1993 until 1998, Mr. Orbea served as Chairman of the Spanish Technical
Association for the Development of Pressure Casting.
51
<PAGE>
DONALD W. PORRITT has served as Director of Corporate Business Development
of French Automotive since October 1998. From 1993 through October 1998, Mr.
Porritt served as Vice President of Operations at Nelson Metal Products. From
1984 through 1993, Mr. Porritt was Secondary Operations Manager at J.L. French.
Prior thereto, Mr. Porritt was employed for 10 years by GM in its aluminum die
castings operations in Bedford, Indiana.
LOWELL SHOAF has served as Technical Director of French Automotive since
June 1998. Before joining J.L. French, Mr. Shoaf was the International
Engineering Manager for Bocar S.A. de C.V., Mexico from 1991 to 1997. Prior to
that time, Mr. Shoaf served as Vice President of Engineering at J.L. French from
1989 to January 1991.
STEPHEN SOUTHERN has held the position of Director of Worldwide Sales and
Marketing of French Automotive since he joined J.L. French in 1986. Previously,
Mr. Southern worked for Madison-Kipp Corporation for four years, and for GM in
its aluminum die castings operations in Bedford, Indiana for 17 years.
DUGALD K. CAMPBELL has served as a Director of French Automotive since May
1999. Mr. Campbell has also served as President, Chief Executive Officer and a
Director of Tower Automotive since December 1993. From 1991 to 1993, Mr.
Campbell served as a consultant to Hidden Creek. From 1988 to 1991, he served as
Vice President and General Manager of the Sensor Systems Division of Siemens
Automotive, a manufacturer of engine management systems and components. From
1972 to 1988, Mr. Campbell held various executive, engineering and marketing
positions with Allied Automotive, a manufacturer of vehicle systems and
components and a subsidiary of AlliedSignal, Inc.
ROBERT H. BARTON III has served as a Director of French Automotive since
1996. Mr. Barton was elected Chairman of French Holdings, Inc. in October 1996
and Chairman and Chief Executive Officer of American Bumper & Mfg. Co. in April
1997. Mr. Barton was Chief Executive Officer of Alcoa Fujikura Ltd. from May
1984 to December 1996. He currently serves on the Board of Directors of and as
senior advisor of Alcoa Fujikura Ltd., and serves on the Board of Directors of
HCC Industries, Inc. and American Bumper & Mfg. Co.
A. KIPP KOESTER has served as a Director of French Automotive since the
recapitalization. Mr. Koester has served as a Managing Director of Northwestern
Investment Management Company (a Northwestern Mutual Company) since January
1998. From July 1987 through December 1997, Mr. Koester was a vice president at
The Northwestern Mutual Life Insurance Company.
JOHN E. LINDAHL has served as a Director of French Automotive since the
recapitalization. Mr. Lindahl is the Managing General Partner of Norwest Equity
Partners. Prior to joining Norwest Equity Partners in 1984, Mr. Lindahl was with
Norwest Bank for 15 years, where he managed the bank's manufacturing and
electronics group, natural resources group and was a senior vice president in
charge of middle market lending activities.
CARL E. NELSON has served as a Director, Secretary and Vice President of
French Automotive since the recapitalization. Mr. Nelson has served as a Vice
President of Hidden Creek since 1995 and as the Controller of Hidden Creek since
June 1992. Mr. Nelson is also a general partner of J2R Partners III. From 1982
to 1992, Mr. Nelson was employed by Arthur Andersen LLP. Mr. Nelson is also a
Vice President of Tower Automotive, Inc. and Dura Automotive Systems, Inc.
ERIC J. ROSEN has served as a Director of French Automotive since the
recapitalization. Mr. Rosen is Managing Director of Onex Investment Corp., a
diversified industrial corporation and an affiliate of Onex, and served as a
Vice President of Onex Investment Corp. from 1989 to February 1994. Prior
thereto, Mr. Rosen was employed in the merchant banking group at Kidder, Peabody
& Co. Incorporated from 1987 to 1989. Mr. Rosen is also a director of Tower
Automotive, Inc. and Dura Automotive Systems, Inc.
52
<PAGE>
KARL F. STORRIE has served as a Director of French Automotive since May
1999. Mr. Storrie has also served as President, Chief Executive Officer and a
Director of Dura Automotive Systems, Inc. since March 1991. Prior to joining
Dura Automotive Systems, Inc. and from 1986, Mr. Storrie was Group President of
a number of aerospace manufacturing companies owned by Coltec Industries, a
multi-divisional public corporation. From 1981 to 1986 and prior to becoming a
Group President, Mr. Storrie was a Division President of two aerospace design
and manufacturing companies for Coltec Industries. During his thirty-five year
career, Mr. Storrie has held a variety of positions in technical and operations
management. Mr. Storrie is also a director of Argo-Tech Corporation, a
manufacturer of aircraft fuel, boost and transfer pumps.
Each director is elected to serve until the next annual meeting of
stockholders or until a successor is duly elected and qualified. Each of the
current directors was elected to the board pursuant to the terms of a
stockholders agreement. See "Certain Relationships and Related
Transactions--Investor Stockholders Agreement." Executive officers of French
Automotive are duly elected by the board to serve until their respective
successors are elected and qualified. There are no family relationships between
any of the directors or executive officers of French Automotive.
EXECUTIVE COMPENSATION
The following table sets forth compensation information for 1998 for French
Automotive's chief executive officer and the four other executive officers of
French Automotive who were its most highly compensated executive officers for
that year. We refer to these officers in this prospectus as the "named executive
officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------
<S> <C> <C> <C> <C>
SALARY BONUS OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION ($)(1) ($)(1) COMPENSATION ($)(2) COMPENSATION ($)(3)
- ----------------------------------------------- ---------- ---------- ------------------- -------------------
Charles M. Waldon.............................. $ 350,000 $ 350,000 $ 2,217 $ 1,768
President and Chief Executive Officer
Thomas C. Dinolfo.............................. 171,417 55,339 3,716 1,768
Treasurer and Chief Financial Officer
Stephen Southern............................... 123,846 40,339 2,725 1,768
Director of Worldwide Sales and Marketing
Paul Buckley................................... 212,018 299,688 10,303 51,990
Managing Director of Morris Ashby
Juan Manuel Orbea.............................. 179,876 33,333(4) 5,000 35,767
General Manager of Ansola
</TABLE>
- ------------------------------
(1) Includes amounts deferred by employees under French Automotive's 401(k)
employee savings plan, pursuant to Section 401(k) of the Internal Revenue
Code.
(2) Includes the value of personal benefits and perquisites.
(3) The amounts disclosed in this column include amounts contributed by French
Automotive to its 401(k) employees savings plan and profit sharing plan and
dollar value of premiums paid by French Automotive for term life insurance
on behalf of the Named Executive Officers.
(4) Mr. Orbea received a bonus of $33,333 in connection with the acquisition of
Ansola in April 1998.
53
<PAGE>
OPTION GRANT TABLE
The following table shows all grants of stock options to the named executive
officers during the year ended December 31, 1998 under our former stock option
plan, which was terminated in connection with the recapitalization. Each of the
outstanding options was terminated in exchange for an amount equal to the
difference between the per share price paid to the existing stockholders and the
exercise price of each such option. In connection therewith, Messrs. Waldon,
Dinolfo, Southern, Buckley and Orbea received $5.6 million, $1.6 million, $1.0
million, $0.3 million and $0.2 million, respectively. See "Certain Relationships
and Related Transactions--The Recapitalization."
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES IN FISCAL PRICE (PER
NAME GRANTED(#) YEAR SHARE) EXPIRATION DATE
- ------------------------------------------ ------------------- ------------------- ----------- ------------------
<S> <C> <C> <C> <C>
Charles M. Waldon......................... 180.645 48.6% $2,767.24 December 2008
1,350.000 1,000.00 April 2005
Thomas C. Dinolfo......................... 54.334 1.7 2,767.24 December 2008
Stephen Southern.......................... 39.923 1.3 2,767.24 December 2008
Paul Buckley.............................. -- -- -- --
Juan Manuel Orbea......................... -- -- -- --
</TABLE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows aggregate exercises of options in the year ended
December 31, 1998 by the named executive officers and the aggregate value of
unexercised options held by each named executive officer as of December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
YEAR-END(#) YEAR-END($)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED ($) UNEXERCISABLE(1) UNEXERCISABLE(1)(2)
- --------------------------------- ------------------- --------------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
Charles M. Waldon................ -- -- 108.387/1,783.548 $ 328,943/$5,332,727
Thomas C. Dinolfo................ -- -- 32.600/130.402 98,939/299,733
Stephen Southern................. -- -- 23.954/79.846 72,697/197,163
Paul Buckley..................... -- -- --/-- --
Juan Manuel Orbea................ -- -- --/-- --
</TABLE>
- ------------------------
(1) All options became vested and were exercised in connection with the
recapitalization.
(2) Calculated based on the price paid for redemption of shares in the
recapitalization of $4,212 per share less the exercise price of the option.
EMPLOYMENT AGREEMENTS
We intend to enter into an employment agreement with Mr. Waldon pursuant to
which he will serve as President and Chief Executive Officer of French
Automotive and will devote his full business time and attention to the business
and affairs of French Automotive. The specific terms of the agreement are still
being negotiated between the parties.
54
<PAGE>
Mr. Buckley and Morris Ashby are parties to an employment agreement which
provides that Mr. Buckley shall serve as Chief Executive Officer of Morris Ashby
and shall devote his full time and attention to the affairs of Morris Ashby. The
agreement provides for an annual salary and an annual bonus, based on Morris
Ashby's financial performance. The agreement is terminable by either Mr. Buckley
or Morris Ashby upon two years' written notice. Morris Ashby may terminate Mr.
Buckley immediately without cause by paying Mr. Buckley an amount equal to two
years' salary. In the event Mr. Buckley is terminated because he has (1)
breached his employment agreement, (2) committed any act of gross negligence or
serious incompetence in the performance of his duties, (3) committed a criminal
act involving dishonesty, (4) become bankrupt, (5) become of unsound mind or
otherwise incapacitated or (6) become prohibited by law from serving as a
director of Morris Ashby, Mr. Buckley would not be entitled to any compensation.
Mr. Buckley has agreed that for a period of twelve months following the
termination of his employment he will not compete within the United Kingdom or
Northern Ireland with Morris Ashby or any of its affiliates over which he has
had supervisory or managerial control. The agreement automatically terminates
upon Mr. Buckley's 60th birthday.
Mr. Orbea is a party to employment agreements with each of Ansola and Ansola
Acquisition Corp., Ansola's parent company, which agreements provide that Mr.
Orbea shall serve as General Manager of both companies in exchange for an annual
salary and, in the case of Ansola, an annual bonus based on Ansola's financial
performance. The agreements are terminable by Ansola or Ansola Acquisition Corp,
as the case may be, with or without cause upon three months' written notice. If
Mr. Orbea's employment is terminated for any reason other than death, disability
or disciplinary reasons based on a serious breach of the employment agreement,
Mr. Orbea will be entitled to receive an amount equal to his salary for
twenty-one months. In addition, Mr. Orbea would be entitled to such amount in
the event that he terminates his employment on the ground that: (1) there has
been a substantial modification in his working conditions, (2) there has been a
serious breach by Ansola or Ansola Acquisition Corp. of their respective
obligations under the employment agreements, or (3) there has been a significant
change in the ownership of either of the companies and he terminates his
employment within three months thereafter. Mr. Orbea has agreed that for two
years from the date of the termination of his employment he will not compete
with Ansola and will receive in exchange a non-compete payment equal to one year
of his base salary under each of his employment agreements.
COMPENSATION OF DIRECTORS
French Automotive does not currently compensate directors for serving as a
director or on committees of the board or pay directors any fees for attendance
at meetings of the board, although French Automotive may elect to compensate
directors in the future. All directors are reimbursed for reasonable
out-of-pocket expenses incurred in connection with their attendance at board and
committee meetings.
55
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Issuer's authorized capital stock consists of six classes of common
stock designated as class A common stock, class B common stock, class C common
stock, class D-1 common stock, class D-2 common stock and class E common stock.
As of June 30, 1999, we had the following shares issued and outstanding (in each
case, rounded to the nearest share): 6,998 shares of class A common stock,
17,100 shares of class B common stock, 4,275 shares of class C common stock,
5,510 shares of class D-1 common stock, 5,700 shares of class D-2 common stock
and 2,802 shares of class E common stock. Our outstanding classes of common
stock generally differ with respect to dividend, liquidation preference and
voting rights. The holders of each of our outstanding classes of common stock
are entitled to receive distributions, whether as a dividend, liquidating
distribution or otherwise and whether in cash, property or securities, based on
the aggregate number of shares of such class outstanding as a percentage of the
total number of shares of common stock outstanding. These distributions will be
allocated between the various classes as set forth in our certificate of
incorporation. Each outstanding share of common stock (other than shares of
class D-2 common stock, which are non-voting) is entitled to one vote on all
matters submitted to a vote of stockholders. Except as otherwise required by our
certificate of incorporation or applicable law, all of our classes of voting
common stock (other than the class D-2 common stock) vote together as a single
class on all matters submitted to a vote of the stockholders, including the
election of directors.
The table below sets forth certain information regarding the equity
ownership of French Automotive as of June 30, 1999 by: (1) each person or entity
known by us to beneficially own five percent or more of a class of our voting
common stock, (2) each director and named executive officer and (3) all of our
directors and executive officers as a group. Unless otherwise stated, each of
the persons named in the table has sole voting and investment power with respect
to the securities beneficially owned by it or him as set forth opposite its or
his name. Beneficial ownership of the common stock listed in the table has been
determined in accordance with the applicable rules and regulations promulgated
under the Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF PERCENT OF VOTING
DIRECTORS, OFFICERS AND 5% STOCKHOLDERS CLASS SHARES CLASS POWER(1)
- ------------------------------------------------------------------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ONEX American Holdings LLC(2)(3)................................... Class B 17,100 100% 87%
J2R Partners III(4)................................................ Class C 4,275 100% (3)
Class E 2,802 100%
Windward Entities(5)............................................... Class A 4,748 68% 13%
The Northwestern Mutual Life Insurance Company(6).................. Class D-1 3,800 69% (3)
Robert W. Baird & Co. Entities(7).................................. Class D-1 1,520 28% (3)
S. A. Johnson(8)................................................... Class A 660 9% (3)
Class C 4,275 100%
Class E 2,802 100%
Charles M. Waldon.................................................. Class A 719 8% (3)
Thomas C. Dinolfo.................................................. Class A 142 2% (3)
Stephen Southern................................................... Class A 95 1% (3)
Paul Buckley....................................................... Class A 200 2% (3)
Juan Manuel Orbea.................................................. -- -- -- --
Robert H. Barton III............................................... -- -- -- --
Dugald K. Campbell(11)............................................. Class A 83 * (3)
Class C 4,275 100%
Class E 2,802 100%
A. Kipp Koester(9)................................................. Class D-1 3,800 69% (3)
John E. Lindahl(10)................................................ Class D-2 3,420 60% (3)
Carl E. Nelson(11)................................................. Class A 149 2% (3)
Class C 4,275 100%
Class E 2,802 100%
Eric J. Rosen(2)(3)................................................ Class B 17,100 100% 87%
Karl F. Storrie(11)................................................ Class A 83 * (3)
Class C 4,275 100%
Class E 2,802 100%
All directors and officers as a group (13 persons)................. All 33,528 -- 87%
</TABLE>
- ------------------------------
* Denotes less than one percent.
56
<PAGE>
(1) Except as otherwise required by our certificate of incorporation or
applicable law, all of our classes of voting common stock vote together as
a single class on all matters submitted to a vote of the stockholders,
including the election of directors.
(2) ONEX American Holdings LLC ("ONEX AH LLC") has shared voting power over
31,938 shares of common stock (see footnote (3)). Mr. Rosen, a Director of
French Automotive, is Managing Director of Onex Investment Corp. and, as a
result, may be deemed to have beneficial ownership of the shares held by
ONEX AH LLC. Mr. Rosen disclaims beneficial ownership of all shares of
class B common stock owned by ONEX AH LLC. ONEX AH LLC and Onex Investment
Corp. are both wholly owned subsidiaries of Onex. The address for ONEX AH
LLC and Mr. Rosen is c/o Onex Investment Corp., 712 Fifth Avenue, 40th
Floor, New York, New York 10019.
(3) ONEX AH LLC, J2R Partners III, The Northwestern Mutual Life Insurance
Company, Robert W. Baird & Co. Entities (as defined below), Messrs.
Johnson, Waldon and Nelson and all of French Automotive's other existing
stockholders (other than the Windward Entities (as defined below)) have
entered into a stockholders agreement pursuant to which such stockholders
agreed to vote their shares of common stock in the same manner as ONEX AH
LLC votes its shares on the election of Directors and, with the exception
of Northwestern Mutual Life, on all other matters presented to French
Automotive's stockholders for a vote and, to the extent permitted by law,
granted to ONEX AH LLC a proxy to effectuate such agreement. As a result,
ONEX AH LLC has voting control of approximately 87% of our common stock.
(4) The general partners of J2R Partners III are S.A. Johnson, Dugald K.
Campbell, Karl F. Storrie, Scott D. Rued, Robert R. Hibbs, Carl E. Nelson,
David J. Huls, Mary L. Johnson, Judith A. Vijums and Daniel F. Moorse. The
address for J2R Partners III is c/o Hidden Creek, 4508 IDS Center,
Minneapolis, Minnesota 55402.
(5) Includes 371 shares of class A common stock owned by Windward/Metropolitan,
L.L.C. and 4,377 shares of class A common stock held by Windward/Park WACI,
L.L.C. (collectively, the "Windward Entities"). The Windward Entities, due
to their common control, may be deemed to beneficially own each other's
shares, but each disclaims such beneficial ownership. The address for each
of the Windward Entities is c/o Windward Capital Partners, L.P., 1177
Avenue of the Americas, 42nd Floor, New York, New York 10036.
(6) The address for Northwestern Mutual Life is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202. NML indirectly owns 64% of the outstanding
capital stock of Robert W. Baird & Co. Incorporated.
(7) Includes 380 shares of class D-1 common stock owned by Robert W. Baird &
Co., 278 shares of class D-1 common stock owned by BCP Affiliates Fund L.P.
and 862 shares of class D-1 common stock owned by BCP II Limited
Partnership (collectively, the "Robert W. Baird & Co. Entities"). The
Robert W. Baird & Co. Entities, due to their common control, may be deemed
to beneficially own each other's shares, but each disclaims such beneficial
ownership. The address for the Robert W. Baird & Co. Entities is c/o Robert
W. Baird & Co., 277 W. Monroe St., Suite 2100, Chicago, Illinois 60606.
(8) Includes 4,275 shares of class C common stock and 2,802 shares of class E
common stock owned by J2R Partners III, of which Mr. Johnson is a general
partner, and 660 shares of class A common stock owned by Mr. Johnson. The
address for Mr. Johnson is c/o Hidden Creek, 4508 IDS Center, Minneapolis,
Minnesota 55402.
(9) Includes 3,800 shares of class D-1 common stock owned by Northwestern
Mutual Life, of which Mr. Koester is a Managing Director. Mr. Koester
disclaims beneficial ownership of the shares owned by Northwestern Mutual
Life. The address for Mr. Koester is c/o Northwestern Mutual Life, 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(10) Includes 3,420 shares of class D-2 common stock owned by Norwest Equity
Capital, L.L.C., an affiliate of Norwest Equity Partners, of which Mr.
Lindahl is Managing General Partner. The address for Mr. Lindahl is c/o
Norwest Equity Partners, 2800 Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402.
(11) Includes 4,275 shares of class C common stock and 2,802 shares of class E
common stock owned by J2R Partners III, of which Messrs. Nelson, Campbell
and Storrie are general partners. Each of Messrs. Nelson, Campbell and
Storrie disclaims beneficial ownership of the shares owned by J2R Partners
III. The address for each of them is c/o Hidden Creek, 4508 IDS Center,
Minneapolis, Minnesota 55402.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE RECAPITALIZATION
The recapitalization was completed on April 21, 1999 pursuant to a
recapitalization agreement dated March 29, 1999 by and among us, our
stockholders prior to the recapitalization, who are referred to in this
prospectus as the existing stockholders, and JLF Acquisition LLC, a newly formed
transitory investment entity. Subsequent to the date of the recapitalization
agreement, but prior to the date of the recapitalization, JLF Acquisition
assigned all of its rights and obligations under the recapitalization agreement
to Onex, J2R and the other equity investors.
Pursuant to the recapitalization agreement, we redeemed for $348.8 million
in cash 87% of our outstanding shares of common stock and all of our outstanding
shares of preferred stock and we paid $21.5 million in cash to the holders of
outstanding stock options in exchange for the cancellation of their options. In
addition, we made a payment of $5.9 million to those persons who were
stockholders prior to the recapitalization based on a post-closing determination
of the amount of our working capital as of the closing date of the
recapitalization. In connection with the recapitalization, the existing
stockholders converted all shares of class B common stock not redeemed into
shares of class A common stock. Included in this conversion was all of the
common stock owned by our chief executive officer, Charles M. Waldon. As a
result of the redemption and the conversion, these stockholders currently own
5,348 shares of class A common stock, representing approximately 13% of the
outstanding common stock.
As part of the recapitalization, we filed an amendment to our certificate of
incorporation, which amendment created our current capital structure, consisting
of six classes of common stock, as described under "Security Ownership of
Certain Beneficial Owners and Management." The equity investors then purchased
for an aggregate purchase price of $156.0 million an aggregate of 37,038 shares
of common stock from French Automotive. As a result of the recapitalization, the
equity investors own approximately 87% of our common stock, representing 85% of
the voting power.
As a result of the recapitalization, Windward received approximately $348.8
million in cash in connection with the redemption of its shares of common stock
and preferred stock and $85.0 million in cash in connection with the repayment
of the old subordinated notes.
Pursuant to the recapitalization agreement, the existing stockholders have
agreed to indemnify us and the equity investors for all liabilities and other
losses arising from any breach by French Automotive or any of the existing
stockholders of certain representations and warranties contained in the
recapitalization agreement. These representations relate to the capitalization
of the French Automotive and to the share ownership of the existing
stockholders, which representations survive indefinitely, and to the amount of
our existing indebtedness, which representation survives until the fourth
anniversary of the recapitalization. The existing stockholders do not have an
obligation to indemnify us and the equity investors for any losses once the
aggregate of all indemnified losses exceeds the price paid by French Automotive
to redeem the existing stockholders' capital stock.
The foregoing summary of the material terms of the recapitalization
agreement and related matters does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all of the provisions of the
recapitalization agreement, including the related exhibits and schedules. You
may obtain a copy of the recapitalization agreement from us.
INVESTOR STOCKHOLDERS AGREEMENT
French Automotive and each of its stockholders are parties to an investor
stockholders agreement, dated as of April 21, 1999. The stockholders agreement
provides that our board of directors will be established at seven directors and
will be comprised of: (1) three representatives designated by J2R, two of whom
shall initially be S.A. Johnson and Carl E. Nelson, (2) two representatives
designated by
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Onex, which representatives shall initially be Eric J. Rosen and Charles M.
Waldon, (3) one representative designated by Windward, which representative
shall initially be Robert H. Barton III and (4) one representative designated by
Northwestern Mutual Life, which representative shall initially be A. Kipp
Koester. The parties to the stockholders agreement subsequently voted to
increase the size of our board of directors to nine directors and have appointed
Karl F. Storrie and Dugald K. Campbell to fill these vacancies. In addition,
each party to the stockholders agreement has agreed to consent to a sale of
French Automotive if such sale is approved by our board of directors.
Except for Windward, each of the parties to the stockholders agreement has
also agreed to vote their common stock as directed by Onex on the election of
directors and, with the exception of Northwestern Mutual Life, on all other
matters submitted to a vote of stockholders, and has granted the person who is
at any time the president of Onex a proxy to vote its common stock. The voting
provisions of the stockholders agreement automatically terminate upon the sale
by French Automotive of at least 20% of its common stock, on a fully diluted
basis, in a underwritten public offering.
The stockholders agreement generally restricts the transfer of any shares of
common stock held by the parties to the stockholders agreement by granting
certain parties thereto rights of first offer and participation rights in
connection with any proposed transfer by any other party, with certain
exceptions. In addition, we have agreed not to issue to any person at any time
prior to an initial public offering of equity securities, any shares of common
stock or any other securities entitled to participate in distributions or to
vote (or securities convertible or exercisable for any of the foregoing) unless
the parties to the stockholders agreement are given the opportunity to purchase
their pro rata share at the same price and on the same terms, subject to certain
exceptions.
REGISTRATION AGREEMENT
In connection with the recapitalization, each of our stockholders entered
into a registration agreement. Pursuant to the registration agreement, the
holders of a majority of (1) the shares of class B common stock issued pursuant
to the recapitalization, or issued or issuable in respect of such securities,
and (2) any other shares of common stock held by persons holding any of the
foregoing may request, at any time, up to five registrations of all or any part
of their common stock on Form S-1 or any similar long-form registration
statement or, if available, an unlimited number of registrations on Form S-2 or
S-3 or any similar short-form registration statement, each at our expense. At
present, ONEX AH LLC owns all of the outstanding class B common stock. In the
event that the holders of these securities make such a demand registration
request, all other parties to the registration agreement will be entitled to
participate in such registration. In the event that none of these securities are
outstanding, the holders of a majority of (1) the common stock issued pursuant
to the recapitalization, or issued or issuable with respect thereto, and (2) any
common stock held by persons holding any of the foregoing will be entitled to
exercise these demand registration rights. The registration agreement also
grants to the parties thereto piggyback registration rights with respect to all
other registrations by us and we will pay all expenses related to such piggyback
registrations.
MANAGEMENT STOCKHOLDERS AGREEMENT
On July 16, 1999, we, Onex and members of our management who own shares of
our common stock, including Messrs. Waldon, Dinolfo, Buckley, Porritt, Shoaf and
Southern, entered into a management stockholders agreement. At the same time, we
sold to 32 of our managers 1,653 shares of our class A common stock,
representing approximately 3.8% of our outstanding common stock. The amount of
management stock held by each of our executive officers is as set forth in
"Security Ownership of Certain Beneficial Owners and Management." Each
management stockholder purchased such stock at a price of $4,212 per share,
which is the per share amount paid by the equity investors in connection with
the recapitalization. The agreement permits the management stockholders to
borrow
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up to half of the purchase price of their stock, with such stock being pledged
to secure repayment of the loan.
Pursuant to this agreement, each management stockholder granted a right of
first refusal to us, and, if we do not exercise such right, to Onex, to purchase
such management stockholder's stock. In the event neither we nor Onex exercises
our respective rights of first refusal, at any time after we have become a
public company, a management stockholder desiring to sell his stock may sell up
to 5% of his stock in the public market during any 90-day period, up to a
maximum of one-third of the stock acquired by the management stockholder prior
to such date.
We, Onex and each of the management stockholders have agreed that either we
or Onex will purchase at book value, and each management stockholder will sell,
the stock held by such management stockholder in the event such management
stockholder's employment is terminated for any reason at any time prior to our
initial public offering. After such time as we become a public company, a
management stockholder may sell his stock in the public market, provided that,
in the event the management stockholder's employment terminates due to: (1)
retirement, he can sell his stock so long as he does not sell more 75% of his
stock during the year following his termination; (2) his death or disability, he
may sell without restriction; and (3) in all other cases, he can sell his stock
so long as he does not sell more than half in the year following his
termination.
The agreement further provides that, in the event our board of directors
approves a sale of our company, we have a right to require each management
stockholder to sell such management stockholder's stock to the proposed
purchaser. In addition, in the event we effect a public offering, we have agreed
to include each management stockholder's stock in such offering, provided that
each management stockholder may not register a greater proportion of his stock
than the proportion of Onex's stock being registered by Onex in such offering.
The terms of the agreement govern all common stock owned or later acquired
by the management stockholders other than any stock purchased in the open market
at any time after we have consummated an initial public offering.
MANAGEMENT AGREEMENT WITH HIDDEN CREEK
Pursuant to the terms of a management agreement dated as of April 21, 1999,
Hidden Creek has agreed to provide strategic direction and management, financial
and administrative services to French Automotive. In exchange for such services,
we have agreed to pay Hidden Creek an annual management fee in the amount of
$500,000. In addition, Hidden Creek received a fee upon consummation of the
recapitalization and the offering of the outstanding notes an aggregate of
approximately $3.5 million for services provided in structuring, negotiating and
financing these transactions.
TRANSACTIONS WITH SIGNIFICANT STOCKHOLDERS
J.L. French Corporation, a wholly owned subsidiary of French Holdings, Inc.,
subleases its sales and service office in Dearborn, Michigan from American
Bumper & Mfg. Co., which is indirectly owned by Windward. Payments with respect
to this sublease aggregated approximately $68,000 in 1998.
In connection with the recapitalization, French Automotive paid Robert W.
Baird & Co. an advisory fee of $2.5 million.
Prior to the recapitalization, French Automotive made payments to Windward
for financial services in the amount of $325,000, $200,000 and $150,000 for
1998, 1997 and 1996, respectively.
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DESCRIPTION OF SENIOR CREDIT FACILITY
GENERAL. In connection with the recapitalization, we and various of our
direct and indirect wholly owned subsidiaries entered into a senior credit
facility with The Chase Manhattan Bank, Bank of America National Trust and
Savings Association, Chase Manhattan International Limited and certain other
lenders. The senior credit facility provides for aggregate borrowings by us of
approximately $330.0 million. As of June 30, 1999, there was $261.4 million of
outstanding indebtedness under the senior credit facility and approximately
$42.3 million available under the senior credit facility for working capital and
other corporate purposes. We used the proceeds of the initial offering of the
outstanding notes to repay a portion of the indebtedness under the senior credit
facility. See "Use of Proceeds."
Following the repayment of a portion of the indebtedness under the senior
credit facility with the proceeds of the initial offering of the notes, the
senior credit facility now consists of (a) approximately $102.5 million of term
loans, consisting of (1) a $70.0 million U.S. dollar-denominated term loan to
French Automotive, (2) a pound sterling-denominated term loan to French
Automotive in an amount equal to the pound sterling equivalent (determined as of
the date such loan was made) of U.S. $17.5 million and (3) a pound
sterling-denominated term loan to Morris Ashby in an amount equal to the pound
sterling equivalent (determined as of the date such loan was made) of U.S. $17.5
million (collectively, the "tranche A term loan"), (b) a $152.5 million tranche
B term loan and (c) a $75.0 million revolving credit facility. Up to $20.0
million of the revolving credit facility is available in British Pounds
Sterling, Euros and other foreign currencies for borrowings by us and certain of
our designated foreign subsidiaries.
INTEREST. Amounts outstanding under the senior credit facility bear
interest, at our option, at a rate per annum equal to either: (1) the
eurocurrency base rate (as defined in the senior credit agreement) or (2) the
base rate (as defined in the senior credit agreement), in each case, plus an
applicable margin. The applicable margin for the tranche A term loan and the
revolving credit facility is initially 2.50% for eurocurrency base rate loans
and 1.50% for base rate loans. The applicable margin for the tranche A term loan
and the revolving credit facility is subject to adjustment downward based on the
achievement of certain performance targets and provided that no event of default
has occurred and is continuing. The applicable margin for the tranche B term
loan is fixed at 2.75% for eurocurrency base rate loans and 1.75% for base rate
loans. As of June 30, 1999, our borrowings under the senior credit facility bore
interest at rates ranging from 7.5% to 7.9%.
MATURITY. Borrowings under the tranche A term loan are due and payable in
quarterly installments until April 21, 2005 and borrowings under the tranche B
term loan are due and payable in nominal quarterly installments until September
30, 2006, with the final balance due on October 21, 2006. The revolving credit
facility is available until April 21, 2005.
SECURITY AND GUARANTIES. The senior credit facility is secured by a first
priority security interest in all of our existing and after-acquired tangible
and intangible assets, including those of our direct and indirect material
subsidiaries, with the exception of certain foreign subsidiaries, including,
without limitation, real property and all of the capital stock owned us and our
direct and indirect material subsidiaries, with the exception of certain foreign
subsidiaries and to the extent permitted by applicable law. All of our
obligations under the senior credit facility are fully and unconditionally
guaranteed by all of our present and future material domestic subsidiaries. In
addition, we and each of such guarantors shall guarantee any borrowings by any
designated foreign subsidiaries permitted to borrow amounts under the senior
credit facility.
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COVENANTS. The senior credit facility requires us to meet certain financial
tests, including, without limitation, minimum interest coverage, minimum cash
retained earnings and maximum leverage tests. The senior credit facility
contains certain covenants which, among other things, limit the incurrence of
additional indebtedness, investments, dividends, transactions with affiliates,
asset sales, acquisitions, mergers and consolidations, prepayments of other
indebtedness, including the notes, liens and encumbrances.
EVENTS OF DEFAULT. The senior credit facility contains customary events of
default, including, without limitation, payment defaults, breaches of
representations and warranties, covenant defaults, cross-defaults to certain
other indebtedness, including the notes, certain events of bankruptcy and
insolvency, judgment defaults, failure of any guaranty or security document
supporting the senior credit facility to be in full force and effect and a
change of control of French Automotive.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under
the caption "--Certain Definitions."
We will issue the exchange notes under an indenture among French Automotive,
the subsidiary guarantors and U.S. Bank Trust National Association, as trustee.
The terms of the notes include those stated in the indenture and those made part
of the indenture by reference to the Trust Indenture Act of 1939, as amended.
The following description is a summary of the material provisions of the
indenture and the registration rights agreement. It does not restate those
agreements in their entirety. We urge you to read the indenture and the
registration rights agreement because they, and not this description, define
your rights as a holder of the notes. Copies of the indenture and the
registration rights agreement are available as set forth below under the caption
"--Additional Information." Certain defined terms used in this description but
not defined below under the caption "--Certain Definitions" have the meanings
assigned to them in the indenture.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTIES
THE NOTES
- are general unsecured obligations of French Automotive;
- are subordinated in right of payment to all existing and future senior
indebtedness of French Automotive;
- rank equally in right of payment with all existing and future unsecured
subordinated indebtedness of French Automotive that is not expressly
subordinated to the notes; and
- are unconditionally guarantied by the subsidiary guarantors.
THE GUARANTIES
The notes are guarantied by each domestic restricted subsidiary of French
Automotive.
Each subsidiary guaranty of the notes:
- is a general unsecured obligation of the subsidiary guarantor;
- is subordinated in right of payment to all existing and future senior debt
of the subsidiary guarantor; and
- ranks equally in right of payment with all existing and future unsecured
subordinated indebtedness of the subsidiary guarantor that is not
expressly subordinated to the subsidiary guaranty.
None of our foreign subsidiaries will guaranty the notes. In addition, under
the circumstances set forth below under the caption "--Certain
Covenants--Designation of Restricted and Unrestricted Subsidiaries," we will be
permitted to designate certain of our subsidiaries as "unrestricted
subsidiaries." Our unrestricted subsidiaries will not be subject to many of the
indenture's restrictive covenants and will not guaranty the notes.
We operate through our subsidiaries and, therefore, depend on the cash flow
of our subsidiaries to meet our obligations, including our obligations under the
notes. French Automotive's right to receive assets of any of our subsidiaries
upon the subsidiary's liquidation or reorganization, and the consequent right of
the holders of the notes to participate in those assets, will be effectively
subordinated to the claims of that subsidiary's creditors, except to the extent
that French Automotive is itself recognized as
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a creditor of the subsidiary, in which case French Automotive's claims would
still be subordinate in right of payment to any security in the assets of the
subsidiary and any indebtedness of the subsidiary senior to that held by French
Automotive. The notes will therefore be effectively subordinated in right of
payment to all indebtedness and other liabilities and commitments, including
trade payables and lease obligations, of our non-guarantor subsidiaries. In the
event of a bankruptcy, liquidation or reorganization of any of these
non-guarantor subsidiaries, these non-guarantor subsidiaries will pay the
holders of their debts and their trade creditors before they will be able to
distribute any of their assets to us. The non-guarantor subsidiaries generated
29.3% of our consolidated sales in the period ending June 30, 1999 and held
36.5% of our consolidated assets and 17.0% of our consolidated liabilities as of
June 30, 1999. See "Risk Factors--We Conduct All of Our Operations Through
Subsidiaries and Not All of Our Subsidiaries Are Subsidiary Guarantors."
PRINCIPAL, MATURITY AND INTEREST
The indenture provides for the issuance by us of notes with a maximum
aggregate principal amount of $275.0 million, of which $175.0 million was issued
in the initial offering of the outstanding notes. We may issue additional notes
from time to time. Any offering of additional notes is subject to the covenant
described below under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock." The notes and any additional
notes subsequently issued under the indenture will be treated as a single class
for all purposes under the indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase. We have issued notes in
denominations of $1,000 and integral multiples of $1,000. The notes will mature
on June 1, 2009.
Interest on the notes will accrue at the rate of 11 1/2% per annum and will
be payable semi-annually in arrears on June 1 and December 1, commencing on
December 1, 1999. We will make each interest payment to the holders of record on
the immediately preceding May 15 and November 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to us, we will pay all
principal, interest and premium and liquidated damages, if any, on that holder's
notes in accordance with those instructions. All other payments on notes will be
made at the office or agency of the paying agent and registrar within the City
and State of New York unless we elect to make interest payments by check mailed
to the holders at their addresses set forth in the register of holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the holders, and we or any
of our subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
holder to pay any taxes and fees required by law or permitted by the indenture.
We are not required to transfer or exchange any note selected for redemption.
Also, we are not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed.
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The registered holder of a note will be treated as the owner of it for all
purposes.
SUBSIDIARY GUARANTIES
The subsidiary guarantors will jointly and severally guaranty our
obligations under the notes. Each subsidiary guaranty will be subordinated to
the prior payment in full of all senior debt of that subsidiary guarantor. The
obligations of each subsidiary guarantor under its subsidiary guaranty will be
limited as necessary to prevent that subsidiary guaranty from constituting a
fraudulent conveyance under applicable law. See "Risk Factors--If a Court Were
to Find that the Issuance of the Notes or the Subsidiary Guaranties Constituted
a Fraudulent Conveyance, such Court Could Avoid Our Obligations under the Notes
or the Subsidiary Guarantors' Obligations under the Subsidiary Guaranties."
A subsidiary guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into
another person, whether or not such subsidiary guarantor is the surviving
person, other than French Automotive or another subsidiary guarantor, unless:
(1) immediately after giving effect to that transaction, no default or event
of default exists; and
(2) either:
(a) the person acquiring the property in any such sale or disposition or
the person formed by or surviving any such consolidation or merger
assumes all the obligations of that subsidiary guarantor under the
indenture, its subsidiary guaranty and the registration rights
agreement pursuant to a supplemental indenture and appropriate
collateral documents satisfactory to the Trustee; or
(b) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Asset Sale" provisions of the indenture.
The subsidiary guaranty of a subsidiary guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that subsidiary guarantor (including by way of
merger or consolidation) to a person that is not (either before or after
giving effect to such transaction) a restricted subsidiary of French
Automotive, if the subsidiary guarantor applies the Net Proceeds of that
sale or other disposition in accordance with the "Asset Sale" provisions
of the indenture;
(2) in connection with any sale of all of the capital stock of a subsidiary
guarantor to a person that is not (either before or after giving effect
to such transaction) a restricted subsidiary of French Automotive, if
French Automotive applies the Net Proceeds of that sale in accordance
with the "Asset Sale" provisions of the indenture, or
(3) if we properly designate any restricted subsidiary that is a subsidiary
guarantor as an unrestricted subsidiary.
See "--Repurchase at the Option of Holders--Asset Sales."
SUBORDINATION
The payment of principal, interest and premium and liquidated damages, if
any, on the notes, and any other Obligations with respect to the notes, will be
subordinated to the prior payment in full in cash of all of our senior debt,
including senior debt incurred after the date of the indenture.
The holders of senior debt will be entitled to receive payment in full in
cash of all obligations due in respect of senior debt, including interest after
the commencement of any bankruptcy proceeding at the rate specified in the
applicable senior debt, whether or not such interest would be an allowed claim,
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before the holders of notes will be entitled to receive any payment with respect
to the notes (except that holders of notes may receive and retain Permitted
Junior Securities and payments made from the trust described under "--Legal
Defeasance and Covenant Defeasance" if the funding of such trust is permitted
under the defeasance section of the indenture), in the event of any distribution
to our creditors:
(1) in a liquidation or dissolution of French Automotive;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to French Automotive or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of French Automotive's assets and liabilities.
We also may not make any payment, whether by purchase, redemption,
defeasance or otherwise, in respect of the notes (except in Permitted Junior
Securities or from the trust described under "--Legal Defeasance and Covenant
Defeasance" if the funding of such trust is permitted under the defeasance
section of the indenture) if:
(1) a payment default on Designated Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior Debt
to accelerate its maturity and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from us or the holders of any
Designated Senior Debt.
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the delivery of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 90 consecutive days.
If the Trustee or any holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities in the circumstances permitted
above or from the trust described under "--Legal Defeasance and Covenant
Defeasance" if the funding of such trust is permitted under the defeasance
section of the indenture) when the payment is prohibited by these subordination
provisions, the Trustee or the holder, as the case may be, shall hold the
payment in trust for the benefit of the holders of senior debt. Upon the proper
written request of the holders of senior debt, the Trustee or the holder, as the
case may be, shall deliver the amounts in trust to the holders of senior debt or
their proper representative.
We must promptly notify holders of senior debt if payment of the notes is
accelerated because of an event of default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of French Automotive, holders of
notes may recover less ratably than our
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creditors who are holders of senior debt. See "Risk Factors--The Notes and
Subsidiary Guaranties are Unsecured Subordinated Obligations."
"DESIGNATED SENIOR DEBT" means:
(1) any indebtedness outstanding under or in respect of the Credit
Agreement; and
(2) after payment in full of all Obligations under the Credit Agreement, any
other senior debt permitted under the indenture the principal amount of
which is $15.0 million or more and that has been designated by us as
"Designated Senior Debt."
"PERMITTED JUNIOR SECURITIES" means: (1) debt securities of French
Automotive as reorganized or readjusted, if applicable, and guaranteed by the
subsidiary guarantors, or debt securities of French Automotive (or any other
company, trust or organization provided for by a plan of reorganization or
readjustment succeeding to the assets and liabilities of French Automotive) and
guaranteed by the subsidiary guarantors, in each of the foregoing cases, which
securities and guarantees are subordinated, to at least the same extent as the
notes and the subsidiary guarantees, to the payment of all senior debt and
guaranties thereof that will be outstanding after giving effect to such
reorganization or readjustment, if applicable, so long as (a) such debt
securities are not entitled to the benefit of covenants or defaults more
beneficial to the holders of such debt securities than those in effect with
respect to the notes (or the senior debt, after giving effect to such
reorganization or readjustment, if applicable), and (b) such debt securities
shall not provide for amortization--including sinking fund and mandatory
prepayment provisions (other than a mandatory prepayment of the type described
under the caption "--Repurchase at the Option of Holders--Change of Control")--
commencing prior to the date which is one year after the final scheduled
maturity date of the senior debt (as modified by such reorganization or
readjustment, if applicable), or (2) equity interests in French Automotive or
any subsidiary guarantor; PROVIDED THAT in each case with respect to clause (1)
or (2) above, if a new corporation results from any such reorganization or
readjustment, such corporation assumes all senior debt that will be outstanding
after giving effect thereto and provided further that the rights of the holders
of senior debt are not impaired.
"SENIOR DEBT" means:
(1) all indebtedness of French Automotive or any subsidiary guarantor
outstanding under credit facilities and all Hedging Obligations with
respect thereto;
(2) any other indebtedness of French Automotive or any subsidiary guarantor
permitted to be incurred under the terms of the indenture, unless the
instrument under which such indebtedness is incurred expressly provides
that it is on a parity with or subordinated in right of payment to the
notes or any subsidiary guaranty, as the case may be; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding paragraph, senior
debt will not include:
(1) any liability for federal, state, local or other taxes owed or owing by
French Automotive or the subsidiary guarantors;
(2) any indebtedness of French Automotive to any of its subsidiaries or
other affiliates;
(3) any trade payables; or
(4) any indebtedness that is incurred in violation of the indenture.
OPTIONAL REDEMPTION
At any time prior to June 1, 2002, we may on any one or more occasions
redeem up to 35% of the aggregate principal amount of notes issued under the
indenture at a redemption price of 111.5% of the
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principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, to the redemption date, with the net cash proceeds of one or
more equity offerings; PROVIDED that:
(1) at least 65% of the aggregate principal amount of notes issued under the
indenture remains outstanding immediately after the occurrence of each
such redemption, excluding notes held by us and our subsidiaries; and
(2) the redemption must occur within 90 days of the date of the closing of
such equity offering.
Except pursuant to the preceding paragraph, the notes will not be redeemable
at our option prior to June 1, 2004. We are not prohibited, however, from
acquiring the notes by means other than a redemption, whether pursuant to an
issuer tender or otherwise, assuming such acquisition does not otherwise violate
the terms of the indenture.
On or after June 1, 2004, we may redeem all or a part of the notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices, expressed
as percentages of principal amount, set forth below plus accrued and unpaid
interest and liquidated damages, if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on June 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------------------------------------ -----------
<S> <C>
2004.................................................................................................. 105.750%
2005.................................................................................................. 103.833%
2006.................................................................................................. 101.917%
2007 and thereafter................................................................................... 100.000%
</TABLE>
MANDATORY REDEMPTION
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a change of control occurs and we have not previously issued an
irrevocable notice of redemption of all of the notes on the terms set forth
above under the heading "--Optional Redemption", each holder of notes will have
the right to require us to repurchase all or any part equal to $1,000 or an
integral multiple thereof of that holder's notes pursuant to a change of control
offer (as described herein) on the terms set forth in the indenture. In the
change of control offer, we will offer a change of control payment in cash equal
to 101% of the aggregate principal amount of notes repurchased plus accrued and
unpaid interest and liquidated damages, if any, thereon, to the date of
purchase. Within 30 days following any change of control, we will mail a notice
to each holder describing the transaction or transactions that constitute the
change of control and offering to repurchase notes on the change of control
payment date specified in such notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by the indenture and described in such notice. We will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a change of control. To the extent that the provisions of any
securities laws or regulations conflict with the change of control provisions of
the indenture, we will comply with the applicable securities laws and
regulations and will not be deemed to have breached our obligations under the
change of control provisions of the indenture by virtue of such conflict.
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On the change of control payment date, we will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the change of control offer;
(2) deposit with the paying agent an amount equal to the change of control
payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the notes so accepted
together with an officers' certificate stating the aggregate principal
amount of notes we are purchasing.
The paying agent will promptly mail to each holder of notes so tendered the
change of control payment for such notes, and the Trustee will promptly
authenticate and mail or cause to be transferred by book entry to each holder a
new note equal in principal to any unpurchased portion of the notes surrendered,
if any; provided that each such new note will be in a principal amount of $1,000
or an integral multiple thereof.
Prior to complying with any of the provisions of this "change of control"
covenant, but in any event within 90 days following a change of control, we will
either repay all outstanding senior debt or obtain the requisite consents, if
any, under all agreements governing outstanding senior debt to permit the
repurchase of notes required by this covenant. If we do not obtain such consents
or repay such borrowings, we will be prohibited from repurchasing the notes. We
will publicly announce the results of the change of control offer on or as soon
as practicable after the change of control payment date.
The provisions described above that require we make a change of control
offer following a change of control will be applicable regardless of whether any
other provisions of the indenture are applicable. Except as described above with
respect to a change of control, the indenture does not contain provisions that
permit the holders of the notes to require that we repurchase or redeem the
notes in the event of a takeover, recapitalization or similar transaction.
We will not be required to make a change of control offer upon a change of
control if a third party makes the change of control offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
indenture applicable to a change of control offer made by us and purchases all
notes validly tendered and not withdrawn under such change of control offer.
The definition of change of control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of our properties or assets and of our subsidiaries taken as
a whole. Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of notes to require
us to repurchase the notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of our assets and the assets of our
subsidiaries taken as a whole to another person or group may be uncertain.
ASSET SALES
We will not, and will not permit any of our restricted subsidiaries to,
consummate an Asset Sale unless:
(1) we (or the restricted subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or equity interests issued or sold or
otherwise disposed of, as determined in good faith by us;
(2) such fair market value is determined by our board of directors and
evidenced by a resolution of the board of directors set forth in an
officers' certificate delivered to the Trustee; and
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(3) at least 75% of the consideration therefor received by us or such
restricted subsidiary is in the form of cash or Cash Equivalents. For
purposes of this provision, each of the following shall be deemed to be
cash:
(a) any of our or our restricted subsidiaries' liabilities, as shown on
our or any such restricted subsidiary's most recent balance sheet,
other than contingent liabilities and liabilities that are by their
terms subordinated to the notes or any subsidiary guaranty, that are
assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases us or such restricted subsidiary
from further liability;
(b) any securities, notes or other obligations received by us or any such
restricted subsidiary from such transferee that are converted by us
or such restricted subsidiary into cash within 180 days after the
consummation of such Asset Sale, to the extent of the cash received
in that conversion; and
(c) any Designated Noncash Consideration received by us or any of our
restricted subsidiaries in such Asset Sale; PROVIDED that the
aggregate fair market value (as determined above) of such Designated
Noncash Consideration, taken together with the fair market value at
the time of receipt of all other Designated Noncash Consideration
received pursuant to this clause (c) less the amount of Net Proceeds
previously realized in cash from such earlier received Designated
Noncash Consideration is less than the greater of 5.0% of Total
Assets or $25.0 million at the time of the receipt of such Designated
Noncash Consideration, with the fair market value of each item of
Designated Noncash Consideration being measured at the time received
and without giving effect to subsequent changes in value.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale, we
may apply such Net Proceeds at our option:
(1) to repay senior debt and, if the senior debt repaid is revolving credit
indebtedness, to correspondingly reduce commitments with respect thereto;
(2) to acquire all or substantially all of the assets of, or a majority of
the voting stock of, another Permitted Business;
(3) to make a capital expenditure; and/or
(4) to acquire other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any such Net Proceeds, we may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "excess proceeds." When the
aggregate amount of excess proceeds exceeds $10.0 million, we will make an offer
to all holders of notes and all holders of other indebtedness that ranks equally
with the notes containing provisions similar to those set forth in the indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets to purchase the maximum principal amount of notes and such other
indebtedness that ranks equally with the notes that may be purchased out of the
excess proceeds, such offer being referred to in this prospectus as an "asset
sale offer". The offer price in any asset sale offer will be equal to 100% of
principal amount plus accrued and unpaid interest and liquidated damages, if
any, to the date of purchase, and will be payable in cash. If any excess
proceeds remain after consummation of an asset sale offer, we may use such
excess proceeds for any purpose not otherwise prohibited by the indenture. If
the aggregate principal amount of notes and such other indebtedness as ranks
equally with the notes tendered into such asset sale offer exceeds the amount of
excess proceeds, the Trustee shall select the notes and such other indebtedness
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as ranks equally with the notes to be purchased on a pro rata basis based on the
principal amount of notes and such other indebtedness as ranks equally with the
notes that is tendered. Upon completion of each asset sale offer, the amount of
excess proceeds shall be reset at zero.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with each repurchase of notes
pursuant to an asset sale offer. To the extent that the provisions of any
securities laws or regulations conflict with the asset sales provisions of the
indenture, we will comply with the applicable securities laws and regulations
and will not be deemed to have breached our obligations under the asset sale
provisions of the indenture by virtue of such conflict.
The agreements governing our outstanding senior debt currently prohibit us
from purchasing any notes, and also provide that certain change of control or
asset sale events with respect to us would constitute a default under these
agreements. Any future credit agreements or other agreements relating to senior
debt to which we become a party may contain similar restrictions and provisions.
In the event a change of control or Asset Sale occurs at a time when we are
prohibited from purchasing notes, we could seek the consent of our senior
lenders to the purchase of notes or could attempt to refinance the borrowings
that contain such prohibition. If we do not obtain such a consent or repay such
borrowings, we cannot purchase the notes. In such case, our failure to purchase
tendered notes would constitute an event of default under the indenture which
would, in turn, constitute a default under such senior debt. In such
circumstances, the subordination provisions in the indenture would likely
restrict payments to the holders of notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed; or
(2) if the notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
We will not, and will not permit any of our restricted subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of our or any of our restricted subsidiaries' equity interests
(including, without limitation, any payment in connection with any merger
or consolidation involving us or any of our restricted subsidiaries) or
to the direct or indirect holders of our or any of our restricted
subsidiaries'
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equity interests in their capacity as such (other than dividends or
distributions payable in our equity interests, other than Disqualified
Stock, or to us or one of our restricted subsidiaries);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving us) any of our equity interests or the equity interests of any
direct or indirect parent of us;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any indebtedness that is by its
terms subordinated to the notes or the subsidiary guaranties, except a
payment of interest or principal at the stated maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"restricted payments"),
unless, at the time of and after giving effect to such restricted payment:
(1) no default or event of default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) we would, at the time of such restricted payment and after giving pro
forma effect thereto as if such restricted payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock;" and
(3) such restricted payment, together with the aggregate amount of all other
restricted payments made by us and our restricted subsidiaries after the
date of the indenture (excluding restricted payments permitted by clauses
(2), (3), (4), (5), (7) and (8) of the next succeeding paragraph), is
less than the sum, without duplication, of:
(a) 50% of our Consolidated Net Income for the period (taken as one
accounting period) from March 31, 1999 to the end of our most
recently ended fiscal quarter for which internal financial statements
are available at the time of such restricted payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of
such deficit), PLUS
(b) 100% of the aggregate net cash proceeds or fair market value of
Productive Assets received by us since the date of the indenture as a
contribution to our common equity capital or from the issue or sale
of our equity interests, other than Disqualified Stock or Designated
Preferred Stock, or from the issue or sale of convertible or
exchangeable Disqualified Stock or Designated Preferred Stock or
convertible or exchangeable debt securities that have been converted
into or exchanged for such equity interests (other than equity
interests (or Disqualified Stock or Designated Preferred Stock or
debt securities) sold to one of our subsidiaries), PLUS
(c) 100% of the aggregate net cash proceeds or fair market value of
Productive Assets received from the disposition or sale of any
Restricted Investment that was made after the date of the indenture
less, in each case, the cost of such disposition or sale, PLUS
(d) 100% of the amount of any dividends paid in cash or the fair market
value (as determined above) of any Productive Assets received by us
or a restricted subsidiary after the date of the indenture from one
of our unrestricted subsidiaries, to the extent that such dividends
were not otherwise included in our Consolidated Net Income for such
period, PLUS
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(e) to the extent that any of our unrestricted subsidiaries is
redesignated as a restricted subsidiary after the date of the
indenture, the fair market value of our Investment in such subsidiary
as of the date of such redesignation, PLUS
(f) without duplication of any amounts included in clause (b) above, 100%
of the aggregate net cash proceeds or the fair market value of
Productive Assets received by us as equity contributions (other than
Disqualified Stock or Designated Preferred Stock) by a holder of our
equity interests (excluding any net cash proceeds from an equity
contribution which has been financed, directly or indirectly using
funds (1) borrowed from us or any of our subsidiaries, unless and
until and to the extent such borrowing is repaid or (2) contributed,
extended, guaranteed or advanced by us or by any of our
subsidiaries).
So long as no payment default has occurred and is continuing or would be
caused thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any of our or our restricted subsidiaries' subordinated indebtedness
or of our or our restricted subsidiaries' equity interests in exchange
for, or out of the net cash proceeds of the substantially concurrent sale
(other than to one of our subsidiaries) of our equity interests (other
than Disqualified Stock); PROVIDED that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of our
subordinated indebtedness or the subordinated indebtedness of any
restricted subsidiary with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by one of our restricted subsidiaries to the
holders of its capital stock on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value
of any of our or our restricted subsidiaries' equity interests held by
any of our or our restricted subsidiaries' current or former employees,
officers or directors pursuant to any management equity subscription
agreement, stock option agreement or other employee plan or agreement or
employment benefit plan; PROVIDED that the aggregate price paid for all
such repurchased, redeemed, acquired or retired equity interests shall
not exceed $2.5 million in any calendar year (provided that in any
calendar year such amount shall be increased by the amount available for
use, but not used, under this clause (5) in the immediately preceding
year) and $10.0 million since the date of the indenture;
(6) the declaration and payment of dividends to holders of any class or
series of Designated Preferred Stock (other than Disqualified Capital
Stock) issued after the date of the indenture; PROVIDED that, at the time
of such issuance, we, after giving effect to such issuance on a pro forma
basis, would have had a Fixed Charge Coverage Ratio of at least 2.0 to
1.0;
(7) repurchases of capital stock deemed to occur upon the exercise of stock
options if such capital stock represents a portion of the exercise price
thereof; and
(8) so long as no default or event of default shall have occurred and be
continuing or would occur as a consequence thereof, other restricted
payments in an aggregate amount not to exceed $10.0 million since the
date of the indenture.
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The amount of all restricted payments, other than cash, shall be the fair
market value on the date of the restricted payment of the asset(s) or securities
proposed to be transferred or issued to or by us or such restricted subsidiary,
as the case may be, pursuant to the restricted payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the board of directors whose resolution with respect thereto
shall be delivered to the Trustee. The board of directors' determination must be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
the greater of 3.0% of Total Assets or $5.0 million. Not later than the date of
making any restricted payment, we shall deliver to the Trustee an officers'
certificate stating that such restricted payment is permitted and setting forth
the basis upon which the calculations required by this restricted payments
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
We will not, and will not permit any of our subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any indebtedness, including Acquired Debt, and we will not issue any
Disqualified Stock and will not permit any of our restricted subsidiaries to
issue any shares of preferred stock; PROVIDED, HOWEVER, that we may incur
indebtedness, including Acquired Debt, or issue Disqualified Stock, and any
subsidiary guarantor may incur indebtedness, including Acquired Debt, or issue
preferred stock, if:
The Fixed Charge Coverage Ratio for our most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.0 to
1.0, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional indebtedness had been incurred or
the preferred stock or Disqualified Stock had been issued, as the case may be,
at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of indebtedness, which we collectively refer to in this
prospectus as Permitted Debt:
(1) the incurrence by us or any of our restricted subsidiaries of indebtedness
and letters of credit under credit facilities in an aggregate principal
amount at any one time outstanding (with letters of credit being deemed to
have a principal amount equal to the face amount thereof) not to exceed the
positive difference between (a) the greater of (i) $330.0 million and (ii)
the amount of the Borrowing Base and (b) the sum of (i) all outstanding
indebtedness incurred in Qualified Securitization Transactions and (ii) the
aggregate amount of all Net Proceeds of Asset Sales applied by us or any of
our subsidiaries to repay any indebtedness under the credit facilities
pursuant to the covenant described above under the caption "--Repurchase at
the Option of Holders--Asset Sales";
(2) the incurrence by us and our restricted subsidiaries of the Existing
Indebtedness;
(3) the incurrence by us and the subsidiary guarantors of indebtedness
represented by the notes and the related subsidiary guaranties to be issued
on the date of the indenture and by the exchange notes and the related
subsidiary guaranties to be issued pursuant to the registration rights
agreement;
(4) the incurrence by us or any of our restricted subsidiaries of indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase
money obligations, in each case, incurred for the purpose of financing all
or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in our business or the business of such
restricted subsidiary, in an aggregate principal amount, including all
Permitted Refinancing
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Indebtedness incurred to refund, refinance or replace any indebtedness
incurred pursuant to this clause (4), not to exceed 5.0% of Total Assets at
any time outstanding;
(5) the incurrence by us or any of our restricted subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are
used to refund, refinance or replace indebtedness, other than intercompany
indebtedness, that was permitted by the indenture to be incurred under the
first paragraph of this covenant or clauses (2), (3), (4), (5), or (10) of
this paragraph;
(6) the incurrence by us or any of our restricted subsidiaries of intercompany
indebtedness between or among us and any of our restricted subsidiaries;
PROVIDED, HOWEVER, that:
(a) if we or any subsidiary guarantor is the obligor on such indebtedness,
such indebtedness must be expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the notes, in our case,
or the subsidiary guaranty, in the case of a subsidiary guarantor; and
(b) (i) any subsequent issuance or transfer of equity interests that results
in any such indebtedness being held by a person other than us or any of
our restricted subsidiaries and (ii) any sale or other transfer of any
such indebtedness to a person other than us or one of our restricted
subsidiaries; shall be deemed, in each case, to constitute an incurrence
of such indebtedness by us or such subsidiary, as the case may be, that
was not permitted by this clause (6);
(7) the incurrence by us or any of our restricted subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging (a)
interest rate risk with respect to any floating rate indebtedness that is
permitted by the terms of this indenture to be outstanding or (b) the value
of foreign currencies or the cost of commodities purchased or received by
us or any of our restricted subsidiaries;
(8) (a) the guaranty by us or any of the subsidiary guarantors of indebtedness
of us or a subsidiary guarantor that was permitted to be incurred by
another provision of this covenant;
(b) the guaranty by any of our restricted subsidiaries that is not a
subsidiary guarantor of our indebtedness or the indebtedness of another
of our restricted subsidiaries that was permitted to be incurred by
another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any indebtedness in the form of
additional indebtedness with the same terms, and the payment of dividends
on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock; PROVIDED, in each such case, that the amount thereof is
included in our Fixed Charges of as accrued;
(10) the incurrence by us or any of our restricted subsidiaries of additional
indebtedness or Disqualified Stock in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any indebtedness incurred pursuant to this clause (10), not to
exceed $25.0 million;
(11) the incurrence by our unrestricted subsidiaries of Non-Recourse Debt or
the issuance of preferred stock, provided, however, that if any such
indebtedness ceases to be Non-Recourse Debt of an unrestricted subsidiary,
such event shall be deemed to constitute an incurrence of indebtedness by
a restricted subsidiary that was not permitted by this clause (11);
(12) the incurrence of indebtedness owing to any insurance company in
connection with the financing of insurance premiums permitted by such
insurance company in the ordinary course of business;
(13) the incurrence of indebtedness, including letters of credit, in respect of
workers' compensation claims, self-insurance obligations, performance,
surety, bid or similar bonds and completion
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guarantees provided by us or one of our restricted subsidiaries in the
ordinary course of business and consistent with past practices;
(14) indebtedness arising from our agreements or the agreements of a restricted
subsidiary providing for indemnification, adjustment of purchase price,
earn out or other similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or a restricted
subsidiary, other than guarantees of indebtedness incurred by any person
acquiring all or any portion of such business, assets or restricted
subsidiary for the purpose of financing such acquisition; PROVIDED that
the maximum assumable liability in respect of all such indebtedness shall
at no time exceed the gross proceeds actually received by us and our
restricted subsidiaries in connection with such disposition;
(15) the incurrence by a Securitization Entity of indebtedness in a Qualified
Securitization Transaction that is Non-Recourse Debt, except for Standard
Securitization Undertakings, with respect to us and our other restricted
subsidiaries;
(16) indebtedness of French Automotive evidenced by promissory notes
subordinated to the notes issued to our and our subsidiaries, current or
former employees, directors, officers or consultants in lieu of cash
payment for any of our equity interests being repurchased from such
persons; PROVIDED, that the aggregate amount of such indebtedness incurred
does not exceed $2.5 million in any calendar year (provided that in any
calendar year such amount shall be increased by the amount available for
incurrence, but not incurred, under this clause (16) in any preceding
year) and $10.0 million since the date of the indenture;
(17) guaranties of indebtedness of any other person incurred by us or a
restricted subsidiary in the ordinary course of business in an aggregate
principal amount not to exceed $5.0 million at any one time outstanding;
(18) indebtedness consisting of take-or-pay obligations contained in supply
agreements entered into by us or our subsidiaries in the ordinary course;
and
(19) the incurrence by any foreign subsidiary of indebtedness that is not
prohibited by the covenant described below under the caption "--Limitation
on Foreign Indebtedness."
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of proposed
indebtedness meets the criteria of more than one of the categories of permitted
debt described in clauses (1) through (19) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, we will be permitted to
classify such item of indebtedness on the date of its incurrence, or later
reclassify all or a portion of such item of indebtedness, in any manner that
complies with this covenant. Indebtedness under credit facilities outstanding on
the date on which the outstanding notes were first issued and authenticated
under the indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (1) of the definition of permitted
debt.
LIMITATION ON FOREIGN INDEBTEDNESS
We will not permit any of our restricted subsidiaries that are not
subsidiary guarantors to, directly or indirectly, incur any indebtedness
(including Acquired Indebtedness) other than indebtedness incurred pursuant to
clause (1) or (2) of the covenant described above under "--Incurrence of
Indebtedness and Issuance of Preferred Stock" unless:
(1) after giving effect to the incurrence of such indebtedness and the receipt
of the application of the proceeds thereof;
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(a) if, as a result of the incurrence of such indebtedness, such restricted
subsidiary will become subject to any restriction or limitation on the
payment of dividends or the making of other distributions,
(i) the Fixed Charge Coverage Ratio of restricted subsidiaries that are
not subsidiary guarantors (determined on a pro forma basis for the
last four fiscal quarters for which financial statements are
available at the date of determination) is greater than 2.5 to 1;
and
(ii) our Fixed Charge Coverage Ratio (determined on a pro forma basis
for our last four fiscal quarters for which financial statements
are available at the date of determination) is greater than 2.0 to
1; and
(b) in any other case, our Fixed Charge Coverage Ratio (determined on a pro
forma basis for our last four fiscal quarters for which financial
statements are available at the date of determination) is greater than
2.0 to 1; and
(2) no default or event of default shall have occurred and be continuing at the
time or as a consequence of the incurrence of such indebtedness.
This covenant will not prohibit the incurrence of indebtedness by a
restricted subsidiary that is not a subsidiary guarantor in an amount at any one
time outstanding that does not exceed $5.0 million; provided, that neither we
nor any subsidiary guarantor shall be obligated, directly or indirectly, to pay
principal, premium, interest or other amounts thereon or in respect thereof,
including by way of net worth requirements, equity keep wells or the like. In
the event that any indebtedness incurred pursuant to clause (1)(b) of the first
paragraph of this covenant is proposed to be amended, modified or otherwise
supplemented such that the payment of dividends or the making of other
distributions becomes subject in any manner to any restriction or limitation, we
will not permit the restricted subsidiary to so amend, modify or supplement such
indebtedness unless such indebtedness could be incurred pursuant to the terms of
clause (1)(a) of the foregoing paragraph.
All calculations required under the prior two paragraphs hereof shall be
made in a manner consistent with the calculations required under the covenant
described under "--Incurrence of Indebtedness and Issuance of Preferred Stock."
NO SENIOR SUBORDINATED DEBT
We will not incur, create, issue, assume, guarantee or otherwise become
liable for any indebtedness that is subordinate or junior in right of payment to
any of our senior debt and senior in any respect in right of payment to the
notes. No subsidiary guarantor will incur, create, issue, assume, guarantee or
otherwise become liable for any indebtedness that is subordinate or junior in
right of payment to the senior debt of such subsidiary guarantor and senior in
any respect in right of payment to such subsidiary guarantor's subsidiary
guaranty.
LIENS
We will not, and will not permit any of our restricted subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any lien of any
kind on any asset now owned or hereafter acquired, except permitted liens (as
defined below).
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DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
We will not, and will not permit any of our restricted subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any restricted
subsidiary to:
(1) pay dividends or make any other distributions on its capital stock to us or
any of our restricted subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any indebtedness owed
to us or any of our restricted subsidiaries;
(2) make loans or advances to us or any of our restricted subsidiaries; or
(3) transfer any of its properties or assets to us or any of our restricted
subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indenture;
(2) the indenture, the notes and the subsidiary guaranties;
(3) applicable law, regulation or order;
(4) indebtedness incurred by a restricted subsidiary that is not a subsidiary
guarantor in compliance with the provisions set forth under the caption
"--Limitation on Foreign Indebtedness."
(5) any instrument governing indebtedness or capital stock of a person acquired
by us or any of our restricted subsidiaries as in effect at the time of
such acquisition (except to the extent such indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance
or restriction is not applicable to any person, or the properties or assets
of any person, other than the person, or the property or assets of the
person, so acquired, PROVIDED that, in the case of indebtedness, such
indebtedness was permitted by the terms of the indenture to be incurred;
(6) customary non-assignment provisions in leases, licenses or similar
agreements entered into in the ordinary course of business and consistent
with past practices;
(7) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions on the property so acquired of the nature
described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a restricted subsidiary
that restricts distributions by that restricted subsidiary pending its sale
or other disposition;
(9) liens securing indebtedness that limit the right of the debtor to dispose
of the assets subject to such lien;
(10) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, asset sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary
course of business;
(11) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(12) any encumbrance or restriction on a Securitization Entity effected in
connection with a Qualified Securitization Transaction;
(13) indebtedness incurred after the date of the indenture in accordance with
the terms of the indenture; PROVIDED, that the restrictions contained in
the agreements governing such new indebtedness are, in the good faith
judgment of our board of directors, not materially less
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favorable, taken as a whole, to the holders of the notes than those
contained in the agreements governing indebtedness outstanding on the date
of the indenture;
(14) customary provisions in agreements with respect to Permitted Joint
Ventures; and
(15) any encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (1) through (14) above; PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of our board
of directors, no more restrictive with respect to such dividend and other
payment restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION OR SALE OF ASSETS
We may not, directly or indirectly, consolidate or merge with or into
another person (whether or not we are the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of our
properties or assets and the properties and assets of our restricted
subsidiaries taken as a whole, in one or more related transactions, to another
person; unless:
(1) either: (a) we are the surviving corporation; or (b) the person formed by or
surviving any such
consolidation or merger (if other than us) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
is a corporation, partnership, limited liability company or trust organized
or existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the person formed by or surviving any such consolidation or merger (if other
than us) or the person to which such sale, assignment, transfer, conveyance
or other disposition shall have been made assumes all our obligations of
under the notes, the indenture and the registration rights agreement
pursuant to agreements reasonably satisfactory to the Trustee;
(3) immediately after such transaction no default or event of default exists;
and
(4) we or the person formed by or surviving any such consolidation or merger (if
other than us), or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made will, on the date of such transaction
after giving pro forma effect thereto and any related financing transactions
as if the same had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock."
In addition, we may not, directly or indirectly, lease all or substantially
all of our properties or assets, in one or more related transactions, to any
other person. This "Merger, Consolidation or Sale of Assets" covenant will not
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among us and any of the subsidiary guarantors.
TRANSACTIONS WITH AFFILIATES
We will not, and will not permit any of our restricted subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
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advance or guarantee with, or for the benefit of, any affiliate, such
transactions being referred to in this prospectus as affiliate transactions,
unless:
(1) such affiliate transaction is on terms that are no less favorable to us or
the relevant restricted subsidiary than those that would have been obtained
in a comparable transaction by us or such restricted subsidiary with an
unrelated person; and
(2) we deliver to the Trustee:
(a) with respect to any affiliate transaction or series of related affiliate
transactions involving aggregate consideration in excess of $2.5 million,
a resolution of our board of directors set forth in an officers'
certificate certifying that such affiliate transaction complies with this
covenant and that such affiliate transaction has been approved by a
majority of the disinterested members of our board of directors.
(b) with respect to any affiliate transaction or series of related affiliate
transactions involving aggregate consideration in excess of $7.5 million,
an opinion issued by an accounting, appraisal or investment banking firm
of national standing that such affiliate transaction complies with this
covenant.
The following items shall not be deemed to be affiliate transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by us or any of our restricted
subsidiaries in the ordinary course of business and consistent with our
past practice or the past practice of any such restricted subsidiary;
(2) transactions between or among us and/or our restricted subsidiaries;
(3) transactions with a person that is our affiliate solely because we own an
equity interest in such person;
(4) payment of reasonable directors fees to persons who are not otherwise our
affiliates;
(5) sales of equity interests (other than Disqualified Stock) to our
affiliates;
(6) restricted payments that are permitted by the provisions of the indenture
described above under the caption "--Restricted Payments."
(7) providing indemnity to current or former officers, directors, employees or
consultants or those of any of our subsidiaries as determined in good faith
by our board of directors;
(8) the payment of customary management, consulting and advisory fees and
related expenses to Hidden Creek or its affiliates consistent with Hidden
Creek's past practices, including, without limitation, in connection with
acquisitions, divestitures or financings by us or any of our restricted
subsidiaries;
(9) our performance of obligations or those of any of our restricted
subsidiaries under the terms of any agreement to which we or any such
restricted subsidiary is a party as of the date of the indenture and which
is described above under the caption "Certain Relationships and Related
Transactions" and any similar agreements entered into after the date of the
indenture as such agreements may be amended or modified from time to time;
provided, however, that the existence of, or the performance by us or any
of our restricted subsidiaries of obligations under, any future amendment
to any such existing agreement or under any similar agreement entered into
after the date of the indenture shall be permitted by this clause to the
extent that the terms of any such amendment or similar agreement are not
more disadvantageous to the holders in any material respect than the terms
of the agreements in place on the date of the indenture;
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(10) the grant of stock options, restricted stock or similar rights to our
employees, and directors and consultants pursuant to plans approved by our
board of directors;
(11) transactions effected as part of a Qualified Securitization Transaction;
(12) loans or advances to employees or consultants in the ordinary course of
business and consistent with past practices, which are approved by a
majority of our board of directors in good faith; and
(13) transactions with customers, joint venture partners, clients, suppliers,
or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of
the indenture which are fair to us or our restricted subsidiaries, in the
reasonable determination of our board of directors.
ADDITIONAL SUBSIDIARY GUARANTIES
If we or any of our restricted subsidiaries acquires or creates another
domestic restricted subsidiary after the date of the indenture and the newly
acquired or created domestic restricted subsidiary becomes a guarantor of the
credit facilities, then that newly acquired or created domestic restricted
subsidiary must become a subsidiary guarantor and execute a supplemental
indenture and deliver an opinion of counsel to the Trustee within 10 business
days of the date on which it became a subsidiary guarantor under the credit
facilities.
We will not permit any restricted subsidiary that is not a subsidiary
guarantor, directly or indirectly, to guaranty or pledge any assets to secure
the payment of any of our other indebtedness or the indebtedness of any
subsidiary guarantor (other than such restricted subsidiary) unless it
simultaneously executes and delivers a supplemental indenture providing for the
guaranty of the payment of the notes by such restricted subsidiary, which
subsidiary guaranty shall be senior to or rank equally with such restricted
subsidiary's guaranty of or pledge to secure such other indebtedness.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
Our board of directors may designate any restricted subsidiary to be an
unrestricted subsidiary if that designation would not cause a default. If a
restricted subsidiary is designated as an unrestricted subsidiary, the aggregate
fair market value of all outstanding Investments owned by us and our restricted
subsidiaries in the subsidiary so designated will be deemed to be an Investment
made as of the time of such designation and will either reduce the amount
available for restricted payments under the first paragraph of the covenant
described above under the caption "--Restricted Payments" or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as we shall determine. That designation will only be
permitted if such Investment would be permitted at that time and if such
restricted subsidiary otherwise meets the definition of an unrestricted
subsidiary. Our board of directors may redesignate any unrestricted subsidiary
to be a restricted subsidiary if the redesignation would not cause a default.
BUSINESS ACTIVITIES
We and our restricted subsidiaries shall be at all times engaged primarily
in Permitted Businesses.
PAYMENTS FOR CONSENT
We will not, and will not permit any of our subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any holder of notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of the indenture or the notes unless such
consideration is offered to be paid and is paid to all holders of the notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
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REPORTS
So long as any notes are outstanding, we will furnish to the holders of
notes, whether or not required by the SEC, on or before the fifth day following
the date on which such reports are or would be due under the SEC's rules and
regulations:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if we were
required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report on the annual financial statements
by our certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on Form
8-K if we were required to file such reports.
The quarterly and annual financial information required by the preceding
paragraphs shall separately include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereof, of the
financial condition and results of operations of our non-guarantor subsidiaries.
In addition, following the consummation of the exchange offer contemplated
by the registration rights agreement, whether or not required by the SEC, we
will file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, we and the subsidiary
guarantors have agreed that, for so long as any notes remain outstanding, we
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an event of default:
(1) default for 30 days in the payment when due of interest on, or liquidated
damages with respect to, the notes whether or not prohibited by the
subordination provisions of the indenture;
(2) default in payment when due of the principal of, or premium, if any, on the
notes, whether or not prohibited by the subordination provisions of the
indenture;
(3) failure by us or any of our restricted subsidiaries to comply with the
provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets;"
(4) failure by us or any of our restricted subsidiaries for 60 days after notice
from the Trustee or holders of at least 25% of the outstanding principal
balance of the notes to comply with any of the other agreements in the
indenture;
(5) default under any mortgage, indenture or instrument under which there is
issued and outstanding any indebtedness for money borrowed by us or any of
our restricted subsidiaries (or the payment of which is guarantied by us or
any of our restricted subsidiaries) whether such indebtedness or guaranty
now exists, or is created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or premium, if
any, on such indebtedness prior to the expiration of the grace period
provided in such indebtedness on the date of such default, such default
being referred to in this prospectus as a payment default; or
(b) results in the acceleration of such indebtedness prior to its express
maturity,
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and, in each case, the principal amount of any such indebtedness, together with
the principal amount of any other such indebtedness under which there has been a
payment default or the maturity of which has been so accelerated, aggregates
$10.0 million or more;
(6) failure by us or any of our restricted subsidiaries to pay final judgments
aggregating in excess of $10.0 million, which judgments are not paid,
vacated, discharged, stayed or non-appealable for a period of 90 days, and
in the event such judgment is covered by insurance, an enforcement
proceeding has been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(7) except as permitted by the indenture, any subsidiary guaranty shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for
any reason to be in full force and effect or any subsidiary guarantor, or
any person acting on behalf of any subsidiary guarantor, shall deny or
disaffirm its obligations under its subsidiary guaranty; and
(8) certain events of bankruptcy or insolvency with respect to us or any
subsidiary or group of subsidiaries that, individually or in the aggregate,
would constitute a Significant Subsidiary.
In the case of an event of default arising from certain events of bankruptcy
or insolvency, with respect to us, any subsidiary that is a Significant
Subsidiary or any group of subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding notes will become due and payable
immediately without further action or notice. If any other event of default
occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
past due and payable immediately; provided, however, that so long as any
indebtedness permitted to be incurred under the indenture as part of the credit
facilities is outstanding, no such acceleration shall be effective until the
earlier of (i) five business days after the giving of written notice to us and
the administrative agent under the credit facilities of such acceleration or
(ii) acceleration of any such indebtedness under the credit facilities.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
notes notice of any continuing default or event of default (except a default or
event of default relating to the payment of principal or interest or liquidated
damages) if it determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
notes waive any existing default or event of default and its consequences under
the indenture except a continuing default or event of default in the payment of
interest or liquidated damages on, or the principal of, the notes.
We are required to deliver to the Trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any default or event of
default, we are required to deliver to the Trustee a statement specifying such
default or event of default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of us or any
subsidiary guarantor, as such, shall have any liability for any of our
obligations or of the subsidiary guarantors under the notes, the indenture or
the subsidiary guaranties or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each holder of notes by accepting a note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes and all obligations of the
subsidiary guarantors discharged with respect to their subsidiary guaranties,
such discharge being referred to in this prospectus as legal defeasance, except
for:
(1) the rights of holders of outstanding notes to receive payments in respect of
the principal of, or interest or premium and liquidated damages, if any, on
such notes when such payments are due from the trust referred to below;
(2) our obligations with respect to the notes concerning issuing temporary
notes, registration of notes, mutilated, destroyed, lost or stolen notes and
the maintenance of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and our
and the subsidiary guarantor's obligations in connection therewith; and
(4) the legal defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations and the obligations of the subsidiary guarantors released with
respect to certain covenants that are described in the indenture, such release
being referred to in this prospectus as covenant defeasance and thereafter any
omission to comply with those covenants shall not constitute a default or event
of default with respect to the notes. In the event covenant defeasance occurs,
certain events, not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events, described under "Events of Default" will
no longer constitute an event of default with respect to the notes.
In order to exercise either legal defeasance or covenant defeasance:
(1) we must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and liquidated
damages, if any, on the outstanding notes on the stated maturity or on the
applicable redemption date, as the case may be, and we must specify whether
the notes are being defeased to maturity or to a particular redemption date;
(2) in the case of legal defeasance, we shall have delivered to the Trustee an
opinion of counsel reasonably acceptable to the Trustee confirming that (a)
we have received from, or there has been published by, the Internal Revenue
Service a ruling or (b) since the date of the indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel shall confirm that,
the holders of the notes will not recognize income, gain or loss for federal
income tax purposes as a result of such legal defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such legal defeasance had not
occurred;
(3) in the case of covenant defeasance, we shall have delivered to the Trustee
an opinion of counsel reasonably acceptable to the Trustee confirming that
the holders of the notes will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had
not occurred;
(4) no default or event of default shall have occurred and be continuing either:
(a) on the date of such deposit (other than a default or event of default
resulting from the borrowing of funds to be applied to such deposit); or (b)
or insofar as events of default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
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(5) such legal defeasance or covenant defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than the indenture) to which we or any of our subsidiaries
is a party or by which we or any of our subsidiaries is bound;
(6) we must have delivered to the Trustee an opinion of counsel to the effect
that, assuming no intervening bankruptcy of us or any subsidiary guarantor
between the date of deposit and the 91st day following the deposit and
assuming that no holder is an insider of the Issuer under applicable
bankruptcy law, 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) we must deliver to the Trustee an officers' certificate stating that the
deposit was not made by us with the intent of preferring the holders of
notes over our other creditors with the intent of defeating, hindering,
delaying or defrauding our creditors or others; and
(8) we must deliver to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent relating to the legal
defeasance or the covenant defeasance have been complied with.
Notwithstanding the foregoing, the opinion of counsel required by clauses
(2) or (3) above need not be delivered if, at such time, all notes have been
irrevocably called for redemption in accordance with the terms of the indenture.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or alter
the provisions with respect to the redemption of the notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of holders");
(3) reduce the rate of or change the time for payment of interest on any note;
(4) waive a default or event of default in the payment of principal of, or
interest or premium, or liquidated damages, if any, on the notes (except a
rescission of acceleration of the notes by the holders of at least a
majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers of
past defaults or the rights of holders of notes to receive payments of
principal of, or interest or premium or liquidated damages, if any, on the
notes;
(7) waive a redemption payment with respect to any note (other than a payment
required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders");
(8) release any subsidiary guarantor from any of its obligations under its
subsidiary guaranty or the indenture, except in accordance with the terms of
the indenture; or
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(9) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the indenture
relating to subordination that adversely affects the rights of the holders of
the notes will require the consent of the holders of at least 75% in aggregate
principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any holder of notes,
we, the subsidiary guarantors and the Trustee may amend or supplement the
indenture or the notes:
(1) to cure any ambiguity, defect, error or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of the issuer's, or any subsidiary
guarantor's, obligations to holders of notes in the case of a merger or
consolidation or sale of all or substantially all of our, or any subsidiary
guarantor's, as the case may be, assets;
(4) to make any change that would provide any additional rights or benefits to
the holders of notes, including providing for additional subsidiary
guaranties, or that does not adversely affect the legal rights under the
indenture of any such holder; or
(5) to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated (except lost, stolen or destroyed
notes that have been replaced or paid and notes for whose payment money
has theretofore been deposited in trust and thereafter repaid to us) have
been delivered to the Trustee for cancellation; or
(b) all notes that have not been delivered to the Trustee for cancellation
have become due and payable by reason of the making of a notice of
redemption or otherwise or will become due and payable within one year
and we or any subsidiary guarantor has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for the
benefit of the holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest, to pay
and discharge the entire indebtedness on the notes not delivered to the
Trustee for cancellation for principal, premium and liquidated damages,
if any, and accrued interest to the date of maturity or redemption;
(2) no default or event of default shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which we or any subsidiary guarantor is a
party or by which we or any subsidiary guarantor is bound;
(3) we or any subsidiary guarantor has paid or caused to be paid all sums
payable by it under the indenture; and
(4) we have delivered irrevocable instructions to the Trustee under the
indenture to apply the deposited money toward the payment of the notes at
maturity or the redemption date, as the case may be.
In addition, we must deliver an officers' certificate to the Trustee stating
that all conditions precedent to satisfaction and discharge have been satisfied.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of French Automotive or any subsidiary
guarantor, the indenture limits its right to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue or
resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The indenture provides that in case an event of default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to J.L. French
Automotive Castings, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402,
Attention: Chief Financial Officer.
BOOK-ENTRY, DELIVERY AND FORM
The notes sold to qualified institutional buyers, as defined in Rule 144A
under the Securities Act, which are known as QIBs, initially will be in the form
of one or more registered global notes without interest coupons (collectively,
the "144A global notes"). Upon issuance, the 144A global notes will be deposited
with the Trustee, as custodian for DTC and registered in the name of DTC or its
nominee, in each case for credit to the accounts of DTC's direct and indirect
participants. In addition, a registered global note without coupons will be
established to accommodate subsequent transfers to institutional accredited
investors, as defined in Rule 501(a)(1)(2)(3) or (7) of Regulation D under the
Securities Act (an "IAI note" and, together with the 144A global notes, the
"U.S. global notes"). The notes being offered and sold in offshore transactions
in reliance on Regulation S, if any, initially will be in the form of one or
more temporary, registered, global book entry notes without interest coupons
(the "Regulation S temporary global notes"). The Regulation S temporary global
notes will be deposited with the Trustee, as custodian for DTC, in New York, New
York, and registered in the name of a nominee of DTC for credit to the accounts
of indirect participants at the Euroclear System and Cedelbank. During the
40-day period commencing on the day after the later of the offering date and the
date of the indenture, beneficial interests in the Regulation S temporary global
notes may be held only through Euroclear or CEDEL, and, pursuant to DTC's
procedures, indirect participants that hold a beneficial interest in the
Regulation S temporary global notes will not be able to transfer such interest
to a person that takes delivery thereof in the form of an interest in the U.S.
global notes. Within a reasonable time after the expiration of the 40-day
restricted period, the Regulation S temporary global notes will be exchanged for
one or more permanent global notes (the "Regulation S permanent global notes,"
and collectively with the Regulation S temporary global notes, the "Regulation S
global notes") upon delivery to DTC of certification of compliance with the
transfer restrictions applicable to the notes and pursuant to Regulation S as
provided in the indenture. After the 40-day restricted period (1) beneficial
interests in the Regulation S permanent global notes may be transferred to a
person that takes delivery in the form of an interest in the U.S. global notes
and (2) beneficial interests in the U.S. global notes may be transferred to a
person that takes delivery in the form of an interest in the Regulation S
permanent global notes; provided, in each case, that the certification
requirements described below are complied with. See "--Exchanges Between
Regulation
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S Notes and Rule 144A Notes." All registered global notes are referred to herein
collectively as "global notes."
The global notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the global notes may be exchanged
for notes in certificated form in certain limited circumstances. See "--Exchange
of Global Notes for Certificated Notes."
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear
and CEDEL are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them. We take no responsibility for these
operations and procedures and urge investors to contact the system or their
participants directly to discuss these matters.
DTC is a limited-purpose trust company created to hold securities for its
participating organizations and to facilitate the clearance and settlement of
transactions in those securities between participants through electronic
book-entry changes in accounts of its participants. The participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly. Persons who are not participants may beneficially own securities
held by or on behalf of DTC only through the participants or the indirect
participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
participants and indirect participants.
Investors in the U.S. global notes who are participants in DTC's system may
hold their interests therein directly through DTC. Investors in the U.S. global
notes who are not participants may hold their interests therein indirectly
through organizations, including Euroclear and CEDEL, which are participants in
such system. Investors in the Regulation S global notes must initially hold
their interests therein through Euroclear or CEDEL, if they are participants in
such systems, or indirectly through organizations that are participants in such
systems. After the expiration of the 40-day restricted period, but not earlier,
investors may also hold interests in the Regulation S global notes through
participants in the DTC system other than Euroclear and CEDEL. Euroclear and
CEDEL will hold interests in the Regulation S global notes on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective depositories, which are Morgan Guaranty Trust
Company of New York, Brussels office, as operator of Euroclear, and Citibank,
N.A., as operator of CEDEL.
All interests in a global note, including those held through Euroclear or
CEDEL, may be subject to the procedures and requirements of DTC. Those interests
held through Euroclear or CEDEL may also be subject to the procedures and
requirements of such systems. 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 beneficial interests in a global note to
such persons will be limited to that extent. Because DTC can act only on behalf
of participants, which in turn act on behalf of indirect participants, the
ability of a person having beneficial interests in a global note to pledge such
interests to persons that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
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Payments in respect of the principal of, and interest and premium and
liquidated damages, if any, on a global note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered holder
under the indenture. Under the terms of the indenture, we and the Trustee will
treat the persons in whose names the notes, including the global notes, are
registered as the owners thereof for the purpose of receiving payments and for
all other purposes. Consequently, neither we, the Trustee nor any of our
respective agents has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any participant's or indirect participant's
records relating to or payments made on account of beneficial ownership
interest in the global notes or for maintaining, supervising or reviewing
any of DTC's records or any participant's or indirect participant's records
relating to the beneficial ownership interests in the global notes; or
(2) any other matter relating to the actions and practices of DTC or any of its
participants or indirect participants.
DTC's current practice, upon receipt of any payment in respect of securities
such as the notes, including principal and interest, is to credit the accounts
of the relevant participants with the payment on the payment date unless DTC has
reason to believe it will not receive payment on such payment date. Each
relevant participant is credited with an amount proportionate to its beneficial
ownership of an interest in the principal amount of the relevant security as
shown on the records of DTC.
Payments by the participants and the indirect participants to the beneficial
owners of notes will be governed by standing instructions and customary
practices and will be the responsibility of the participants or the indirect
participants and will not be the responsibility of DTC, the Trustee or us.
Neither we nor the Trustee will be liable for any delay by DTC or any of its
participants in identifying the beneficial owners of the notes, and we and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and CEDEL participants, interest
in the global notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. See"--Same Day Settlement and
Payment."
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and CEDEL will be effected in accordance with their
respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
outstanding notes described herein, cross-market transfers between the
participants in DTC, on the one hand, and Euroclear or CEDEL participants, on
the other hand, will be effected through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and CEDEL participants may
not deliver instructions directly to the depositories for Euroclear or CEDEL.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account DTC has credited the interests in the global
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notes and only in respect of such portion of the aggregate principal amount of
the notes as to which such participant or participants has or have given such
direction. However, if there is an event of default under the notes, DTC
reserves the right to exchange the global notes for legended notes in
certificated form, and to distribute such notes to its participants.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to
facilitate transfers of interests in the U.S. global notes and the Regulation S
global notes among participants in DTC, Euroclear and CEDEL, they are under no
obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither we nor the Trustee nor any of
our respective agents will have any responsibility for the performance by DTC,
Euroclear or CEDEL or their respective participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A global note is exchangeable for definitive notes in registered
certificated form if:
(1) DTC (a) notifies us that it is unwilling or unable to continue as depositary
for the global notes and we fail to appoint a successor depositary or (b)
has ceased to be a clearing agency registered under the Exchange Act;
(2) we, at our option, notify the Trustee in writing that we elect to cause the
issuance of the certificated notes; or
(3) there shall have occurred and be continuing a default or event of default
with respect to the Notes.
In addition, beneficial interests in a global note may be exchanged for
certificated notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the indenture. In all cases, certificated notes
delivered in exchange for any global note or beneficial interests in global
notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary, in accordance with its customary
procedures.
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated notes may not be exchanged for beneficial interests in any
global note unless the transferor first delivers to the Trustee a written
certificate (in the form provided in the indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes.
EXCHANGES BETWEEN REGULATION S NOTES AND RULE 144A NOTES
Prior to the expiration of the 40-day restricted period, beneficial
interests in the Regulation S global note may be exchanged for beneficial
interests in the Rule 144A global note only if:
(1) such exchange occurs in connection with a transfer of the notes pursuant to
Rule 144A; and
(2) the transferor first delivers to the Trustee a written certificate (in the
form provided in the indenture) to the effect that the notes are being
transferred to a Person:
(a) who the transferor reasonably believes to be a QIB;
(b) purchasing for its own account or the account of a QIB in a transaction
meeting the requirements of Rule 144A; and
(c) in accordance with all applicable securities laws of the states of the
United States and other jurisdictions.
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Beneficial interest in a Rule 144A global note may be transferred to a
Person who takes delivery in the form of an interest in the Regulation S global
note, whether before or after the expiration of the 40-day restricted period,
only if the transferor first delivers to the Trustee a written certificate in
the form provided in the indenture to the effect that such transfer is being
made in accordance with Rule 903 or 904 of Regulation S or Rule 144, if
available, and that, if such transfer occurs prior to the expiration of the
40-day restricted period, the interest transferred will be held immediately
thereafter through Euroclear or CEDEL.
Transfers involving exchanges of beneficial interests between the Regulation
S global notes and the Rule 144A global notes will be effected in DTC by means
of an instruction originated by the Trustee through the DTC Deposit/Withdraw at
Custodian system. Accordingly, in connection with any such transfer, appropriate
adjustments will be made to reflect a decrease in the principal amount of the
Regulation S global note and a corresponding increase in the principal amount of
the Rule 144A global note or vice versa, as applicable. Any beneficial interest
in one of the global notes that is transferred to a person who takes delivery in
the form of an interest in the other global note will, upon transfer, cease to
be an interest in such global note and will become an interest in the other
global note and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interest in such
other global note for so long as it remains such an interest. The policies and
practices of DTC may prohibit transfers of beneficial interests in the
Regulation S global note prior to the expiration of the 40-day restricted
period.
SAME DAY SETTLEMENT AND PAYMENT
The indenture requires that payments in respect of the notes represented by
the global notes (including principal, premium, if any, interest and liquidated
damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the global note holder. We will make all payments of
principal, interest and premium and liquidated damages, if any, with respect to
certificated notes by wire transfer of immediately available funds to the
accounts specified by the holders thereof or, if no such account is specified,
by mailing a check to each such holder's registered address. The notes
represented by the global notes are expected to be eligible to trade in the
PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such notes will, therefore, be
required by DTC to be settled in immediately available funds. We expect that
secondary trading in any certificated notes will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a global note from a participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or CEDEL participant, during the securities settlement processing day
(which must be a business day for Euroclear and CEDEL) immediately following the
settlement date of DTC. DTC has advised us that cash received in Euroclear or
CEDEL as a result of sales of interests in a global note by or through a
Euroclear or CEDEL participant to a participant in DTC will be received with
value on the settlement date of DTC but will be available in the relevant
Euroclear or CEDEL cash account only as of the business day for Euroclear or
CEDEL following DTC's settlement date.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
registration rights agreement. It does not restate that agreement in its
entirety. We urge you to read the registration rights agreement in its entirety
because it, and not this description, defines your registration rights as a
holder of these notes. See "--Additional Information."
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We, the subsidiary guarantors and the initial purchasers entered into the
registration rights agreement. Pursuant to the registration rights agreement, we
and the subsidiary guarantors agreed to file with the SEC the exchange offer
registration statement on the appropriate form under the Securities Act with
respect to the exchange notes. Upon the effectiveness of the exchange offer
registration statement, we and the subsidiary guarantors will offer to the
holders of Transfer Restricted Securities (as defined below) pursuant to the
exchange offer who are able to make certain representations the opportunity to
exchange their outstanding notes for exchange notes.
If:
(1) we and the subsidiary guarantors are not
(a) required to file the exchange offer registration statement; or
(b) permitted to consummate the exchange offer because the exchange offer is
not permitted by applicable law or SEC policy; or
(2) any holder of transfer restricted securities (as defined below) notifies us
prior to the 20th day following consummation of the exchange offer that:
(a) it is prohibited by law or SEC policy from participating in the exchange
offer; or
(b) that it may not resell the exchange notes acquired by it in the exchange
offer to the public without delivering a prospectus and the prospectus
contained in the exchange offer registration statement is not appropriate
or available for such resales; or
(c) that it is a broker-dealer and owns notes acquired directly from us or
an affiliate of ours,
we and the subsidiary guarantors will file with the SEC a shelf registration
statement to cover resales of the notes by the holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the shelf registration statement.
We and the subsidiary guarantors will use our reasonable best efforts to
cause the applicable registration statement to be declared effective as promptly
as possible by the SEC.
For purposes of the preceding, transfer restricted securities means each
note until:
(1) the date on which such note has been exchanged by a Person other than a
broker-dealer for an exchange note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of a note
for an exchange note, the date on which such exchange note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in the exchange offer
registration statement;
(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with the shelf registration
statement; or
(4) the date on which such note is distributed to the public pursuant to Rule
144 under the Securities Act.
The registration rights agreement provides:
(1) we and the subsidiary guarantors will use our reasonable best efforts to
file an exchange offer registration statement with the SEC on or prior to 90
days after the closing of initial offering of the outstanding notes;
(2) we and the subsidiary guarantors will use our reasonable best efforts to
have the exchange offer registration statement declared effective by the SEC
on or prior to 180 days after the closing of the initial offering of the
outstanding note;
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(3) unless the exchange offer would not be permitted by applicable law or SEC
policy, we and the subsidiary guarantors will
(a) commence the exchange offer; and
(b) use our reasonable best efforts to issue on or prior to 30 business
days, or longer, if required by the federal securities laws, after the
date on which the exchange offer registration statement was declared
effective by the SEC, exchange notes in exchange for all outstanding
notes tendered prior thereto in the exchange offer; and
(4) if obligated to file the shelf registration statement, we and the subsidiary
guarantors will use our reasonable best efforts to file the shelf
registration statement with the SEC on or prior to 30 days after such filing
obligation arises and to cause the shelf registration statement to be
declared effective by the SEC on or prior to 90 days after such filing is
made, but in no event earlier than the date on which our obligation with
respect to the exchange offer registration statement would have arisen.
If:
(1) we and the subsidiary guarantors fail to file any of the registration
statements required by the registration rights agreement on or before the
date specified for such filing; or
(2) any of such registration statements is not declared effective by the SEC on
or prior to the date specified for such effectiveness; or
(3) we and the subsidiary guarantors fail to consummate the exchange offer
within 30 business days of the date specified for the effectiveness of the
exchange offer registration statement; or
(4) the shelf registration statement or the exchange offer registration
statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of transfer restricted securities during
the periods specified in the registration rights agreement, each such event
referred to in clauses (1) through (4) being referred to in this prospectus
as a registration default,
then we and the subsidiary guarantors will pay liquidated damages to each
holder of notes, with respect to the first 90-day period immediately following
the occurrence of the first registration default in an amount equal to $.05 per
week per $1,000 principal amount of notes held by such holder.
The amount of the liquidated damages will increase by an additional $.05 per
week per $1,000 principal amount of notes with respect to each subsequent 90-day
period until all registration defaults have been cured, up to a maximum amount
of liquidated damages for all registration defaults of $.50 per week per $1,000
principal amount of notes. All accrued liquidated damages will be paid by the us
the subsidiary guarantors on each Damages Payment Date to the global note holder
by wire transfer of immediately available funds or by federal funds check and to
holders of certificated notes by wire transfer to the accounts specified by them
or by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all registration defaults, the accrual of
liquidated damages will cease.
Holders of notes will be required to make certain representations to us, as
described in the registration rights agreement, in order to participate in the
exchange offer and will be required to deliver certain 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 notes included in the shelf
registration statement and benefit from the provisions regarding liquidated
damages set forth above. By acquiring transfer restricted securities, a holder
will be deemed to have agreed to indemnify us and the subsidiary guarantors
against certain losses arising out of information furnished by such holder in
writing for inclusion in any shelf registration statement. Holders of notes will
also be required to suspend their use
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of the prospectus included in the shelf registration statement under certain
circumstances upon receipt of written notice to that effect from us.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified person:
(1) indebtedness of any other person existing at the time such other person
is merged with or into or became a subsidiary of such specified person,
whether or not such indebtedness is incurred in connection with, or in
contemplation of, such other person merging with or into, or becoming a
subsidiary of, such specified person; and
(2) indebtedness secured by a lien encumbering any asset acquired by such
specified person.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control,"
as used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
agreement or otherwise; PROVIDED that beneficial ownership of 10% or more of the
voting stock of a person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales or leases in the ordinary course of business
consistent with past practices; PROVIDED that the sale, conveyance or
other disposition of all or substantially all of our assets and the
assets of our restricted subsidiaries taken as a whole will be governed
by the provisions of the indenture described above under the caption
"--Repurchase at the Option of Holders--Change of Control" and/or the
provisions described above under the caption "--Certain Covenants--
Merger, Consolidation or Sale of Assets" and not by the provisions of the
Asset Sale covenant; and
(2) the issuance of equity interests by any of our restricted subsidiaries
or the sale of equity interests in any of our restricted subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $2.5 million;
(2) a transfer of assets between or among us and our restricted
subsidiaries,
(3) an issuance of equity interests by a restricted subsidiary to us or to
another restricted subsidiary;
(4) the sale, lease or license of equipment, inventory, accounts receivable
or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a restricted payment or Permitted Investment that is permitted by the
covenant described above under the caption "--Certain
Covenants--Restricted Payments";
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(7) the licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property in the
ordinary course of business and which do not materially interfere with
our business and our subsidiaries' businesses;
(8) sales of receivables and related assets (including contract rights) of
the type specified in the definition of "QUALIFIED SECURITIZATION
TRANSACTION" to a Securitization Entity for the fair market value
thereof;
(9) an exchange or series of exchanges of long-term assets; provided (i)
that the long-term assets received by us or any of our restricted
subsidiaries have a fair market value, as determined by us, at least
equal to the fair market value of the assets for which they were
exchanged and are used or useful in a Permitted Business and (ii) that
the aggregate fair market value, as determined above, of such long-term
assets, taken together with the fair market value of all other long-term
assets received pursuant to this clause (9) less the amount of Net
Proceeds previously realized in cash from the disposition of such earlier
received long-term assets is, at the time of receipt of such long-term
assets, with the fair market value of each long-term asset being measured
at the time received and without giving effect to subsequent changes in
value, less than 10.0% of Total Assets; and
(10) any exchange of like property pursuant to 1031(g) of the Internal
Revenue Code of 1986, as amended, for use in a Permitted Business.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value of the obligation of the lessee for
net rental payments during the remaining term of the lease included in such sale
and leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"BORROWING BASE" means, as of any date, an amount equal to:
(1) 85% of the face amount of all accounts receivable owned by us and our
restricted subsidiaries as of the most recent month end for which such
information is available that were not more than 90 days past due; PLUS
(2) 50% of the book value of all inventory owned by us and our restricted
subsidiaries as of the most recent month end for which such information
is available.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
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(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"CASH EQUIVALENTS" means:
(1) with respect to United States dollars, (a) United States dollars, (b)
securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (c) certificates of deposit, time
deposits, overnight bank deposits, bankers acceptances and repurchase
agreements of any commercial bank which has, or whose obligations are
guaranteed by an affiliated commercial bank which has capital and surplus
in excess of $500,000,000 having maturities of one year or less from the
date of acquisition, (d) commercial paper of an issuer rated at least A-1
by Standard & Poor's Corporation or P-1 by Moody's Investors Service,
Inc., or carrying an equivalent rating by a nationally recognized rating
agency if both of the two named rating agencies cease publishing ratings
of investments, (e) money market accounts or funds with or issued by
Qualified Issuers, (f) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause
(b) above entered into with any bank meeting the qualifications specified
in clause (c) above, and (g) demand deposit accounts maintained in the
ordinary course of business with any Lender or with any bank that is not
a Lender not in excess of $100,000 in the aggregate on deposit with any
such bank; "QUALIFIED ISSUER" means any commercial bank (a) which has, or
whose obligations are guaranteed by an affiliated commercial bank which
has, capital and surplus in excess of $500,000,000 and (b) the
outstanding short-term debt securities of which are rated at least A-1 by
Standard & Poor's Corporation or at least P-1 by Moody's Investors
Service, Inc., or carry an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing
ratings of investments;
(2) with respect to pounds sterling, (a) pounds sterling, (b) any credit
balances, realizable within three (3) months, on any bank or other
deposit, savings or current account held in the United Kingdom (or any
other jurisdiction from which cash is readily remittable to the United
Kingdom); (c) cash in hand; (d) gilt edged securities; (e) Sterling
commercial paper maturing not more than twelve (12) months from the date
of issue and rated A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc.; (f) any deposit with or acceptance maturing not
more than one (1) year after issue accepted by an institution authorized
under the Banking Act 1987 or a Bank; and (g) Sterling denominated debt
securities having not more than one (1) year until final maturity and
listed on a recognized stock exchange and rated at least AA by Standard &
Poor's Corporation or Aa by Moody's Investors Service, Inc.; and
(3) with respect to currencies of nations in which we or our restricted
subsidiaries do business, (a) the currency of such nations and (b) any
credit balances realizable within three (3) months, on any bank or other
deposit, savings or current account held in such nations (or any other
jurisdiction from which cash is readily remittable to such nation).
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of our properties or
assets and the properties and assets of our restricted subsidiaries taken
as a whole to any "person", as that term is used in Section 13(d)(3) of
the Exchange Act, other than a Principal or a Related Party of a
Principal;
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(2) the adoption by us of a plan relating to the liquidation or dissolution;
(3) the consummation of any transaction, including, without limitation, any
merger or consolidation, the result of which is that any "person", as
defined above, other than the Principals and their Related Parties,
becomes the Beneficial Owner, directly or indirectly, of more than 50% of
our voting stock, measured by voting power rather than number of shares;
(4) the first day on which a majority of the members of our board of
directors are not Continuing Directors; or
(5) we consolidate with, or merge with or into, any person, or any person
consolidates with, or merges with or into, us, in any such event pursuant
to a transaction in which any of our outstanding voting stock or such
other person is converted into or exchanged for cash, securities or other
property, other than any such transaction where our voting stock
outstanding immediately prior to such transaction is converted into or
exchanged for voting stock, other than Disqualified Stock, of the
surviving or transferee person constituting a majority of the outstanding
shares of such voting stock of such surviving or transferee person,
immediately after giving effect to such issuance.
"CONSOLIDATED CASH FLOW" means, with respect to any specified person for any
period, the Consolidated Net Income of such person for such period PLUS:
(1) an amount equal to any extraordinary loss plus any net loss realized by
such person or any of its restricted subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; PLUS
(2) provision for taxes based on income or profits of such person and its
restricted subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; PLUS
(3) consolidated interest expense of such person and its restricted
subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the extent
that any such expense was deducted in computing such Consolidated Net
Income; PLUS
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such person and
its restricted subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; MINUS
(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, any of our restricted subsidiaries shall be added to Consolidated Net Income
to compute our Consolidated Cash Flow only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to us by
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such restricted subsidiary without prior governmental approval that has not been
obtained, and without direct or indirect restriction pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that restricted
subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any specified person for
any period, the aggregate of the Net Income of such person and its restricted
subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any person that is not a restricted
subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified person or a wholly owned
restricted subsidiary thereof;
(2) the Net Income of any restricted subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that restricted subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, 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;
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded;
(5) any fees, expenses and costs relating to the recapitalization, including
any fees and expenses incurred in connection with the subordinated credit
facility, any compensation expense incurred in connection with the
cancellation of stock options and expenses related to early
extinguishment of debt, shall be excluded; and
(6) the Net Income (but not loss) of any unrestricted subsidiary shall be
excluded, whether or not distributed to the specified person or one of
its subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
our board of directors who:
(1) was a member of our board of directors on the date of the indenture; or
(2) was nominated for election or elected to our board of directors with the
approval of a majority of the Continuing Directors who were members of
the board at the time of such nomination or election.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of April
21, 1999, by and among French Automotive, Automotive Components Investments
Limited, Morris Ashby Limited, Bank of America National Trust and Savings
Association, as syndication agent, Chase Manhattan International Limited and The
Chase Manhattan Bank, as administrative agent, and the other lenders signatory
thereto, providing for up to $370 million of revolving credit borrowings and
term loans, including any related notes, guaranties, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced, in whole or in
part, or increased (provided that such increase in borrowings is permitted by
the covenant described under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock") from time to time.
"CREDIT FACILITIES" means, one or more debt facilities, including, without
limitation, the Credit Agreement, or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing, including through the sale of
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receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables, or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an event of default.
"DESIGNATED NONCASH CONSIDERATION" means any non-cash consideration (other
than non-cash consideration that would constitute a Restricted Investment)
received by us or one of our restricted subsidiaries in connection with an Asset
Disposition that is designated as Designated Noncash Consideration pursuant to
an officers' certificate executed by our principal executive officer and our
principal financial officer or such restricted subsidiary principal executive
officer and principal financial officer. Such officers' certificate shall state
the basis of such valuation, which shall be a report of a nationally recognized
investment banking firm with respect to the receipt in one or a series of
related transactions of Designated Noncash Consideration with a fair market
value in excess of $5.0 million.
"DESIGNATED PREFERRED STOCK" means preferred stock that is designated as
Designated Preferred Stock, pursuant to an officers' certificate executed by our
principal executive officer and principal financial officer on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause 3(b) of the first paragraph of the covenant described under the
caption "--Restricted Payments."
"DISQUALIFIED STOCK" means any capital stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
capital stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require us to repurchase such capital stock
upon the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the we may
not repurchase or redeem any such capital stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described above
under the caption "--Certain Covenants--restricted Payments."
"DOMESTIC RESTRICTED SUBSIDIARY" means any domestic subsidiary that is a
restricted subsidiary.
"EQUITY INTERESTS" means capital stock and all warrants, options or other
rights to acquire capital stock, but excluding any debt security that is
convertible into, or exchangeable for, capital stock.
"EQUITY OFFERING" means an offering by us of shares of our common stock,
however designated and whether voting or non-voting and any and all rights,
warrants or options to acquire such common stock.
"EXISTING INDEBTEDNESS" means our indebtedness and the indebtedness of our
restricted subsidiaries, other than Indebtedness under the Credit Agreement, in
existence on the date of the indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any specified person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such person and its restricted
subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net of the effect
of all payments made or received pursuant to Hedging Obligations; PLUS
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(2) the consolidated interest of such person and its restricted subsidiaries
that was capitalized during such period; PLUS
(3) any interest expense on indebtedness of another person that is
guarantied by such person or any of its restricted subsidiaries or
secured by a lien on assets of such person or any of its restricted
subsidiaries, whether or not such guaranty or lien is called upon; PLUS
(4) the product of (a) all dividends, whether paid or accrued and whether or
not in cash, on any series of preferred stock of such person or any of
its restricted subsidiaries, other than dividends on equity interests
payable solely in equity interests of French Automotive, other than
Disqualified Stock, or to French Automotive or a restricted subsidiary of
French Automotive, times (b) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such person, expressed as
a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified person for
any period, the ratio of the Consolidated Cash Flow of such person for such
period to the Fixed Charges of such person for such period. In the event that
the specified person or any of its restricted subsidiaries incurs, assumes,
guaranties, repays, repurchases or redeems any indebtedness, other than ordinary
working capital borrowings, or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guaranty, repayment,
repurchase or redemption of indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified person or any of its
restricted subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior
to the Calculation Date shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities
Act (giving effect to any Pro Forma Cost Savings), but without giving
effect to clause (3) of the proviso set forth in the definition of
Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior
to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations
of the specified person or any of its restricted subsidiaries following
the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect as of the date of this indenture.
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"GUARANTY" means a guaranty other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any specified person, the
obligations of such person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and foreign exchange hedge agreements; and
(2) other agreements or arrangements designed to protect such person against
fluctuations in interest rates and foreign exchange rates.
"INDEBTEDNESS" means, with respect to any specified person, any indebtedness
of such person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items, other than letters of credit
and Hedging Obligations, would appear as a liability upon a balance sheet of the
specified person prepared in accordance with GAAP. In addition, the term
indebtedness includes all indebtedness of others secured by a lien on any asset
of the specified person, whether or not such indebtedness is assumed by the
specified person, and, to the extent not otherwise included, the guaranty by the
specified person of any indebtedness of any other person.
The amount of any indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other indebtedness.
"INVESTMENTS" means, with respect to any person, all direct or indirect
investments by such person in other persons, including affiliates, in the forms
of loans, including guaranties or other obligations, advances or capital
contributions, excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business, purchases or other
acquisitions for consideration of indebtedness, equity interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If we or any of
our restricted subsidiaries sell or otherwise dispose of any equity interests of
any of our direct or indirect restricted subsidiaries such that, after giving
effect to any such sale or disposition, such person is no longer one of our
restricted subsidiaries, we shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
equity interests of such restricted subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "--Certain Covenants--Restricted Payments."
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"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
"LIQUIDATED DAMAGES" means all liquidated damages owing pursuant to the
registration rights agreement.
"NET INCOME" means, with respect to any specified person, the net income
(loss) of such person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such
gain or loss, realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such person or any of its restricted
subsidiaries or the extinguishment of any Indebtedness of such person or
any of its restricted subsidiaries; and
(2) any extraordinary gain or loss, together with any related provision for
taxes on such extraordinary gain or loss.
"NET PROCEEDS" means the aggregate cash proceeds received by us or any of
our restricted subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, sales commissions, any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof, in each case, after taking
into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
indebtedness, other than our Credit Agreement, secured by a lien on the asset or
assets that were the subject of such Asset Sale in each case and any reserves
for adjustment in respect of the sale price of such asset or assets or for any
indemnification obligations assumed in connection with the sale of such asset or
assets, established in accordance with GAAP; provided, however, that the
reversal of any such reserve shall be deemed a receipt of Net Proceeds by us in
the amount and on the date of such reversal.
"NON-RECOURSE DEBT" means indebtedness:
(1) as to which neither we nor any of our restricted subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement
or instrument that would constitute indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) constitutes the
lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an unrestricted
subsidiary) would permit upon notice, lapse of time or both any holder of
any of our other indebtedness or of any of our restricted subsidiaries'
other indebtedness to declare a default on such other indebtedness or
cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to our stock or assets or to the stock or assets of any
of our restricted subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any indebtedness.
"PERMITTED BUSINESS" means the business conducted by us and our restricted
subsidiaries on the date hereof and businesses reasonably related thereto or
supportive thereof.
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"PERMITTED INVESTMENTS" means:
(1) any Investment in us or in one of our restricted subsidiaries;
(2) any Investment in Cash Equivalents;
(3) any Investment by us or any of our subsidiaries in a person, if as a
result of such Investment:
(a) such person becomes a restricted subsidiary of French Automotive; or
(b) such person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, French Automotive or a restricted subsidiary of
French Automotive;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "--Repurchase at the Option
of Holders--Asset Sales";
(5) any acquisition of assets to the extent acquired in exchange for the
issuance of our equity interests, other than Disqualified Stock;
(6) Hedging Obligations;
(7) other Investments in any person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (7) that are at the time
outstanding not to exceed the greater of (a) $35.0 million and (b) 5% of
Total Assets;
(8) Investments existing on the date of the indenture and any amendment,
modification, restatement, supplement, extension, renewal, refunding,
replacement, refinancing, in whole or in part, thereof;
(9) Investments in Permitted Joint Ventures in an amount at any one time
outstanding not to exceed the greater of 3% of Total Assets or $10.0
million;
(10) Investments in unrestricted subsidiaries in an amount at any one time
outstanding not to exceed the greater of 3% of Total Assets or $10.0
million;
(11) Investments in securities of trade creditors or customers received
pursuant to a plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(12) any Investment by us or one of our subsidiaries in a Securitization
Entity or any Investment by a Securitization Entity in any other person
in connection with a Qualified Securitization Transaction; PROVIDED that
any Investment in a Securitization Entity is in the form of a purchase
money note or any equity interest;
(13) extensions of trade credit in the ordinary course of business; and
(14) loans or advances to employees or consultants in the ordinary course of
business and consistent with past practices, which are approved by the
majority of our board of directors in good faith.
"PERMITTED JOINT VENTURE" means an entity characterized as a joint venture,
however structured, engaged in a Permitted Business and in which we or a
restricted subsidiary (a) owns at least 25% of the ownership interest or (b) has
the right to receive at least 25% of the profits or distributions; provided that
such joint venture is not a subsidiary.
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"PERMITTED LIENS" means:
(1) liens of French Automotive and any subsidiary guarantor securing
indebtedness and other Obligations under credit facilities that were
senior debt that was permitted by the terms of the indenture to be
incurred;
(2) liens in favor of French Automotive or the subsidiary guarantors;
(3) liens on property of a person existing at the time such person is merged
with or into or consolidated with French Automotive or any subsidiary of
French Automotive; PROVIDED that such liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to
any assets other than those of the person merged into or consolidated
with French Automotive or the subsidiary;
(4) liens on property existing at the time of acquisition thereof by French
Automotive or any subsidiary of French Automotive, PROVIDED that such
liens were in existence prior to the contemplation of such acquisition;
(5) liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) liens to secure indebtedness, including Capital Lease Obligations,
permitted by clause (4) of the second paragraph of the covenant
described under "--Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such indebtedness;
(7) liens existing on the date of the indenture;
(8) liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) liens (not otherwise permitted hereunder) with respect to obligations
that do not exceed $10.0 million at any one time outstanding;
(10) liens on assets of unrestricted subsidiaries that secure Non-Recourse
Debt of unrestricted subsidiaries;
(11) liens on assets of a restricted subsidiary that is not a subsidiary
guarantor that secure indebtedness, including Acquired Indebtedness,
incurred in compliance with the covenant described under "--Limitation
on Foreign Indebtedness" or indebtedness incurred in compliance with
clauses (1) or (2) of the covenant described under "--Incurrence of
Indebtedness and Issuance of Preferred Stock;"
(12) judgment liens not giving rise to an event of default;
(13) liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of French
Automotive or any of our restricted subsidiaries, including rights of
offset and set-off;
(14) liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customer duties in connection with the
importation of goods;
(15) leases or subleases granted to others that do not materially interfere
with the ordinary course of our business and the business of our
restricted subsidiaries;
(16) liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, including any lien securing letters of credit
issued in the ordinary course of business consistent with past practice
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in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations, exclusive of obligations for the payment of borrowed money;
(17) liens imposed by law, such as carriers', warehouseman's and mechanics'
liens in each case for sums not yet due or being contested in good
faith;
(18) liens securing indebtedness or other obligations of a restricted
subsidiary owing to us or any subsidiary guarantor to the extent such
indebtedness is permitted to be incurred in accordance with the covenant
described under "--Incurrence of Indebtedness and Issuance of Preferred
Stock";
(19) liens securing Hedging Obligations as long as the related indebtedness
is, and is permitted to be under the indentures to be secured by a lien
on the same property securing the Hedging Obligations;
(20) liens on specific items of inventory or other goods and proceeds of any
person securing such person's obligations with respect of bankers'
acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(21) liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by us and our restricted
subsidiaries in the ordinary course of business; and
(22) liens on assets transferred to a Securitization Entity or on assets of a
Securitization Entity, in either case incurred in connection with a
Qualified Securitization Transaction.
"PERMITTED REFINANCING INDEBTEDNESS" means any of our indebtedness or any
indebtedness of our restricted subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other indebtedness of us or any of our restricted subsidiaries, other
than intercompany indebtedness; PROVIDED that:
(1) the principal amount or accreted value, if applicable, of such Permitted
Refinancing Indebtedness does not exceed the principal amount or accreted
value, if applicable, of the indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded plus all accrued interest thereon
and the amount of all expenses and premiums incurred in connection
therewith;
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(3) if the indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment
to, the notes on terms at least as favorable to the holders of notes as
those contained in the documentation governing the indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(4) if such refinanced indebtedness was indebtedness of French Automotive or
a subsidiary guarantor, such indebtedness is incurred either by French
Automotive or by a subsidiary guarantor.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
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"PRINCIPALS" means Onex DHC LLC and J2R Corporation.
"PRO FORMA COST SAVINGS" means, with respect to any period, the reduction in
costs that occurred during the four-quarter period or after the end of the
four-quarter period and on or prior to the Transaction Date that were (i)
directly attributable to an asset acquisition and calculated on a basis that is
consistent with Article 11 of Regulation S-X under the Securities Act as in
effect on the date of the indenture or (ii) implemented by the business that was
the subject of any such asset acquisition within six months of the date of the
asset acquisition, that are supportable and quantifiable by the underlying
accounting records of such business, and are described, as provided below, in an
officer's certificate, as if, in the case of each of clause (i) and (ii), all
such reductions in costs had been effected as of the beginning of such period.
Pro Forma Cost Savings described in clause (ii) above shall be set forth in
reasonable specificity in a certificate delivered to the Trustee from our chief
financial officer and, in the case of Pro Forma Cost Savings in excess of $5.0
million per four-quarter period, such certificate shall be accompanied by a
supporting opinion from an accounting firm of national standing.
"PRODUCTIVE ASSETS" means assets that are used or useful in, or capital
stock of any person engaged in, a Permitted Business.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of
transactions pursuant to which we or any of our restricted subsidiaries may
sell, convey or otherwise transfer to (a) a Securitization Entity, in the case
of a transfer by us or any of our restricted subsidiaries, and (b) any other
person, in case of a transfer by a Securitization Entity, or may grant a
security interest in, any accounts receivable whether now existing or arising or
acquired in the future, of us or any of our restricted subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable and other assets, including contract rights, and all
guarantees or other obligations in respect to such accounts receivable, proceeds
of such accounts receivable and other assets, including contract rights, which
are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable all of the foregoing for the purpose of providing
working capital financing on terms that are more favorable to us and our
restricted subsidiary than would otherwise be available at that time.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned subsidiary, or
immediate family member (in the case of an individual) of any Principal;
or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or persons beneficially holding an 80% or
more controlling interest of which consist of any one or more Principals
and/or such other persons referred to in the immediately preceding clause
(1).
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a person means any subsidiary of the referent
person that is not an unrestricted subsidiary.
"SECURITIZATION ENTITY" means a wholly owned subsidiary of French
Automotive, or another person in which French Automotive or any subsidiary of
French Automotive makes an Investment and to which French Automotive or any
subsidiary of French Automotive transfers accounts receivable or equipment and
related assets, that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by our board of
directors, as provided below, as a Securitization Entity (a) no portion of the
indebtedness or any other obligations, contingent or otherwise, of which (i) is
guaranteed by the French Automotive or any other restricted subsidiary,
excluding guarantees of Obligations other than the principal of, and interest
on, indebtedness pursuant to Standard Securitization Undertakings, (ii) is
recourse to or obligates French Automotive or any
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restricted subsidiary in any way other than pursuant to Standard Securitization
Undertakings, (b) with which neither French Automotive nor any restricted
subsidiary has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to French Automotive or such restricted
subsidiary than those that might be obtained at the time from persons that are
not our affiliates, other than fees payable in the ordinary course of business
in connection with servicing receivables of such entity, and (c) to which
neither French Automotive nor any restricted subsidiary has any obligation to
maintain or preserve such entity's financial condition or cause such entity to
achieve certain levels of operating results. Any such designation by our board
of directors shall be evidenced to each of the Trustees by filing with the
Trustees a certified copy of the resolution of the board of directors giving
effect to such designation and an officers' certificate certifying that such
designation complied with the foregoing conditions.
"SIGNIFICANT SUBSIDIARY" means any subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by us or any of our subsidiaries that are
reasonably customary in an accounts receivable securitization transaction.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBORDINATED CREDIT FACILITY" means the Bridge Loan Agreement dated as of
April 21, 1999 by and among us, the subsidiary guarantors, the lenders named
therein, NationsBanc Montgomery Securities LLC and Chase Securities Inc., as
arrangers, NationsBridge L.L.C. and The Chase Manhattan Bank, as co-agents, and
NationsBridge L.L.C., as administrative agent.
"SUBSIDIARY" means, with respect to any specified person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of capital stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such person or one or more of
the other subsidiaries of that person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such person or a subsidiary of such person or (b) the
only general partners of which are such person or one or more
subsidiaries of such person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means:
(1) each of our domestic subsidiaries existing on the date of the indenture;
and
(2) any other subsidiary that executes a subsidiary guaranty in accordance
with the provisions of the indenture;
and their respective successors and assigns.
"TOTAL ASSETS" means the total assets of us and our restricted subsidiaries
on a consolidated basis determined in accordance with GAAP, as shown on the most
recently available consolidated balance sheet of us and our restricted
subsidiaries.
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"UNRESTRICTED SUBSIDIARY" means any subsidiaries that is designated by our
board of directors as an unrestricted subsidiaries pursuant to a board
resolution, but only to the extent that such subsidiary:
(1) has no indebtedness other than Non-Recourse Debt:
(2) is not party to any agreement, contract, arrangement or understanding
with us or any of our restricted subsidiaries unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to us or such restricted subsidiary than those that might be
obtained at the time from persons who are not our affiliates;
(3) is a person with respect to which neither we nor any of our restricted
subsidiaries has any direct or indirect obligation (a) to subscribe for
additional equity interests or (b) to maintain or preserve such person's
financial condition or to cause such person to achieve any specified
levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any of our indebtedness or any indebtedness of any of our
restricted subsidiaries.
Any designation of subsidiaries as an unrestricted subsidiary shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
board resolution giving effect to such designation and an officers' certificate
certifying that such designation complied with the preceding conditions and was
permitted by the covenant described above under the caption "--Certain
Covenants--Restricted Payments." If, at any time, any unrestricted subsidiary
would fail to meet the preceding requirements as an unrestricted subsidiary, it
shall thereafter cease to be an unrestricted subsidiary for purposes of the
indenture and any indebtedness of such subsidiary shall be deemed to be incurred
by one of our restricted subsidiaries as of such date and, if such indebtedness
is not permitted to be incurred as of such date under the covenant described
under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," we shall be in default of such covenant. Our board of
directors may at any time designate any unrestricted subsidiary to be a
restricted subsidiary; PROVIDED that such designation shall be deemed to be an
incurrence of indebtedness by a restricted subsidiary of any outstanding
indebtedness of such unrestricted subsidiary and such designation shall only be
permitted if (1) such indebtedness is permitted under the covenant described
under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
default or event of default would be in existence following such designation.
"VOTING STOCK" of any person as of any date means the capital stock of such
person that is at the time entitled to vote in the election of the board of
directors of such person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified person means a
restricted subsidiary of such person all of the outstanding capital stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such person and/or by one or more wholly owned
restricted subsidiaries of such person.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of certain material U.S. Federal income tax
consequences of the acquisition, ownership and disposition of the notes. Unless
otherwise stated, this discussion is limited to the tax consequences to those
persons who are original owners of the notes and who hold such notes as capital
assets. The discussion does not purport to address specific tax consequences
that may be relevant to particular persons (including, for example, financial
institutions, broker-dealers, insurance companies, tax-exempt organizations and
persons in special situations, such as those who hold notes as part of a
straddle, hedge, conversion transaction or other integrated investment). In
addition, this discussion does not address U.S. federal alternative minimum tax
consequences or any aspect of state, local or foreign taxation. This discussion
is based upon the Internal Revenue Code of 1986, as amended, the Treasury
Department regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with
retroactive effect. We will treat the notes as indebtedness for federal income
tax purposes, and the following discussion assumes that such treatment is
correct.
For purposes of this discussion, a "U.S. holder" is a holder of a note who
is a United States citizen or resident, a corporation or partnership created or
organized in or under the laws of the United States or any state, an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, or a trust if a United States court exercises primary supervision over
its administration and one or more United States persons have the authority to
control all of its substantial decisions. A "non-U.S. holder" is a holder of a
note who is not a U.S. holder.
PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM
OF ACQUIRING, OWNING AND DISPOSING OF THE NOTES, AS WELL AS THE APPLICATION OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
TAX CONSEQUENCES TO U.S. HOLDERS
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of the notes, a U.S. holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less a portion allocable to any accrued and
unpaid interest, which will be taxable as ordinary income) and the U.S. holder's
adjusted tax basis in the notes. A U.S. holder's adjusted tax basis in the notes
generally will be the U.S. holder's cost therefor, less any principal payments
received by such holder.
Gain or loss recognized by a U.S. holder on the sale, exchange or retirement
of the notes will be capital gain or loss. The gain or loss will be long-term
capital gain or loss if the notes have been held by the U.S. holder for more
than twelve months. Long-term capital gain is subject to a maximum federal tax
rate of 20%. The deductibility of capital losses by U.S. holders is subject to
limitation.
EXCHANGE OFFER
A U.S. holder will not recognize any taxable gain or loss on the exchange of
the notes for exchange notes pursuant to the exchange offer, and a U.S. holder's
tax basis and holding period in the exchange notes will be the same as in the
outstanding notes.
TAXATION OF INTEREST
Interest paid on the notes will be includible in the income of a U.S. holder
in accordance with the U.S. holder's regular method of tax accounting. A U.S.
holder may be entitled to treat interest income on the notes as investment
income for purposes of computing certain limitations concerning the
deductibility of investment interest expense.
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In the event of a change of control, a holder of a note will have the right
to require us to purchase such note at a price equal to 101% of the principal
amount thereof. The Treasury Regulations provide that the right of a holder of a
note to require redemption of such note upon the occurrence of a change of
control will not affect the yield or maturity date of the note if, based on all
the facts and circumstances as of the issue date, it is significantly more
likely than not that a change of control giving rise to the redemption right
will not occur. We believe that the redemption provisions of the notes will not
affect the computation of the yield to maturity of the notes and intend to
report in a manner consistent with this belief.
We may redeem the notes at any time on or after June 1, 2004, and in certain
circumstances, may redeem a portion of the notes at any time prior to June 1,
2002. Under the Treasury Regulations, we are deemed to exercise any option to
redeem if the exercise of such option would lower the yield of the debt
instrument. We believe that it will not be treated as having exercised an option
to redeem under these rules and intend to report in a manner consistent with
this belief.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Any capital gain a non-U.S. holder recognizes on the sale, exchange,
retirement or other taxable disposition of a note will be exempt from U.S.
federal income and withholding tax, provided that (1) the gain is not
effectively connected with the non-U.S. holder's conduct of a trade or business
within the United States, and (2) in the case of a non-U.S. holder that is an
individual, the non-U.S. holder is not present in the United States for 183 days
or more during the taxable year.
TAXATION OF INTEREST
A non-U.S. holder generally will not be subject to U.S. federal income or
withholding tax on interest paid on the notes so long as such interest is not
effectively connected with the non-U.S. holder's conduct of a trade or business
within the United States, and the non-U.S. holder (1) does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of French Automotive, (2) is not a "controlled foreign corporation"
with respect to which French Automotive is a "related person" within the meaning
of the Code, and (3) satisfies the requirements of Sections 871(h) or 881(c) of
the Code, as set forth below under "OWNER STATEMENT REQUIREMENT." If the
foregoing conditions (1) - (3) are not satisfied, then interest paid on the
notes will be subject to U.S. withholding tax at a rate of 30%, unless such rate
is reduced or eliminated pursuant to an applicable tax treaty.
EFFECTIVELY CONNECTED INCOME
If the interest, gain or other income a non-U.S. holder recognized on a note
is effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States, the non-U.S. holder (although exempt from the
withholding tax previously discussed if an appropriate statement is furnished)
generally will be subject to U.S. federal income tax on the interest, gain or
other income at regular federal income tax rates. In addition, if the non-U.S.
holder is a corporation, it may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable tax treaty.
FEDERAL ESTATE TAXES
A note held by an individual who at the time of death is not a citizen or
resident of the United States will not be subject to United States federal
estate tax as a result of such individual's death, provided that the individual
does not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock entitled to vote and that the interest accrued
on such notes was
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not effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business and that holds a note on behalf of such owner files a statement with
us or our agent to the effect that the beneficial owner is not a United States
person in order to avoid withholding of United States federal income tax. Under
current regulations, this requirement will be satisfied if we or our agent
receives (1) a statement (an "Owner Statement") from the beneficial owner of a
note in which such owner certifies, under penalties of perjury, that such owner
is not a United States person and provides such owner's name and address, or (2)
a statement from the financial institution holding the note on behalf of the
beneficial owner in which the financial institution certifies, under penalties
of perjury, that it has received the Owner Statement together with a copy of the
Owner Statement. The beneficial owner must inform us or our agent (or, in the
case of a statement described in clause (2) of the immediately preceding
sentence, the financial institution) within 30 days of any change in information
on the Owner Statement. The Internal Revenue Service has amended the transition
period relating to recently issued Treasury Regulations governing backup
withholding and information reporting requirements. Withholding certificates or
statements that are valid on December 31, 1999, may be treated as valid until
the earlier of their expiration or December 31, 2000. Certificates or statements
received under the currently effective rules will fail to be effective after
December 31, 2000.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, where required, report to the holders of notes and the Internal
Revenue Service the amount of any interest paid on the notes in each calendar
year and the amounts of tax withheld, if any, with respect to such payments. A
noncorporate U.S. holder may be subject to information reporting and to backup
withholding at a rate of 31% with respect to payments of principal and interest
made on a note, or on proceeds of the disposition of a note before maturity,
unless such U.S. holder provides a correct taxpayer identification number or
proof of an applicable exemption, and otherwise complies with applicable
requirements of the information reporting and backup withholding rules.
In the case of payments of interest to non-U.S. holders, current Treasury
Regulations provide that the 31% backup withholding tax and certain information
reporting requirements will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or an
exemption has otherwise been established, provided that neither we nor our
payment agent has actual knowledge that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied. Under
current Treasury Regulations, these information reporting and backup withholding
requirements will apply, however, to the gross proceeds paid to a non-U.S.
holder on the disposition of the notes by or through a United States office of a
United States or foreign broker, unless the non-U.S. holder otherwise
establishes an exemption. Information reporting requirements, but not backup
withholding, will also apply to payment of the proceeds of a disposition of the
notes by or through a foreign office of a United States broker or foreign
brokers with certain types of relationships to the United States unless such
broker has documentary evidence in its file that the holder of the notes is not
a United States person and such broker has no actual knowledge to the contrary,
or the holder establishes an exemption. Neither information reporting nor backup
withholding generally will apply to payment of the proceeds of a disposition of
the notes by or through a foreign office of a foreign broker not subject to the
preceding sentence.
The Treasury Department has released new Treasury Regulations governing the
backup withholding and information reporting requirements. The new regulations
would not generally alter the
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treatment of a non-U.S. holder who furnishes an Owner Statement to the payor.
The new regulations may change certain procedures applicable to the foreign
office of a United States broker or foreign brokers with certain types of
relationships to the United States. The new regulations are generally effective
for payments made after December 31, 2000. Non U.S. holders should consult their
own tax advisors with respect to the impact, if any, of the new final
regulations.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the holder's United
States federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.
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 such broker-dealers in
connection with resales of exchange notes received in exchange for outstanding
notes where such outstanding notes were acquired as a result of market-making
activities or other trading activities. We have agreed that for a period of one
year 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.
We will not receive any proceeds from any sales of the exchange notes by
such broker-dealers. Exchange notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes. Any
broker-dealer that resells the exchange notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
underwriter within the meaning of the Securities Act and any profit on any such
resale of exchange notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the Securities Act.
For a period of one year after the expiration date of the exchange offer 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.
Prior to the exchange offer, there has not been any public market for the
outstanding notes. The outstanding notes have not been registered under the
Securities Act and will be subject to restrictions on transferability to the
extent that they are not exchanged for exchange notes by holders who are
entitled to participate in this exchange offer. The holders of outstanding
notes, other than any such holder that is an affiliate of ours within the
meaning of Rule 405 under the Securities Act, who are not eligible to
participate in the exchange offer are entitled to certain registration rights,
and we are required to file a shelf registration statement with respect to such
outstanding notes. The exchange notes will constitute a new issue of securities
with no established trading market. We do not intend to list the exchange notes
on any national securities exchange or to seek the admission thereof to trading
in the National Association of Securities Dealers Automated Quotation System. In
addition, such market making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the exchange
offer and the pendency of the shelf registration statement.
112
<PAGE>
Accordingly, no assurance can be given that an active public or other market
will develop for the exchange notes or as to the liquidity of the trading market
for the exchange notes. If a trading market does not develop or is not
maintained, holders of the exchange notes may experience difficulty in reselling
the exchange notes or may be unable to sell them at all. If a market for the
exchange notes develops, any such market may be discontinued at any time.
LEGAL MATTERS
The validity of the exchange notes offered hereby and certain other legal
matters will be passed upon on behalf of French Automotive by Kirkland & Ellis
(a partnership that includes professional corporations), Chicago, Illinois.
Certain partners of Kirkland & Ellis are partners in Randolph Street Partners
II, which owns 190 shares of class D-1 common stock.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of J.L. French Automotive Castings,
Inc. and Subsidiaries as of December 31, 1998 and 1997 and for the years ended
December 31, 1998 and 1997 and the nine months ended December 31, 1996 included
in this prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports.
The consolidated financial statements of Morris Ashby plc as of March 31,
1997 and 1996 and for each of the two years in the period ended March 31, 1997
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
AVAILABLE INFORMATION
French Automotive has filed with the SEC a registration statement on Form
S-4 pursuant to the Securities Act and the rules and regulations promulgated
thereunder covering the exchange offer contemplated by this prospectus. This
prospectus does not contain all the information set forth in the registration
statement. For further information with respect to French Automotive and the
exchange offer, see the registration statement.
We are not currently subject to the periodic reporting and other
informational requirements of the Exchange Act. We have agreed that, whether or
not it is required to do so by the rules and regulations of the SEC, for so long
as any of the notes remain outstanding, it will furnish to the holders of the
notes and file with the SEC, copies of the financial and other information that
would be contained in the annual reports and quarterly reports that we would be
required to file with the SEC if we were subject to such requirements of the
Exchange Act. We will also make such reports available to prospective purchasers
of the exchange notes, and to securities analysts and broker-dealers upon their
request.
113
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Pro Forma Statements of Operations for the year ended December
31, 1998, the six months ended June 30, 1999 and 1998 give effect to: (1) the
recapitalization and the related financing transactions, including borrowings
under the senior credit facility and subordinated financing facility and (2) the
initial offering of the outstanding notes and the application of the net
proceeds therefrom, as if such transactions had occurred at the beginning of the
period.
The unaudited pro forma financial data presented in this prospectus are
based on the assumptions and adjustments described in the accompanying notes.
The Unaudited Pro Forma Statements of Operations do not purport to represent
what our results of operations actually would have been if the events described
above had occurred as of the dates indicated or what our results will be for any
future periods. The Unaudited Pro Forma Financial Statements are based upon
assumptions and adjustments that we believe are reasonable. You should read the
Unaudited Pro Forma Financial Statements and the accompanying notes in
conjunction with the historical financial statements, including the related
notes, included elsewhere in this prospectus.
114
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL(1) ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Sales.................................................................. $ 295,690 $ -- $ 295,690
Cost of sales.......................................................... 221,040 -- 221,040
---------- ----------- -----------
Gross profit......................................................... 74,650 -- 74,650
Selling, general and administrative expenses........................... 16,802 -- 16,802
Amortization of intangible assets...................................... 16,861 1,174(2) 18,035
---------- ----------- -----------
Operating income..................................................... 40,987 (1,174) 39,813
Interest expense....................................................... 20,533 22,270(3) 42,803
---------- ----------- -----------
Income (loss) before income taxes.................................... 20,454 (23,444) (2,990)
Provision (benefit) for income taxes................................... 8,299 (9,495)(4) (1,196)
---------- ----------- -----------
Income (loss) from continuing operations............................. $ 12,155 $ (13,949) $ (1,794)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
115
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Sales.................................................................. $ 165,689 $ -- $ 165,689
Cost of sales.......................................................... 123,406 -- 123,406
---------- ----------- -----------
Gross profit......................................................... 42,283 -- 42,283
Selling, general and administrative expenses........................... 10,228 -- 10,228
Recapitalization expenses.............................................. 21,151 (21,151)(5) --
Amortization of intangible assets...................................... 5,505 392(2) 5,897
---------- ----------- -----------
Operating income..................................................... 5,399 20,759 26,158
Interest expense....................................................... 13,823 7,579(3) 21,402
---------- ----------- -----------
Income (loss) before income taxes.................................... (8,424) 13,180 4,756
Provision (benefit) for income taxes................................... (3,369) 5,271(4) 1,902
---------- ----------- -----------
Income from continuing operations.................................... $ (5,055) $ 7,909 $ 2,854
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
116
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Sales.................................................................. $ 145,563 $ -- $ 145,563
Cost of sales.......................................................... 108,467 -- 108,467
---------- ----------- -----------
Gross profit......................................................... 37,096 -- 37,096
Selling, general and administrative expenses........................... 8,882 -- 8,882
Amortization of intangible assets...................................... 8,484 588(2) 9,072
---------- ----------- -----------
Operating income..................................................... 19,730 (588) 19,142
Interest expense....................................................... 8,844 12,558(3) 21,402
---------- ----------- -----------
Income (loss) before income taxes.................................... 10,886 (13,146) (2,260)
Provision (benefit) for income taxes................................... 4,376 (5,279)(4) (903)
---------- ----------- -----------
Income (loss) from continuing operations............................. $ 6,510 $ (7,867) $ (1,357)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
117
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(In thousands)
(1) Represents the results of operations of French Automotive for the year ended
December 31, 1998, including the results of operations of Morris Ashby and
Ansola from their respective dates of acquisition. The results of operations
of Morris Ashby and Ansola prior to their respective dates of acquisition
have not been included because such results are not material to French
Automotive's results of operations taken as a whole.
(2) Represents the net increase in amortization of other intangible assets
arising from amortization of fees related to the senior credit facility and
costs associated with the initial offering of the outstanding notes, net of
amortization of debt issue costs related to the former credit facility:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS SIX MONTHS
DECEMBER 31, ENDED JUNE 30, ENDED JUNE 30,
1998 1999 1998
------------- ----------------- -----------------
<S> <C> <C> <C>
Senior credit facility..................... $ 1,111 $ 371 $ 556
Initial offering of the outstanding
notes.................................... 720 240 360
Debt issue costs related to former credit
facility................................. (657) (219) (328)
------ ----- -----
Net increase............................. $ 1,174 $ 392 $ 588
------ ----- -----
------ ----- -----
</TABLE>
(3) Represents the change in interest expense arising from:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS SIX MONTHS
DECEMBER 31, ENDED JUNE 30, ENDED JUNE 30,
1998 1999 1998
------------ ---------------- ----------------
<S> <C> <C> <C>
Interest expense on tranche A term loan.... $ 8,138 $ 4,069 $ 4,069
Interest expense on tranche B term loan.... 12,000 6,000 6,000
Interest expense on notes offered hereby... 20,125 10,063 10,063
Interest expense on other senior
indebtedness............................. 2,540 1,270 1,270
------------ -------- -------
42,803 21,402 21,402
Net interest expense previously recorded by
French Automotive........................ (20,533) (13,823) (8,844)
------------ -------- -------
Net increase............................. $ 22,270 $ 7,579 $ 12,558
------------ -------- -------
------------ -------- -------
</TABLE>
(4) Adjusts income taxes on a pro forma basis to reflect French Automotive's
estimated effective tax rate.
(5) Represents an elimination of non-recurring expenses incurred pursuant to the
recapitalization.
118
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of December 31, 1998 and 1997............................................. F-3
Consolidated Statements of Operations for the Years Ended December 31, 1998 and 1997 and for the Nine
Months Ended December 31, 1996......................................................................... F-4
Consolidated Statements of Stockholders' Investment and Comprehensive Income for the Years Ended December
31, 1998 and 1997 and for the Nine Months Ended December 31, 1996...................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 and for the Nine
Months Ended December 31, 1996......................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-7
Condensed Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998.............. F-26
Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 1999 and 1998
(unaudited)............................................................................................ F-29
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998
(unaudited)............................................................................................ F-30
Notes to Condensed Consolidated Financial Statements (unaudited)......................................... F-31
MORRIS ASHBY PLC
Auditors' Report......................................................................................... F-39
Consolidated Profit and Loss Account for the Years Ended March 31, 1997 and 1996......................... F-40
Balance Sheets as at March 31, 1997 and 1996............................................................. F-41
Cash Flow Statement for the Years Ended March 31, 1997 and 1996.......................................... F-42
Notes to the Accounts.................................................................................... F-43
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To J. L. French Automotive Castings, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of J. L. French
Automotive Castings, Inc. and Subsidiaries as of December 31, 1998 and 1997 and
the related consolidated statements of operations, stockholders' investment and
comprehensive income and cash flows for the years ended December 31, 1998 and
1997 and for the nine months ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of J. L. French
Automotive Castings, Inc. and Subsidiaries as of December 31, 1998 and 1997 and
the results of their operations and their cash flows for the years ended
December 31, 1998 and 1997 and for the nine months ended December 31, 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
April 30, 1999 (except with respect to
the matter discussed in Note 13,
as to which the date is May 25, 1999)
F-2
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................................ $ 4,128 $ 14,438
Accounts receivable, less reserve for doubtful accounts of $1,353 and $553............... 55,242 18,529
Inventories.............................................................................. 17,077 7,422
Customer tooling-in-progress............................................................. 8,013 5,992
Other current assets..................................................................... 2,029 1,713
--------- ---------
Total current assets................................................................... 86,489 48,094
PROPERTY, PLANT AND EQUIPMENT, net......................................................... 147,505 66,371
INTANGIBLE AND OTHER ASSETS, net of accumulated amortization of $56,233 and $39,372........ 170,799 120,737
--------- ---------
Total assets........................................................................... $ 404,793 $ 235,202
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable......................................................................... $ 27,814 $ 5,131
Accrued liabilities...................................................................... 23,329 6,899
Current portion of long-term debt........................................................ 13,113 12,170
--------- ---------
Total current liabilities.............................................................. 64,256 24,200
LONG-TERM DEBT, excluding current portion.................................................. 198,467 122,221
OTHER NONCURRENT LIABILITIES............................................................... 5,165 --
--------- ---------
Total liabilities...................................................................... 267,888 146,421
COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)
CONVERTIBLE REDEEMABLE SERIES A PREFERRED STOCK............................................ 12,217 11,974
CONVERTIBLE REDEEMABLE SERIES B PREFERRED STOCK............................................ -- --
STOCKHOLDERS' INVESTMENT:
Common stock, Class A; par value $0.0001; 300,000 shares authorized; 60,492.73 and
66,960.34 shares issued and outstanding................................................ -- --
Common stock, Class B; par value $0.0001; 75,000 shares authorized; 16,016.36 and
2,326.86 shares issued and outstanding................................................. -- --
Common stock, Class C; par value $0.0001; 50,000 shares authorized; 2,651.05 and 258.54
shares issued and outstanding.......................................................... -- --
Common stock, Class D; par value $0.0001; 25,000 shares authorized; 294.56 and 0 shares
issued and outstanding................................................................. -- --
Additional paid-in capital............................................................... 109,034 72,640
Retained earnings........................................................................ 14,224 4,167
Accumulated other comprehensive income--foreign currency translation adjustment.......... 1,430 --
--------- ---------
Total stockholders' investment......................................................... 124,688 76,807
--------- ---------
Total liabilities and stockholders' investment......................................... $ 404,793 $ 235,202
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31 NINE MONTHS
---------------------- ENDED
1998 1997 DECEMBER 31, 1996
---------- ---------- -----------------
<S> <C> <C> <C>
SALES................................................................. $ 295,690 $ 169,510 $ 106,941
COST OF SALES......................................................... 221,040 116,522 75,697
---------- ---------- --------
Gross profit...................................................... 74,650 52,988 31,244
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.......................... 16,802 5,649 3,359
AMORTIZATION OF INTANGIBLE ASSETS..................................... 16,861 20,680 18,692
---------- ---------- --------
Operating income.................................................. 40,987 26,659 9,193
INTEREST EXPENSE, net................................................. 20,533 13,981 11,973
---------- ---------- --------
Income (loss) before income taxes and extraordinary loss.......... 20,454 12,678 (2,780)
PROVISION (BENEFIT) FOR INCOME TAXES.................................. 8,299 4,954 (1,126)
---------- ---------- --------
Income (loss) before extraordinary loss........................... 12,155 7,724 (1,654)
EXTRAORDINARY LOSS--WRITE-OFF OF UNAMORTIZED DEBT ISSUANCE COSTS, net
of income tax benefit of $515....................................... 805 -- --
---------- ---------- --------
NET INCOME (LOSS)..................................................... $ 11,350 $ 7,724 $ (1,654)
---------- ---------- --------
---------- ---------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCKS
------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ ----------------------- ---------
SHARES AMOUNT SHARES AMOUNT SHARES
----------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INITIAL CAPITALIZATION:
Issuance of common stock................................ 64,960.34 $ -- 2,326.86 $ -- 258.54
Capital component of convertible redeemable Series A
preferred stock....................................... -- -- -- -- --
----------- ----- ---------- ----- ---------
64,960.34 -- 2,326.86 -- 258.54
Sale of Class A common stock, $1,000 per share.......... 2,000 -- -- -- --
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- --
Dividends declared for convertible redeemable Series A
preferred stock, $523 per share....................... -- -- -- -- --
Comprehensive income--
Net loss.............................................. -- -- -- -- --
----------- ----- ---------- ----- ---------
BALANCE, December 31, 1996................................ 66,960.34 -- 2,326.86 -- 258.54
Comprehensive income--
Net income............................................ -- -- -- -- --
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- --
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- -- -- -- --
----------- ----- ---------- ----- ---------
BALANCE, December 31, 1997................................ 66,960.34 -- 2,326.86 -- 258.54
Comprehensive income--
Net income............................................ -- -- -- -- --
Foreign currency translation adjustment............... -- -- -- -- --
Total comprehensive income............................
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- --
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- -- -- -- --
Conversion of Class A to Class B........................ (13,944.85) -- 13,944.85 -- --
Conversion of Class B to Class C........................ -- -- (2,326.86) -- 2,326.86
Conversion of Class C to Class D........................ -- -- -- -- (258.54)
Sale of common stocks at $3,672.89 per share............ 7,477.24 -- 2,071.51 -- 324.19
----------- ----- ---------- ----- ---------
BALANCE, December 31, 1998................................ 60,492.73 $ -- 16,016.36 $ -- 2,651.05
----------- ----- ---------- ----- ---------
----------- ----- ---------- ----- ---------
<CAPTION>
CLASS D ADDITIONAL
------------------------ PAID-IN RETAINED
AMOUNT SHARES AMOUNT CAPITAL EARNINGS
----------- ----------- ----------- ----------- -----------
<S> <C> <C>
INITIAL CAPITALIZATION:
Issuance of common stock................................ $ -- -- $ -- $ 67,546 $ --
Capital component of convertible redeemable Series A
preferred stock....................................... -- -- -- 3,396 --
----- ----------- ----- ----------- -----------
-- -- -- 70,942 --
Sale of Class A common stock, $1,000 per share.......... -- -- -- 2,000 --
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- (152)
Dividends declared for convertible redeemable Series A
preferred stock, $523 per share....................... -- -- -- (302) (483)
Comprehensive income--
Net loss.............................................. -- -- -- -- (1,654)
----- ----------- ----- ----------- -----------
BALANCE, December 31, 1996................................ -- -- -- 72,640 (2,289)
Comprehensive income--
Net income............................................ -- -- -- -- 7,724
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- (218)
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- -- -- -- (1,050)
----- ----------- ----- ----------- -----------
BALANCE, December 31, 1997................................ -- -- -- 72,640 4,167
Comprehensive income--
Net income............................................ -- -- -- -- 11,350
Foreign currency translation adjustment............... -- -- -- -- --
Total comprehensive income............................
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- -- -- -- (243)
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- -- -- -- (1,050)
Conversion of Class A to Class B........................ -- -- -- -- --
Conversion of Class B to Class C........................ -- -- -- -- --
Conversion of Class C to Class D........................ -- 258.54 -- -- --
Sale of common stocks at $3,672.89 per share............ -- 36.02 -- 36,394 --
----- ----------- ----- ----------- -----------
BALANCE, December 31, 1998................................ $ -- 294.56 $ -- $ 109,034 $ 14,224
----- ----------- ----- ----------- -----------
----- ----------- ----- ----------- -----------
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME TOTAL
--------------- ---------
INITIAL CAPITALIZATION:
Issuance of common stock................................ $ -- $ 67,546
Capital component of convertible redeemable Series A
preferred stock....................................... -- 3,396
------ ---------
-- 70,942
Sale of Class A common stock, $1,000 per share.......... -- 2,000
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- (152)
Dividends declared for convertible redeemable Series A
preferred stock, $523 per share....................... -- (785)
Comprehensive income--
Net loss.............................................. -- (1,654)
------ ---------
BALANCE, December 31, 1996................................ -- 70,351
Comprehensive income--
Net income............................................ -- 7,724
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- (218)
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- (1,050)
------ ---------
BALANCE, December 31, 1997................................ -- 76,807
Comprehensive income--
Net income............................................
Foreign currency translation adjustment............... 1,430
Total comprehensive income............................ 12,780
Accretion of convertible redeemable Series A preferred
stock to redemption value............................. -- (243)
Dividends declared for convertible redeemable Series A
preferred stock, $700 per share....................... -- (1,050)
Conversion of Class A to Class B........................ -- --
Conversion of Class B to Class C........................ -- --
Conversion of Class C to Class D........................ -- --
Sale of common stocks at $3,672.89 per share............ -- 36,394
------ ---------
BALANCE, December 31, 1998................................ $ 1,430 $ 124,688
------ ---------
------ ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
NINE MONTHS
----------------------- ENDED
1998 1997 DECEMBER 31, 1996
----------- ---------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)................................................... $ 11,350 $ 7,724 $ (1,654)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities--
Depreciation and amortization..................................... 36,037 31,037 25,880
Subordinated notes discount accretion............................. 469 437 250
Deferred income taxes............................................. 1,100 (610) (3,743)
Extraordinary loss................................................ 805 -- --
Change in other operating items:
Accounts receivable............................................. (12,197) (1,485) 3,446
Inventories and customer tooling-in-progress.................... (3,398) (6,210) 2,451
Accounts payable and accrued liabilities........................ 5,662 (420) 420
Other, net...................................................... (773) (844) (329)
----------- ---------- -----------------
Net cash provided by operating activities..................... 39,055 29,629 26,721
----------- ---------- -----------------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.................................. (74,778) -- (227,765)
Capital expenditures................................................ (34,640) (24,530) (2,995)
----------- ---------- -----------------
Net cash used for investing activities........................ (109,418) (24,530) (230,760)
----------- ---------- -----------------
FINANCING ACTIVITIES:
Borrowings under revolving credit facilities........................ 197,273 -- --
Repayments under revolving credit facilities........................ (179,870) -- --
Long-term borrowings................................................ 74,474 -- 152,454
Repayment of long-term borrowings................................... (64,157) (10,715) (8,035)
Debt issuance costs................................................. (3,193) -- (3,300)
Proceeds from sale of common stock.................................. 36,394 -- 69,546
Proceeds from sale of convertible redeemable Series A preferred
stock............................................................. -- -- 15,000
Dividends paid on convertible redeemable Series A preferred stock... (1,050) (1,572) --
----------- ---------- -----------------
Net cash provided by (used in) financing activities........... 59,871 (12,287) 225,665
----------- ---------- -----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS.......... 182 -- --
----------- ---------- -----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS............................... (10,310) (7,188) 21,626
CASH AND CASH EQUIVALENTS, beginning of period........................ 14,438 21,626 --
----------- ---------- -----------------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 4,128 $ 14,438 $ 21,626
----------- ---------- -----------------
----------- ---------- -----------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for--
Interest.......................................................... $ 20,289 $ 15,107 $ 10,216
----------- ---------- -----------------
----------- ---------- -----------------
Income taxes...................................................... $ 6,200 $ 6,245 $ 2,781
----------- ---------- -----------------
----------- ---------- -----------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. ORGANIZATION AND BASIS OF PRESENTATION:
DESCRIPTION OF BUSINESS
J. L. French Automotive Castings, Inc. (French) is an international
independent designer and manufacturer of aluminum die cast components and
assemblies for the global automotive industry. French consists of three primary
operating subsidiaries: French Holdings, Inc. and Subsidiaries (FHI) initially
capitalized in April 1996, located primarily in Wisconsin; Morris Ashby Ltd. and
Subsidiaries (Morris Ashby) acquired in January 1998, located in the United
Kingdom; and Fundiciones Viuda De Ansola, S.A. (Ansola) acquired in April 1998,
located in Spain.
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the financial statements of
French and its wholly owned subsidiaries (collectively referred to as the
Company). All significant intercompany balances and transactions have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with an
original maturity of three months or less. Cash equivalents consist primarily of
short-term money market investments with Spanish financial institutions in 1998,
and overnight investments collateralized by U.S. government securities and
premium rated commercial paper in 1997. Cash equivalents are stated at cost
which approximates fair value.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) or average cost methods, which approximate
current cost. Market is determined by the quoted price for comparable raw
materials.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Raw materials............................................................ $ 4,094 $ 2,313
Components............................................................... 2,815 1,841
Work-in-process.......................................................... 5,045 887
Finished goods........................................................... 4,573 1,860
Supplies................................................................. 550 521
--------- ---------
$ 17,077 $ 7,422
--------- ---------
--------- ---------
</TABLE>
CUSTOMER TOOLING
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the production of customer-owned tooling to be
used by the Company in the manufacture
F-7
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
of its products. The Company receives a specific purchase order for this tooling
and is reimbursed by the customer for the cost of such tooling. Costs are
deferred until reimbursed by the customer. Forecasted losses on incomplete
projects are recognized currently.
PROPERTY, PLANT AND EQUIPMENT
Property plant and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Land and improvements................................................. $ 3,218 $ 1,239
Buildings............................................................. 30,044 15,537
Machinery and equipment............................................... 138,908 59,673
Furniture, fixtures and other......................................... 2,390 757
Construction in progress.............................................. 9,455 6,663
---------- ----------
184,015 83,869
Less- Accumulated depreciation........................................ (36,510) (17,498)
---------- ----------
Net property, plant and equipment..................................... $ 147,505 $ 66,371
---------- ----------
---------- ----------
</TABLE>
Property, plant and equipment are stated at cost. Depreciation of plant and
equipment is calculated on the straight-line method over the following estimated
useful lives:
<TABLE>
<S> <C>
15 to 39
Buildings and land improvements.............................. years
Machinery and equipment...................................... 5 to 13 years
Furniture and fixtures....................................... 3 to 10 years
</TABLE>
The Company capitalizes interest cost as a component of the cost of
construction in progress. Interest costs of $210,000 and $384,000 were
capitalized for the years ended December 31, 1998 and 1997. There were no costs
capitalized for the period ended December 31, 1996.
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of property,
plant and equipment retired or otherwise disposed of are removed from the
related accounts, and any residual values are charged or credited to income.
F-8
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INTANGIBLE AND OTHER ASSETS
Intangibles and other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Goodwill.............................................................. $ 169,793 $ 98,779
Customer relationships................................................ 52,946 52,946
Debt issuance costs and other......................................... 4,293 8,384
---------- ----------
227,032 160,109
Accumulated amortization.............................................. (56,233) (39,372)
---------- ----------
$ 170,799 $ 120,737
---------- ----------
---------- ----------
</TABLE>
Goodwill represents the excess of the purchase price over fair value of net
assets acquired arising from the initial capitalization in April 1996 and the
Morris Ashby and Ansola transactions described in Note 3. Goodwill is amortized
on a straight-line basis over 40 years. Amortization for the customer
relationships is calculated using an accelerated method, reflecting the nature
of the relationship, over 5 years. Debt financing costs are amortized over the
term of the applicable agreement.
The Company periodically evaluates whether events and circumstances have
occurred which may affect the estimated useful life or the recoverability of the
remaining balance of its goodwill and other long-lived assets. If such events or
circumstances were to indicate that the carrying amount of these assets would
not be recoverable, the Company would estimate the future cash flows expected to
result from the use of the assets and their eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) were
less than the carrying amount of goodwill and other long-lived assets, the
Company would recognize an impairment loss.
ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Compensation and benefits................................................ $ 10,026 $ 4,121
Income taxes............................................................. 2,361 128
Tooling advances......................................................... 4,896 --
Interest................................................................. 2,084 1,742
Other.................................................................... 3,962 908
--------- ---------
$ 23,329 $ 6,899
--------- ---------
--------- ---------
</TABLE>
INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax
F-9
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using currently
enacted tax rates.
REVENUE RECOGNITION AND SALES COMMITMENTS
The Company recognizes revenue as its products are shipped to its customers.
The Company enters into agreements to produce products for its customers at the
beginning of a given vehicle's life. Once such agreements are entered into by
the Company, fulfillment of the customer's purchasing requirements is the
obligation of the Company for the entire production life of the vehicle, with
terms averaging seven years. The Company has no provisions to terminate such
contracts.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign operations are translated into U.S.
dollars using the year-end rates of exchange. Results of operations are
translated at average rates prevailing throughout the period. Translation gains
and losses are accumulated as a separate component of other comprehensive
income--foreign currency translation adjustments in stockholders' investment.
Gains and losses resulting from foreign currency transactions are included in
net income. Such gains or losses and related hedges are reported in the same
manner as translation adjustments.
STOCK OPTION PLANS
The Company accounts for its stock option plans in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees," as permitted by Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." Under APB
Opinion No. 25, compensation expense is recorded only if the current market
price of the underlying stock exceeds the exercise price of the stock option.
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income, " which established standards for
reporting and display of comprehensive income and its components. Comprehensive
income reflects the change in equity of a business enterprise during a period
from transactions and other events and circumstances from nonowner sources. For
the Company, comprehensive income represents net income adjusted for foreign
currency translation adjustments. In accordance with SFAS No. 130, the Company
has chosen to disclose comprehensive income in the accompanying consolidated
statements of stockholders' investment and comprehensive income. Net income
(loss) for periods prior to 1998 was the same as comprehensive income.
SEGMENT REPORTING
In 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 supersedes SFAS No. 14,
replacing the "industry segment" approach with the "management" approach. The
management approach designates the internal organization that is used by
management for making operating decisions and assessing performance as
F-10
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas and major customers.
The adoption affected only the disclosure of segment information (see Note 8).
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," becomes effective for the years beginning after June 15, 2000. SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge criteria are met. Special accounting for qualifying hedges allow a
derivative's gains or losses to offset related results on the hedged item in the
income statement and requires that a company must formally document, designate
and assess the effectiveness of transactions that receive hedge accounting. The
Company has not yet quantified the impact of adopting SFAS No. 133 and has not
yet determined the timing of adoption.
During 1998, the Company adopted Financial Accounting Standards Board
Statement of Position (SOP) No. 98-5, "Reporting on the Costs of Start-up
Activities." SOP 98-5 requires that start-up activities be expensed as incurred,
versus capitalizing and expensing them over a period of time. The adoption of
SOP 98-5 did not affect the Company's consolidated results of operations or the
financial position of the Company.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of changes in net assets available for
benefits during the reporting period. Ultimate results could differ from those
estimates.
RECLASSIFICATIONS
Certain amounts previously reported in the 1997 and 1996 consolidated
financial statements have been reclassified to conform to the 1998 presentation.
These reclassifications had no effect on previously reported net income (loss)
or stockholders' investment.
3. MERGER AND ACQUISITIONS:
MORRIS ASHBY AND ANSOLA
On January 12, 1998, the Company effectively acquired 100% of the
outstanding common stock of Morris Ashby for approximately $54.0 million in
cash, including certain transaction costs, plus unsecured sterling loan notes
issued to certain electing shareholders in the amount of $26.4 million. On April
30, 1998, the Company acquired 100% of the outstanding common stock of Ansola
for approximately $20.8 million in cash, including certain transaction costs.
F-11
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
3. MERGER AND ACQUISITIONS: (CONTINUED)
The acquisitions of Morris Ashby and Ansola have been accounted for using
the purchase method of accounting and, accordingly, the assets acquired and
liabilities assumed have been recorded at their fair value as of the respective
dates of acquisition. The excess of the purchase price over the fair value of
the assets acquired and liabilities assumed have been recorded as goodwill.
The assets acquired and liabilities assumed have been recorded based upon
preliminary estimates of fair value as of the dates of acquisition. The Company
does not believe the final allocation of purchase price will be materially
different from preliminary allocations. Any changes to the preliminary estimates
will be reflected as adjustments to goodwill. Results of operations for these
acquisitions have been included in the accompanying consolidated financial
statements since the respective dates of the acquisition.
The following unaudited consolidated pro forma results of operations for the
years ended December 31, 1998 and 1997 give effect to the acquisitions of Morris
Ashby and Ansola as if such transactions had occurred at the beginning of the
period (in thousands):
<TABLE>
<CAPTION>
PRO FORMA FOR YEARS
ENDED DECEMBER 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Sales................................................................. $ 303,899 $ 269,480
Operating income...................................................... 41,910 38,222
Net income before extraordinary item.................................. 12,264 14,696
</TABLE>
The unaudited pro forma consolidated financial information does not purport
to represent what the Company's financial position or results of operations
would actually have been if these transactions had occurred at such dates or to
project the Company's future results of operations.
F-12
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
4. LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
1998 senior credit facility:
U.S. term loan...................................................... $ 41,625 $ --
Sterling term loan.................................................. 24,215 --
U.S. revolving credit facility...................................... 15,000 --
Sterling revolving credit facility.................................. 14,204 --
1996 senior credit facility--U.S. term loan........................... -- 56,250
Unsecured sterling loan notes......................................... 27,303 --
Peseta term loans..................................................... 5,303 --
Obligations under capital leases (Note 10)............................ 5,320 --
Subordinated notes at face amount..................................... 85,000 85,000
Less- Subordinated notes original issue discount...................... (6,390) (6,859)
---------- ----------
211,580 134,391
Less- Current portion................................................. 13,113 12,170
---------- ----------
$ 198,467 $ 122,221
---------- ----------
---------- ----------
</TABLE>
1998 SENIOR CREDIT FACILITY
On March 16, 1998, the Company entered into a new global senior credit
facility (the Agreement) with a group of banks providing for a U.S. term loan
and revolving credit facility of $45.0 million and $75.0 million, respectively,
and a sterling term loan and revolving credit facility of L33.6 million and
L16.4 million, respectively. The proceeds from the new senior credit facility
were used to finance the acquisitions of Morris Ashby and Ansola and retire
amounts outstanding under the 1996 senior credit facility discussed below.
Each of the revolving credit facilities and term loans provide for an annual
interest rate, at the option of the Company, equal to either the Eurocurrency
loan rate plus an applicable margin of 0.5% to 1.25%, or the base rate, as
defined, plus an applicable margin of up to 0.25%. The applicable interest rate
at December 31, 1998 was 6.6% for the U.S. term loan and revolving credit
facility and 6.5% for the Sterling term loan and revolving credit facility. The
Eurocurrency loan rate reflects the London Interbank Offered Rate (LIBOR) plus
an additional margin as determined by the Lender's agent. The base rate is equal
to the greater of 1) the publicly announced prime rate, 2) the federal funds
rate plus 0.5% to 1.0%, or 3) the base certificate of deposit rate plus 1.0%.
The applicable margin is based on the Company's leverage ratio as defined in the
Agreement. A commitment fee ranging from 0.2% to 0.375%, depending on the
Company's leverage ratio, is charged on the unused portion of the revolving
credit facilities.
The dollar and sterling term loans call for quarterly principal payments
totaling $1.1 million and L395,000 respectively, from June 30, 1998 to March 31,
1999.
F-13
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
4. LONG-TERM DEBT: (CONTINUED)
The Agreement contains covenants which restrict the Company with regard to
capital expenditures, asset sales, additional debt and distributions to
stockholders, while permitting regularly scheduled dividends or redemption of
Series A and B preferred stock. The Company is also subject to the maintenance
of certain financial covenants. The Company was in compliance with all covenants
as of December 31, 1998.
The Agreement was terminated in April 1999 in connection with the
transaction described in Note 13.
1996 SENIOR CREDIT FACILITY
In 1997, the U.S. term loan represented advances under a $100.0 million Loan
and Security Agreement with a group of banks entered into in conjunction with
the 1996 Acquisition. The term loan was payable in quarterly principal
installments of $2.7 million with a final payment of $21.4 million due on April
2, 2001. Interest on the term loan was based on the prime rate plus 5% or,
alternatively at the option of the Company, on the LIBOR plus .75% (6.7% at
December 31, 1997).
The Loan and Security Agreement also provided for a U.S. revolving credit
facility. There were no borrowings outstanding as of December 31, 1997 under the
revolving credit facility.
In connection with the repayment of the 1996 Senior Credit Facility, the
Company wrote off as an extraordinary loss $1.3 million ($805,000 after income
tax benefit) of unamortized debt issuance costs.
PESETA TERM LOANS
Upon the acquisition of Ansola, the Company assumed peseta term loans under
agreements with a number of Spanish banks. The loans were used by Ansola to
finance capital expenditures and generally have restrictions that require
approval prior to the disposal of assets. The loans have various payment terms
and maturity dates from 2000 through 2005. The effective interest rate in 1998
was approximately 5.2%.
SUBORDINATED NOTES
The subordinated notes (the Notes) bear interest at 12% and are due March
31, 2006. In conjunction with the acquisition and merger with FHI as discussed
in Note 3, the Notes were amended and the Company assumed all obligations and
rights of FHI under the Notes. The Notes are subordinated to the obligations
under the Agreement. The Notes were originally issued by FHI in April 1996 at a
face value of $85.0 million, with a discounted yield of 13.65%. Interest is
payable semiannually. The original issue discount is being accreted under the
interest method over the term of the Notes.
The Notes were retired in April 1999 in connection with the transaction
described in Note 13.
F-14
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
4. LONG-TERM DEBT: (CONTINUED)
AGGREGATE MATURITIES
The aggregate maturities of long-term debt, including obligations under
capital leases, for each of the five years subsequent to December 31, 1998 are
as follows (in thousands):
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
1999.............................................................................. $ 13,113
2000.............................................................................. 13,542
2001.............................................................................. 13,499
2002.............................................................................. 13,177
2003.............................................................................. 77,984
2004 and thereafter............................................................... 80,265
----------
$ 211,580
----------
----------
</TABLE>
5. REDEEMABLE PREFERRED STOCKS:
The Company has 1,500 shares of convertible redeemable 7% Series A preferred
stock with a redemption value of $15.0 million issued and outstanding as of
December 31, 1998. The Series A preferred stock has a par value of $.0001 per
share. Holders of Series A preferred stock are entitled to cumulative cash
dividends, payable quarterly on the first business day of the succeeding
quarter, at an annual rate of $700 per share.
Each share of Series A preferred stock is convertible at any time at the
option of the holder into (i) 2.26372 shares of Class A common stock, or if such
share of Series A preferred stock is held by a Regulated Holder, 2.26372 shares
of Class B common stock; and (ii) one share of Series B preferred stock. The
conversion rate is subject to adjustment under certain circumstances pursuant to
antidilution provisions. The Series A preferred stock carries a redemption price
of $10,000 per share plus accrued, but unpaid, cash dividends.
The shares of Series A preferred stock are nonvoting, except in certain
circumstances. Such shares rank in parity with shares of Series B preferred
stock with respect to dividend rights and rights of liquidation and dissolution
and are senior to all other equity securities of the Company, including all
preferred stock used subsequent to March 16, 1998.
The Series A preferred stock was stated at estimated fair value at the
original date of issuance, net of $3.4 million, the estimated fair value
attributed to the conversion into shares of Class A common stock. The Company is
recording the accretion to increase the carrying value of the Series A preferred
stock to the redemption value of $15.0 million as a reduction to retained
earnings.
The Company has 1,500 shares of authorized redeemable 7% Series B preferred
stock with a par value of $.0001 per share that are available for issue only in
the event of the conversion of the Series A preferred stock. Shares of the
Series B preferred stock are not convertible, but have the same rights as the
Series A preferred stock with respect to dividends, liquidation, dissolution,
voting and seniority with respect to all other equity securities of the Company.
F-15
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
5. REDEEMABLE PREFERRED STOCKS: (CONTINUED)
Any outstanding shares of Series B preferred stock may be redeemed at the
option of the Company at any time at $10,000 per share plus accrued, but unpaid,
cash dividends.
In April 1999, in connection with transaction described in Note 13, each
share of Series A preferred stock was converted into 2.26372 shares of Class A
common stock and 1 share of Series B preferred stock. Certain shares of the
Class A common stock and all of the Series B preferred stock were redeemed by
the Company.
6. COMMON STOCKS:
In connection with the March 1998 merger, the Class A common stock was
converted into 53,015.49 shares of Class A and 13,944.85 shares of Class B
common stock. Class B common stock was converted in Class C common stock and
Class C common stock was converted into Class D common stock. The
transferability of common stock is restricted by a shareholders' agreement.
Each share of Class A and Class B common stock is entitled to one vote.
Shares of Class C common stock are nonvoting except in certain circumstances and
shares of Class D common stock are entitled to ten votes per share. Under
certain circumstances, including an initial public offering or the sale of the
Company, each share of Class C common stock will convert into one share of Class
A or, if owned by a "Regulated Holder," into one share of Class A or Class B
common stock. Concurrent with any conversion of a share of Class C common stock,
one-ninth of a share of Class D common stock will automatically convert into
one-ninth of a share of Class A or Class B common stock. In other references,
each class of common stock generally shares the same powers.
In April 1999, in connection with the transaction described in Note 13,
certain shares of common stock were redeemed by the Company.
7. INCOME TAXES:
The provision (benefit) for income taxes consists of the following (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER NINE MONTHS
31 ENDED
-------------------- DECEMBER 31,
1998 1997 1996
--------- --------- ------------
<S> <C> <C> <C>
Current.................................................. $ 7,199 $ 5,564 $ 2,617
Deferred................................................. 1,100 (610) (3,743)
--------- --------- ------------
Total................................................ $ 8,299 $ 4,954 $ (1,126)
--------- --------- ------------
--------- --------- ------------
</TABLE>
F-16
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
7. INCOME TAXES: (CONTINUED)
A summary of deferred income tax assets and liabilities is as follows (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts receivable................................................... $ 456 $ 210
Inventories........................................................... 212 218
Vacation accruals..................................................... 138 95
Employee benefit plans................................................ 512 --
Amortization of intangible assets..................................... 9,212 5,885
State tax credit and net operating loss carryforwards................. 584 244
--------- ---------
Total deferred tax assets......................................... 11,114 6,652
Deferred tax liabilities--depreciation.................................. 13,288 3,961
--------- ---------
Net deferred tax assets (liabilities)............................. $ (2,174) $ 2,691
--------- ---------
--------- ---------
</TABLE>
Management believes it more likely than not that the results of future
operations will generate sufficient taxable income to realize the deferred tax
assets. Accordingly, no valuation allowance is recorded.
A reconciliation of income taxes computed at the statutory rates to the
reported income tax provisions is as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 NINE MONTHS
ENDED
------------------------ DECEMBER 31,
1998 1997 1996
----------- ----------- ---------------
<S> <C> <C> <C>
Federal provision at statutory rates........................ 35.0% 35.0% (35.0)%
State income taxes, net of federal benefit.................. 5.4 4.4 (2.0)
Other, net.................................................. 0.2 (0.3) (3.5)
--- --- -----
40.6% 39.1% (40.5)%
--- --- -----
--- --- -----
</TABLE>
The Company has approximately $305,000 of state tax credit carryforwards
which expire in 2013, and $1.8 million of Wisconsin net operating loss
carryforwards which expire in 2011 and 2012, and $900,000 of foreign net
operating loss carryforwards which expire in 2013.
8. GEOGRAPHIC AND PRODUCT LINE INFORMATION:
The Company designs and manufactures aluminum die cast components and
assemblies for the global automotive industry and operates in a single
reportable business segment, automotive products. The Company internally
evaluates its business principally by product category; however, because of
similar economic characteristics of the operations, including the nature of
products, production process and customers, those operations have been
aggregated following the provisions of SFAS No. 131 for segment reporting
purposes.
F-17
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
8. GEOGRAPHIC AND PRODUCT LINE INFORMATION: (CONTINUED)
The following is a summary of sales, based on location of production, and
long-lived assets by geographic location (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------------
1998 1997
---------------------- ---------------------
LONG- LONG-
LIVED LIVED
SALES ASSETS SALES ASSETS
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
North America................................. $ 208,000 $ 79,703 $ 169,510 $ 66,371
Europe........................................ 87,690 67,802 -- --
---------- ---------- ---------- ---------
$ 295,690 $ 147,505 $ 169,510 $ 66,371
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
</TABLE>
Sales to customers in various geographic locations were as follows (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
North America......................................................... $ 186,328 $ 143,753
Europe................................................................ 106,608 23,812
Other foreign locations............................................... 2,754 1,945
---------- ----------
$ 295,690 $ 169,510
---------- ----------
---------- ----------
</TABLE>
The Company sells its products primarily directly to automobile
manufacturers. Customers that accounted for a significant portion of
consolidated sales for the years ended December 31, 1998 and 1997 and for the
nine months ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER NINE MONTHS
31 ENDED
-------------------- DECEMBER 31,
1998 1997 1996
--------- --------- ------------
<S> <C> <C> <C>
Ford............................................................ 58% 60% 58%
GM.............................................................. 20% 39% 42%
</TABLE>
As of December 31, 1998 and 1997, receivables from these customers
represented 68% and 100% of total accounts receivable, respectively.
9. EMPLOYEE BENEFIT PLANS:
The Company has a noncontributory defined contribution retirement plan
covering substantially all U.S. employees after one year of service. Under the
terms of the plan, contributions made by the Company are based on the number of
hours worked by each participant. The Company's contribution for 1997 was at the
rate of 70 cents per hour of qualified service, which increased to 85 cents in
1998, and increases to $1.00 in 1999. The expense for the years ended December
31, 1998 and 1997 was $1.2 million and $926,000, respectively.
F-18
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
9. EMPLOYEE BENEFIT PLANS: (CONTINUED)
The Company also sponsors a 401(k) savings plan covering substantially all
U.S. employees. Company contributions are not provided under the 401(k) plan.
The Company sponsors a defined benefit pension plan covering certain
employee groups at Morris Ashby. The change in benefit obligation and plan
assets consisted of the following as of December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
CHANGE IN BENEFIT OBLIGATION
- -----------------------------------------------------------------------------------
<S> <C>
Benefit obligation at January 12, 1998............................................. $ 25,402
Service cost....................................................................... 1,827
Interest cost...................................................................... 1,983
Actuarial loss..................................................................... 4,557
Plan participants' contributions................................................... 627
Benefits paid...................................................................... (1,520)
---------
Benefit obligation at the end of the year.......................................... $ 32,876
---------
---------
CHANGE IN PLAN ASSETS
- -----------------------------------------------------------------------------------
Fair value of plan assets at January 12, 1998...................................... $ 21,711
Actual return on plan assets....................................................... 2,532
Employer contributions............................................................. 1,505
Plan participants' contributions................................................... 592
Benefits paid...................................................................... (1,585)
---------
Fair value of plan assets at the end of the year................................... $ 24,755
---------
---------
</TABLE>
The Company's plan has benefits in excess of the plan assets. The funded
status of the Company's plan is as follows as of December 31, 1998 (amounts in
thousands):
<TABLE>
<S> <C>
Funded status...................................................... $ (8,120)
Unrecognized actuarial loss........................................ 6,132
---------
Accrued benefit cost............................................... $ 1,988
---------
---------
</TABLE>
The following assumptions were used to account for the plan assets for the
year ended December 31, 1998 (in thousands):
<TABLE>
<S> <C>
Discount rate........................................................ 5.5%
Expected return on plan assets....................................... 9.0%
Rate of compensation increase........................................ 4.0%
</TABLE>
F-19
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
9. EMPLOYEE BENEFIT PLANS: (CONTINUED)
The components of net periodic benefit costs are as follows for the year
ended December 31, 1998 (in thousands):
<TABLE>
<S> <C>
Service cost....................................................... $ 1,827
Interest cost...................................................... 1,983
Expected return on plan assets..................................... (1,976)
---------
Net periodic benefit costs......................................... $ 1,834
---------
---------
</TABLE>
The Company became obligated under this plan upon the acquisition of Morris
Ashby (see Note 3).
On March 16, 1998, the Company adopted the 1998 Stock Option Plan (the
Option Plan) and the 1998 Performance Stock Option Plan (the Performance Plan)
pursuant to which the Company's board of directors may grant stock options to
key officers and employees. Both plans constitute a continuation and restatement
of the 1996 Stock Option Plan and 1996 Performance Stock Option Plan,
respectively.
The Option Plan authorizes grants of options to purchase up to 4,516 shares
of authorized, but unissued Class A common stock. Stock options are granted with
an exercise price equal to the stock's fair market value at the date of grant.
All stock options have 10-year terms, vest at a rate of 20% per year and become
fully exercisable after five years from the date of grant. Vesting accelerates
upon a change of control, as defined, or optionee termination due to death,
disability or retirement after age 65 with 15 or more years of service.
The Performance Plan authorizes grants of options to purchase up to 4,516
shares of Class A common stock. Stock options are granted with an exercise price
of $1,000 per share. All stock options vest from the date of the Performance
Plan through April 2005 and become exercisable when certain financial hurdles
are achieved. In December 1998, 2,250 options were granted under the Performance
Plan.
A summary of stock option information under the Option Plan as of December
31, 1998 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
DATE OF GRANT OUTSTANDING EXERCISE PRICE PRICE
- ----------------------------------------------------------------------- ------------- ---------------- -----------
<S> <C> <C> <C>
Option Plan:
August 1996.......................................................... 1,222 $ 1,000
June 1997............................................................ 822 1,531
February 1998........................................................ 900 2,767
Performance Plan:
December 1998........................................................ 2,250 1,000
----- ----------------
Options outstanding as of December 31, 1998............................ 5,194 $ 1,000-$2,767 $ 1,390
----- ---------------- -----------
----- ---------------- -----------
Options exercisable as of December 31, 1998............................ 653 $ 1,000-$1,531 $ 1,135
----- ---------------- -----------
----- ---------------- -----------
</TABLE>
There are 3,838 shares of Class A common stock available for grant as of
December 31, 1998.
The pro forma effect on net income for the years ended December 31, 1998 and
1997 using the fair value based method of accounting for employee stock options
under SFAS No. 123 was not significant.
In April 1999, all outstanding options were redeemed by the Company in
connection with the transaction described in Note 13.
F-20
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
10. LEASES:
The Company is obligated at December 31, 1998 under various capital leases
for certain machinery and equipment, including vehicles, that expire at various
dates through 2004. There were no capital lease obligations at December 31,
1997. Amortization of assets held under capital leases is included with
depreciation expense.
The Company also leases buildings, vehicles, machinery and equipment under
noncancelable operating leases expiring on various dates through 2013. Total
rent expense from operating leases, including month-to-month leases, was
$852,000 and $252,000 for the years ended December 31, 1998 and 1997,
respectively.
Aggregate future minimum lease payments as of December 31, 1998 relating to
capital leases and noncancelable operating leases with an initial term in excess
of one year are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
<S> <C> <C>
1999..................................................................... $ 1,700 $ 711
2000..................................................................... 1,491 584
2001..................................................................... 1,200 512
2002..................................................................... 834 502
2003..................................................................... 715 452
Thereafter............................................................... 213 1,991
--------- -----------
Total minimum lease payments..................................... $ 6,153 $ 4,752
--------- -----------
--------- -----------
Less- Amount representing interest (at rates ranging from 6.2% to
11.8%)................................................................. 833
---------
Present value of net minimum capital lease payments.............. 5,320
Less- Current installments of obligations under capital leases........... 1,380
---------
Obligations under capital leases, excluding current
installments................................................... $ 3,940
---------
---------
</TABLE>
11. RELATED-PARTY TRANSACTIONS:
The Company paid $325,000, $200,000 and $150,000 of financial advisory fees
to Windward Capital Partners, L.P., an entity affiliated through common
ownership, in the years ended December 31, 1998 and 1997 and during the period
ended December 31, 1996. The Company pays the outside members of the board of
directors fees based on meeting attendance and services provided. Director fees
paid were $440,000, $370,000 and $156,000 in the years ended December 31, 1998
and 1997 and during the period ended December 31, 1996. In connection with the
transaction discussed in Note 13, the Company entered into a management
agreement with Hidden Creek Industries which requires annual payment of
$500,000.
In 1997, prior to its equity investment of capital into the Company,
Windward Capital Partners, L.P. advanced the Company $1.2 million for costs
incurred to obtain financing commitments in connection with the acquisition of
Morris Ashby. As of December 31, 1997, this advance remained
F-21
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
11. RELATED-PARTY TRANSACTIONS: (CONTINUED)
unpaid and is included in accounts payable in the 1997 consolidated balance
sheet. The advance was repaid in January 1998.
12. FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS:
The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, accrued liabilities and the revolving credit facilities
approximate fair value, because of the short maturity of these instruments. The
fair value of long-term debt is based on quoted market prices for the same or
similar issues or on the current rates offered to the Company for a term equal
to the same remaining maturities. As of December 31, 1998 and 1997, the fair
value of the Company's long-term debt was determined to be the same as the
carrying amount. It is not practicable to estimate the fair value of the
redeemable convertible preferred stock due to the unique terms and conditions of
this security.
The Company uses derivative financial instruments for the purpose of
reducing its exposure to adverse fluctuations in foreign exchange rates and does
not use them for trading purposes. Off-balance-sheet derivative financial
instruments as of December 31, 1998 consist of foreign currency forward
contracts to sell pesetas with a notional value of approximately $19.1 million
and a fair value of approximately $70,000. The fair value is based on quoted
market prices. The Company did not have any off-balance-sheet derivative
financial instruments as of December 31, 1997. The Company enters into foreign
currency forward contracts to eliminate foreign exchange risk on long-term
intercompany loans. These contracts serve as a hedge of the Company's net
investment in the foreign operations and, accordingly, gains and losses on such
contracts are recorded as a component of accumulated other comprehensive
income--foreign currency translation adjustment in the accompanying consolidated
statement of stockholders' investment and comprehensive income.
13. EVENTS SUBSEQUENT TO DECEMBER 31, 1998:
RECAPITALIZATION
On April 21, 1999, the Company completed a recapitalization transaction (the
Recapitalization). Pursuant to the Recapitalization Agreement, immediately prior
to the Recapitalization, each share of Class B, Class C and Class D common stock
was converted into one share of Class A common stock. In addition, each share of
Convertible Redeemable 7% Series A preferred stock was converted into one share
of Series B preferred stock and 2.26372 shares of Class A common stock, and the
Company restated its Articles of Incorporation to authorize 20,000 shares of
Class A common stock, 30,000 shares of Class B common stock, 2,000 shares of
Class C common stock, 15,000 shares of Class D-1 common stock, 7,500 shares of
nonvoting Class D-2 common stock and 1,000 shares of Class E common stock.
Concurrently with the above transactions, new investors acquired 1,650.06 shares
of Class A common stock, 17,099.89 shares of Class B common stock, 4,274.97
shares of Class C common stock, 5,509.97 shares of Class D-1 common stock,
5,699.96 shares of Class D-2 common stock and 2,802.48 shares of Class E common
stock for total consideration of $156.0 million. In addition, the Company
borrowed $295.0 million pursuant to a new Senior Credit Facility and $130.0
million pursuant to a Subordinated Financing Facility.
The proceeds from the equity investment, the Senior Credit Facility and the
Subordinated Financing Facility were used to retire $184.0 million of existing
indebtedness, $12.3 million to redeem
F-22
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
13. EVENTS SUBSEQUENT TO DECEMBER 31, 1998: (CONTINUED)
the outstanding Series B preferred stock, $336.5 million to repurchase certain
shares of Class A common stock and $21.5 million to redeem all outstanding
options and $6.9 million of transaction fees. As a result of the
Recapitalization, approximately 87% of all classes of the combined capital stock
of the Company were acquired which represented 85% of the voting control. The
prior owners retained a carry-over interest of 13% of all classes of combined
capital stock. This redemption of stock options was recorded as compensation
expense at the date of the Recapitalization. A subsequent additional payment of
$5.9 million was made to those persons who were stockholders prior to the
Recapitalization based on a post-closing determination of working capital as of
the closing date of the Recapitalization.
The Company's Senior Credit Facility provides for total borrowings of up to
$370.0 million, including (a) $105.0 million of term loans consisting of a $70.0
million U.S. dollar-denominated term loan and a pound sterling-denominated term
loan in an amount equal to the pound sterling equivalent (determined as of the
date such loan was made) of U.S. $17.5 million, which are available to French,
and a pound sterling-denominated term loan in an amount equal to the pound
sterling equivalent (determined as of the date such loan was made) of U.S. $17.5
million, which is available to Morris Ashby (collectively, the tranche A term
loan), (b) a $190.0 million tranche B term loan, and (c) a $75.0 million
revolving credit facility. Initial interest rates as of April 30, 1999 on
borrowings under the Senior Credit Facility ranged from 7.375% to 8.078%. The
Senior Credit Facility requires the Company to maintain certain financial tests
including minimum interest coverage, minimum net worth and maximum leverage
tests.
Borrowings under the tranche A term loan are due and payable April 21, 2005
and borrowings under the Tranche B term loan are due and payable October 21,
2006. The revolving credit facility is available until April 21, 2005. The
Senior Credit Facility is secured by all of the assets and by all present and
future subsidiaries of French in each case, with exceptions for certain foreign
subsidiaries.
The Company's Subordinated Financing Facility provides for total borrowings
of $130.0 million. The Subordinated Financing Facility has a final maturity of
October 21, 2008. As of April 30, 1999 borrowings under the Subordinated
Financing Facility were at 11.35%.
Pursuant to the Recapitalization, the historical basis of all assets and
liabilities will be retained for financial reporting purposes, and the
repurchase of the existing common stock and issuance of new common stock will be
accounted for as an equity transaction. In addition, the Company incurred
approximately $6.9 million of fees and expenses to complete the
Recapitalization. These costs will be included in stockholders investment as a
cost of the Recapitalization.
On May 25, 1999, the Company completed an offering of $175 million of
11 1/2% Senior Subordinated Notes due 2009 (Subordinated Notes). Net proceeds of
the offering, approximately $169.6 million, combined with $0.4 million of cash
were used to retire the $130 million Subordinated Financing facility and $40
million of the tranche B term loan. In conjunction with the recapitalization and
offering, the Company recorded an extraordinary loss, net of tax, of $8,112. The
loss includes the write off of unamortized debt issuance costs and original
issue discount related to indebtedness that was retired.
F-23
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
13. EVENTS SUBSEQUENT TO DECEMBER 31, 1998: (CONTINUED)
POTENTIAL ACQUISITION
In March 1999, we entered into a non-binding letter of intent to acquire a
Mexican supplier of aluminum die castings to DaimlerChrysler and GM for
approximately $13 million. Completion of this acquisition is subject to our
satisfactory completion of due diligence, negotiation of a definitive agreement,
regulatory approval and the approval of our senior lenders. If we complete this
acquisition, we would expect closing to occur in the third quarter of 1999. We
expect that we would finance this acquisition with available borrowings under
our revolving credit facility.
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR INFORMATION:
The following consolidating financial information presents balance sheet,
statement of operations and cash flow information related to the Company's
business. Each Guarantor is a direct wholly owned domestic subsidiary of the
Company and has fully and unconditionally guaranteed the 11 1/2% senior
subordinated notes issued by J.L. French Automotive Casting, Inc., on a joint
and several basis. Separate financial statements and other disclosures
concerning the Guarantors have not been presented because management believes
that such information is not material. As all subsidiaries of the Company are
guarantors for 1997 and 1996, separate consolidating guarantor and non-guarantor
financial statements have not been presented for such periods.
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues...................................... $ -- $ 208,000 $ 87,690 $ -- $ 295,690
Cost of sales................................. -- 152,440 68,600 -- 221,040
------------ ----------- ----------- ------------ ------------
Gross profit................................ -- 55,560 19,090 -- 74,650
Selling, general and administrative
expenses.................................... 193 6,817 9,792 -- 16,802
Amortization of intangible assets............. 20 15,234 1,607 -- 16,861
------------ ----------- ----------- ------------ ------------
Operating income............................ (213) 33,509 7,691 -- 40,987
Interest expense.............................. (32) 13,896 6,669 -- 20,533
------------ ----------- ----------- ------------ ------------
Income before income taxes, equity in
earnings (losses) of subsidiaries and
extraordinary loss........................ (181) 19,613 1,022 -- 20,454
Provision (benefit) for income taxes.......... (65) 7,649 715 -- 8,299
Equity in earnings (losses) of subsidiaries... 11,466 -- -- (11,466) --
------------ ----------- ----------- ------------ ------------
Income before extraordinary loss............ 11,350 11,964 307 (11,466) 12,155
Extraordinary loss............................ -- 805 -- -- 805
------------ ----------- ----------- ------------ ------------
Net income (loss)........................... $ 11,350 $ 11,159 $ 307 $ (11,466) $ 11,350
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-24
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,
1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).......................... $ 11,350 $ 11,159 $ 307 $ (11,466) $ 11,350
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities--
Depreciation and amortization............ 20 27,933 8,084 -- 36,037
Other non-cash........................... 104 1,527 743 -- 2,374
Earnings of subsidiaries................. (11,466) -- -- 11,466 --
Change in other operating activities..... 6,743 (29,055) 11,392 214 (10,706)
------------ ----------- ----------- ------------ ------------
Net cash provided by operating
activities........................... 6,751 11,564 20,526 214 39,055
------------ ----------- ----------- ------------ ------------
INVESTING ACTIVITIES:
Acquisitions, net.......................... (38,965) -- (74,085) 38,272 (74,778)
Capital expenditures, net.................. -- (26,033) (8,607) -- (34,640)
------------ ----------- ----------- ------------ ------------
Net cash provided by (used for)
investing activities................. (38,965) (26,033) (82,692) 38,272 (109,418)
------------ ----------- ----------- ------------ ------------
FINANCING ACTIVITIES:
Borrowings on revolving credit
facilities............................... -- 56,300 140,973 -- 197,273
Repayments on revolving credit
facilities............................... -- (41,300) (138,570) -- (179,870)
Long-term borrowings....................... -- 45,000 29,474 -- 74,474
Repayment of long-term borrowings.......... -- (59,625) (4,532) -- (64,157)
Other financing activities................. (4,243) -- -- -- (4,243)
Capital investment......................... 36,395 -- 38,018 (38,019) 36,394
------------ ----------- ----------- ------------ ------------
Net cash provided by (used for)
financing activities................. 32,152 375 65,363 (38,019) 59,871
------------ ----------- ----------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS........................... -- -- 649 (467) 182
------------ ----------- ----------- ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS...... (62) (14,094) 3,846 -- (10,310)
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 84 14,354 -- -- 14,438
------------ ----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS, end of period..... $ 22 $ 260 $ 3,846 $ -- $ 4,128
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-25
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR INFORMATION: (CONTINUED)
J.L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................... $ 22 $ 260 $ 3,846 $ -- $ 4,128
Accounts receivable, net.................... -- 34,897 20,345 -- 55,242
Inventories................................. -- 9,712 7,365 -- 17,077
Customer tooling-in-progress................ -- 2,335 5,678 -- 8,013
Other current assets........................ -- 1,470 559 -- 2,029
------------ ----------- ----------- ------------ ------------
Total current assets...................... 22 48,674 37,793 -- 86,489
------------ ----------- ----------- ------------ ------------
Property, Plant & Equipment, net.............. -- 79,703 67,802 147,505
Investment in Subsidiaries.................... 138,003 -- -- (138,003) --
Intangible and Other Assets................... 3,226 99,469 68,104 -- 170,799
------------ ----------- ----------- ------------ ------------
$ 141,251 $ 227,846 $ 173,699 $ (138,003) $ 404,793
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable............................ $ -- $ 11,257 $ 16,557 $ -- $ 27,814
Accrued liabilities......................... 498 8,792 14,039 -- 23,329
Current portion of long-term debt........... -- 6,000 7,113 -- 13,113
------------ ----------- ----------- ------------ ------------
Total current liabilities................. 498 26,049 37,709 -- 64,256
------------ ----------- ----------- ------------ ------------
Long-Term Debt................................ -- 129,234 69,233 -- 198,467
Other Current Liabilities..................... 104 (3,090) 8,151 -- 5,165
Inter-Company................................. 5,174 (24,025) 18,644 207 --
------------ ----------- ----------- ------------ ------------
Total liabilities......................... 5,776 128,168 133,737 207 267,888
------------ ----------- ----------- ------------ ------------
Convertible Redeemable Series A Preferred
Stock....................................... 12,217 -- -- -- 12,217
Common Stock.................................. -- -- -- -- --
Additional Paid-In-Capital.................... 109,034 84,857 38,018 (122,875) 109,034
Retained Earnings............................. 14,224 14,821 307 (15,128) 14,224
Accumulated and Other Comprehensive Income.... -- -- 1,637 (207) 1,430
------------ ----------- ----------- ------------ ------------
Total stockholders' investment............ 123,258 99,678 39,962 (138,210) 124,688
------------ ----------- ----------- ------------ ------------
$ 141,251 $ 227,846 $ 173,699 $ (138,003) $ 404,793
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-26
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a condensed summary of actual quarterly results of
operations for 1997 and 1998 (in thousands):
<TABLE>
<CAPTION>
GROSS OPERATING NET
REVENUES PROFIT INCOME INCOME
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
1997:
First......................................... $ 40,911 $ 12,839 $ 6,264 $ 1,621
Second........................................ 44,956 14,613 8,172 2,817
Third......................................... 42,317 12,598 6,108 1,661
Fourth........................................ 41,326 12,938 6,115 1,625
---------- --------- ----------- ---------
$ 169,510 $ 52,988 $ 26,659 $ 7,724
---------- --------- ----------- ---------
---------- --------- ----------- ---------
1998:
First......................................... $ 67,687 $ 16,416 $ 7,536 $ 1,299
Second........................................ 77,876 20,680 12,194 4,406
Third......................................... 72,905 14,716 6,375 (130)
Fourth........................................ 77,222 22,838 14,882 5,775
---------- --------- ----------- ---------
$ 295,690 $ 74,650 $ 40,987 $ 11,350
---------- --------- ----------- ---------
---------- --------- ----------- ---------
</TABLE>
F-27
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1998
JUNE 30, ------------
1999
-----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................... $ 27,357 $ 4,128
Accounts receivable, net............................................................ 65,860 55,242
Inventories......................................................................... 15,805 17,077
Other current assets................................................................ 19,132 10,042
----------- ------------
Total current assets.............................................................. 128,154 86,489
PROPERTY, PLANT AND EQUIPMENT, net.................................................... 144,087 147,505
INTANGIBLE AND OTHER ASSETS, net...................................................... 166,467 170,799
----------- ------------
Total assets...................................................................... $ 438,708 $ 404,793
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.................................................................... $ 24,985 $ 27,814
Accrued liabilities................................................................. 17,128 23,329
Current portion of long-term debt................................................... 11,398 13,113
----------- ------------
Total current liabilities......................................................... 53,511 64,256
LONG-TERM DEBT, excluding current portion............................................. 460,078 198,467
OTHER NONCURRENT LIABILITIES.......................................................... 3,454 5,165
----------- ------------
Total liabilities................................................................. 517,043 267,888
CONVERTIBLE REDEEMABLE SERIES A PREFERRED STOCK....................................... -- 12,217
----------- ------------
STOCKHOLDERS' INVESTMENT (DEFICIT):
Common stock........................................................................ -- --
Additional paid-in capital.......................................................... -- 109,034
Retained earnings (deficit)......................................................... (77,031) 14,224
Accumulated other comprehensive income--foreign currency translation adjustment..... (1,304) 1,430
----------- ------------
Total stockholders' investment (deficit)........................................ (78,335) 124,688
----------- ------------
Total liabilities and stockholders' investment (deficit)........................ $ 438,708 $ 404,793
----------- ------------
----------- ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
F-28
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales..................................................................................... $ 165,689 $ 145,563
Cost of sales............................................................................. 123,406 108,467
---------- ----------
Gross profit............................................................................ 42,283 37,096
Selling, general and administrative expenses.............................................. 10,228 8,882
Recapitalization expenses................................................................. 21,151 --
Amortization expense...................................................................... 5,505 8,484
---------- ----------
Operating income........................................................................ 5,399 19,730
Interest expense, net..................................................................... 13,823 8,844
---------- ----------
Income (loss) before provision (benefit) for income taxes............................... (8,424) 10,886
Provision (benefit) for income taxes...................................................... (3,369) 4,376
---------- ----------
Income (loss) before extraordinary item................................................. (5,055) 6,510
Extraordinary loss on early extinguishment of debt, net of income taxes................... 8,112 805
---------- ----------
Net income (loss)....................................................................... $ (13,167) $ 5,705
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-29
<PAGE>
J. L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------------
<S> <C> <C>
1999 1998
---------- ----------
OPERATING ACTIVITIES:
Net income (loss)....................................................................... $ (13,167) $ 5,705
Adjustments to reconcile net income to net cash provided by (used for) operating
activities--
Depreciation and amortization......................................................... 16,565 17,535
Extraordinary loss.................................................................... 8,112 805
Other noncash items................................................................... 2,543 969
Changes in operating items............................................................ (22,980) (13,636)
---------- ----------
Net cash provided by (used for) operating activities................................ (8,927) 11,378
---------- ----------
INVESTING ACTIVITIES:
Acquisitions, net....................................................................... -- (71,740)
Capital expenditures, net............................................................... (12,157) (16,815)
---------- ----------
Net cash used for investing activities.............................................. (12,157) (88,555)
---------- ----------
FINANCING ACTIVITIES:
Borrowings (repayments) on revolving credit facilities.................................. (21,435) 27,745
Long-term borrowings.................................................................... 600,933 71,824
Repayment of long-term borrowings....................................................... (321,695) (58,142)
Recapitalization........................................................................ (355,009) --
Capital investment...................................................................... 156,000 34,383
Other................................................................................... (15,498) (4,839)
---------- ----------
Net cash provided by (used for) financing activities................................ 43,296 70,971
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS.............................. 1,017 (3,086)
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS................................................... 23,229 (9,292)
CASH AND CASH EQUIVALENTS, beginning of period............................................ 4,128 14,438
---------- ----------
CASH AND CASH EQUIVALENTS, end of period.................................................. $ 27,357 $ 5,146
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-30
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying condensed consolidated financial statements of J. L. French
Automotive Castings, Inc. and its wholly owned subsidiaries (collectively,
French or the Company) have been prepared by French without audit. The
information furnished in the condensed consolidated financial statements
includes normal recurring adjustments and reflects all adjustments which are, in
the opinion of management, necessary for a fair presentation of such financial
statements. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Although French believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and the notes thereto included
in this offering memorandum.
Sales and operating results for the six months ended June 30, 1999 and 1998
are not necessarily indicative of the results to be expected for the full year.
2. COMPREHENSIVE INCOME:
The table below presents comprehensive income, defined as changes in the
equity of the Company for the six month periods ended June 30, 1999 and 1998 (in
thousands):
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net income (loss)........................................ $ (13,167) $ 5,705
Change in translation adjustment......................... (2,734) 1,430
--------- ---------
Comprehensive income..................................... $ (15,901) $ 7,135
--------- ---------
--------- ---------
</TABLE>
3. RECAPITALIZATION TRANSACTION:
On April 21, 1999, the Company completed a recapitalization transaction (the
Recapitalization). Pursuant to the Recapitalization Agreement, immediately prior
to the Recapitalization, each share of Class B, Class C and Class D common stock
was converted into one share of Class A common stock. In addition, each share of
Convertible Redeemable 7% Series A preferred stock was converted into one share
of Series B preferred stock and 2.26372 shares of Class A common stock, and the
Company restated its Articles of Incorporation to authorize 20,000 shares of
Class A common stock, 30,000 shares of Class B common stock, 2,000 shares of
Class C common stock, 15,000 shares of Class D-1 common stock, 7,500 shares of
nonvoting Class D-2 common stock and 1,000 shares of Class E common stock.
Concurrently with the above transactions, new investors acquired 1,650.06 shares
of Class A common stock, 17,099.89 shares of Class B common stock, 4,274.97
shares of Class C common stock, 5,509.97 shares of Class D-1 common stock,
5,699.96 shares of Class D-2 common stock and 2,802.48 shares of Class E common
stock for total consideration of $156.0 million. In addition, the Company
borrowed $295.0 million pursuant to a new Senior Credit Facility and $130.0
million pursuant to a Subordinated Financing Facility.
The proceeds from the equity investment, the Senior Credit Facility and the
Subordinated Financing Facility were used to retire $184.0 million of existing
indebtedness, $12.3 million to redeem the outstanding Series B preferred stock,
$336.5 million to repurchase certain shares of Class A
F-31
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. RECAPITALIZATION TRANSACTION: (CONTINUED)
common stock, $21.5 million to redeem all outstanding options and approximately
$6.9 million of fees associated with the transaction. This redemption of stock
options was recorded as compensation expense at the date of the
Recapitalization. As a result of the Recapitalization, approximately 87% of all
classes of the combined capital stock of the Company were acquired which
represented 85% of the voting control. Subsequent to June 30, 1999, an
additional payment of $5.9 million was made to those persons who were
stockholders prior to the Recapitalization based on a post-closing determination
of working capital as of the closing date of the Recapitalization.
The Recapitalization, along with other recurring changes in retained
earnings, was included in stockholders' deficit during the six months ended June
30, 1999. The following is a rollforward of stockholders' deficit for such
period (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Beginning balance as of January 1, 1999........................... $ 124,688
Equity investment................................................. 156,000
Recapitalization.................................................. (342,792)
Net loss.......................................................... (13,167)
Other changes..................................................... (3,064)
---------
Ending balance as of June 30, 1999................................ $ (78,335)
---------
---------
</TABLE>
The Company's Senior Credit Facility provides for total borrowings of up to
$370.0 million, including (a) a $105.0 million of term loans consisting of a
$70.0 million U.S. dollar-denominated term loan and a pound sterling-denominated
term loan in an amount equal to the pound sterling equivalent (determined as of
the date such loan was made) of U.S. $17.5 million, which are available to
French, and a pound sterling-denominated term loan in an amount equal to the
pound sterling equivalent (determined as of the date such loan was made) of U.S.
$17.5 million, which is available to Morris Ashby (collectively, the tranche A
term loan), (b) a $190.0 million tranche B term loan, and (c) a $75.0 million
revolving credit facility. Initial interest rates as of April 30, 1999 on
borrowings under the Senior Credit Facility ranged from 7.375% to 8.078%. The
Senior Credit Facility requires the Company to maintain certain financial tests
including minimum interest coverage, minimum net worth and maximum leverage
tests. The debt is guaranteed only by our domestic subsidiaries (guarantors).
Borrowings under the tranche A term loan are due and payable April 21, 2005
and borrowings under the Tranche B term loan are due and payable October 21,
2006. The revolving credit facility is available until April 21, 2005. The
Senior Credit Facility is secured by all of the assets and by all present and
future subsidiaries of French in each case, with exceptions for certain foreign
subsidiaries.
The Company's Subordinated Financing Facility provides for total borrowings
of $130.0 million. The Subordinated Financing Facility has a final maturity of
October 21, 2008.
Pursuant to the Recapitalization, the historical basis of all assets and
liabilities will be retained for financial reporting purposes, and the
repurchase of the existing common stock and issuance of new common stock will be
accounted for as an equity transaction. In addition, the Company incurred
approximately $6.9 million of fees and expenses to finance the Recapitalization.
These costs were included in stockholders' investment as a cost of the
Recapitalization.
F-32
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. RECAPITALIZATION TRANSACTION: (CONTINUED)
On May 25, 1999, the Company completed an offering of $175.0 million of
11 1/2% Senior Subordinated Notes due 2009 (Subordinated Notes). Net proceeds of
the offering, approximately $169.6 million, combined with $.4 million of cash
were used to retire the $130.0 million Subordinated Financing Facility, $2.5
million of the tranche A term loan and $37.5 million of the tranche B term loan.
The Subordinated Notes are guaranteed by French and its domestic subsidiaries.
The Subordinated Notes contain certain restrictive covenants, and the Company
was in compliance with all such covenants at June 30, 1999.
In conjunction with the Recapitalization, offering and the resulting debt
repayments, the Company recorded an extraordinary loss, net of tax, of $8,112
during the second quarter of 1999. The loss includes the write-off of
unamortized debt issuance costs and original issue discount related to
indebtedness that was repaid.
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
The following consolidating financial information presents balance sheet,
statement of operations and cash flow information related to the Company's
businesses. Each Guarantor is a direct wholly owned subsidiary of the Company
and has fully and unconditionally guaranteed the 11.5% senior subordinated notes
issued by J.L. French Automotive Casting, Inc, on a joint and several basis.
Separate financial statements and other disclosures concerning the Guarantors
have not been presented because management believes that such information is not
material.
F-33
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE
30, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues...................................... $ -- $ 102,286 $ 43,277 $ -- $ 145,563
Cost of sales................................. -- 75,399 33,068 -- 108,467
------ ----------- ----------- ------------ ------------
Gross profit................................ -- 26,887 10,209 -- 37,096
Selling, general and administrative
expenses.................................... 75 2,802 6,005 -- 8,882
Amortization of intangible assets............. -- 7,548 936 -- 8,484
------ ----------- ----------- ------------ ------------
Operating income (loss)..................... (75) 16,537 3,268 -- 19,730
Interest expense (income)..................... (24) 7,149 1,719 -- 8,844
------ ----------- ----------- ------------ ------------
Income (loss) before income taxes, equity in
earnings (losses) of subsidiaries and
extraordinary loss........................ (51) 9,388 1,549 -- 10,886
Provision (benefit) for income taxes.......... -- 3,756 620 -- 4,376
Equity in earnings (losses) of subsidiaries... 5,756 -- -- (5,756) --
------ ----------- ----------- ------------ ------------
Income before extraordinary loss............ 5,705 5,632 929 (5,756) 6,510
Extraordinary loss............................ -- 805 -- -- 805
------ ----------- ----------- ------------ ------------
Net income (loss)........................... $ 5,705 $ 4,827 $ 929 $ (5,756) $ 5,705
------ ----------- ----------- ------------ ------------
------ ----------- ----------- ------------ ------------
</TABLE>
F-34
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30,
1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................... $ 5,705 $ 4,827 $ 929 $ (5,756) $ 5,705
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities--
Depreciation and amortization............. -- 13,719 3,816 -- 17,535
Other non-cash............................ -- 2,074 (300) -- 1,774
(Income)/loss from investment in
subsidiaries............................ (5,756) -- -- 5,756 --
Change in other operating
activities.............................. 6,288 (33,442) 10,155 3,363 (13,636)
------------ ----------- ----------- ------------ -------------
Net cash provided by (used for)
operating activities.................. 6,237 (12,822) 14,600 3,363 11,378
------------ ----------- ----------- ------------ -------------
INVESTING ACTIVITIES:
Acquisitions, net........................... (38,658) -- (73,032) 39,950 (71,740)
Capital expenditures, net................... -- (13,969) (2,846) -- (16,815)
------------ ----------- ----------- ------------ -------------
Net cash provided by (used for) investing
activities.............................. (38,658) (13,969) (75,878) 39,950 (88,555)
------------ ----------- ----------- ------------ -------------
FINANCING ACTIVITIES:
Borrowings on revolving credit facilities,
net....................................... -- 26,107 1,638 -- 27,745
Long-term borrowings........................ -- 45,000 26,824 -- 71,824
Repayment of long-term borrowings........... -- (57,482) (660) -- (58,142)
Capital investment.......................... 36,194 -- 38,139 (38,950) 34,383
Other....................................... (3,855) (210) (774) -- (4,839)
------------ ----------- ----------- ------------ -------------
Net cash provided by (used for) financing
activities.............................. 32,339 13,415 65,167 (39,950) 70,971
------------ ----------- ----------- ------------ -------------
EFFECT OF EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS................................. -- -- 277 (3,363) (3,086)
------------ ----------- ----------- ------------ -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS....... (82) (13,376) 4,166 -- (9,292)
CASH AND CASH EQUIVALENTS, beginning of
period...................................... 84 14,354 -- -- 14,438
------------ ----------- ----------- ------------ -------------
CASH AND CASH EQUIVALENTS, end of period...... $ 2 $ 978 $ 4,166 $ -- $ 5,146
------------ ----------- ----------- ------------ -------------
------------ ----------- ----------- ------------ -------------
</TABLE>
F-35
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF JUNE 30, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................... $ 7,733 $ 15,403 $ 4,221 $ -- $ 27,357
Accounts receivable, net.................... 3,612 43,876 18,372 -- 65,860
Inventories................................. -- 7,338 8,467 -- 15,805
Other current assets........................ 1,407 14,181 3,544 -- 19,132
------------ ----------- ----------- ------------ ------------
Total current assets...................... 12,752 80,798 34,604 -- 128,154
------------ ----------- ----------- ------------ ------------
Property, Plant & Equipment, net.............. -- 80,685 63,402 -- 144,087
Investment in Subsidiaries.................... 133,814 -- -- (133,814) --
Intangible and Other Assets................... 7,571 96,624 62,272 -- 166,467
------------ ----------- ----------- ------------ ------------
$ 154,137 $ 258,107 $ 160,278 $ (133,814) $ 438,708
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT (DEFICIT)
Current Liabilities:
Accounts payable............................ $ -- $ 10,715 $ 14,270 $ -- $ 24,985
Accrued liabilities......................... 1,822 7,529 7,777 -- 17,128
Current portion of long-term debt........... 7,320 -- 4,078 -- 11,398
------------ ----------- ----------- ------------ ------------
Total current liabilities................. 9,142 18,244 26,125 -- 53,511
------------ ----------- ----------- ------------ ------------
Long-Term Debt................................ 404,762 -- 55,316 -- 460,078
Other Noncurrent Liabilities.................. (3,090) -- 6,544 -- 3,454
Inter-Company................................. (179,646) 143,818 35,828 -- --
------------ ----------- ----------- ------------ ------------
Total liabilities......................... 231,168 162,062 123,813 -- 517,043
------------ ----------- ----------- ------------ ------------
Common Stock.................................. -- -- -- -- --
Additional Paid-In-Capital.................... -- 84,857 38,018 (122,875) --
Accumulated Deficit........................... (77,031) 11,188 (249) (10,939) (77,031)
Accumulated and Other Comprehensive Income.... -- -- (1,304) -- (1,304)
------------ ----------- ----------- ------------ ------------
Total stockholders' investment (deficit).... (77,031) 96,045 36,465 (133,814) (78,335)
------------ ----------- ----------- ------------ ------------
$ 154,137 $ 258,107 $ 160,278 $ (133,814) $ 438,708
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-36
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE
30, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues...................................... $ -- $ 117,169 $ 48,520 $ -- $ 165,689
Cost of sales................................. -- 84,299 39,107 -- 123,406
------------ ----------- ----------- ------------ ------------
Gross profit................................ -- 32,870 9,413 -- 42,283
Selling, general and administrative
expenses.................................... 88 4,584 5,556 -- 10,228
Recapitalization expenses..................... 5,411 15,740 -- -- 21,151
Amortization of intangible assets............. 4 4,647 854 -- 5,505
------------ ----------- ----------- ------------ ------------
Operating income (loss)..................... (5,503) 7,899 3,003 -- 5,399
Interest expense.............................. 3,527 7,360 2,936 -- 13,823
------------ ----------- ----------- ------------ ------------
Income (loss) before income taxes, equity in
earnings (losses) of subsidiaries and
extraordinary loss........................ (9,030) 539 67 -- (8,424)
Provision (benefit) for income taxes.......... (3,612) 216 27 -- (3,369)
Equity in earnings (losses) of subsidiaries... (3,663) -- -- 3,663 --
------------ ----------- ----------- ------------ ------------
Income before extraordinary loss............ (9,081) 323 40 3,663 (5,505)
Extraordinary loss............................ 4,086 4,026 -- -- 8,112
------------ ----------- ----------- ------------ ------------
Net income (loss)........................... $ (13,167) $ (3,703) $ 40 $ 3,663 $ (13,167)
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-37
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
J. L. FRENCH AUTOMOTIVE CASTING, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30,
1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).......................... $ (13,167) $ (3,703) $ 40 $ 3,663 $ (13,167)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities--
Depreciation and amortization.............. 4 11,684 4,877 -- 16,565
Other non-cash............................. 4,086 6,569 -- -- 10,655
Income (loss) in subsidiary................ 3,663 -- -- (3,663) --
Change in other operating activities....... (43,560) 8,613 11,465 502 (22,980)
------------ ----------- ----------- ------------ ------------
Net cash provided by (used for) operating
activities............................. (48,974) 23,163 16,382 502 (8,927)
------------ ----------- ----------- ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures, net ................. -- (8,020) (4,137) -- (12,157)
------------ ----------- ----------- ------------ ------------
Net cash used for investing activities... -- (8,020) (4,137) -- (12,157)
------------ ----------- ----------- ------------ ------------
FINANCING ACTIVITIES:
Repayments on revolving credit
facilities............................... -- (15,000) (6,435) -- (21,435)
Long-term borrowings....................... 582,491 -- 18,442 -- 600,933
Repayment of long-term borrowings.......... (170,000) (126,625) (25,070) -- (321,695)
Recapitalization........................... (199,009) -- -- -- (199,009)
Other...................................... (157,123) 141,625 -- -- (15,498)
------------ ----------- ----------- ------------ ------------
Net cash provided by (used for) financing
activities............................. 56,359 -- (13,063) -- 4,329
------------ ----------- ----------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS......................... 326 -- 1,193 (502) 1,017
------------ ----------- ----------- ------------ ------------
NET CHANGES IN CASH AND CASH EQUIVALENTS..... 7,711 15,143 375 -- 23,229
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 22 260 3,846 -- 4,128
------------ ----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS, end of period..... $ 7,733 $ 15,403 $ 4,221 $ -- $ 27,357
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
F-38
<PAGE>
MORRIS ASHBY PLC
Report of Independent Accountants
To the Board of Directors and Shareholders of Morris Ashby plc
- --------------------------------------------------------------------------------
In our opinion, the accompanying consolidated balance sheets and the related
consolidated profit and loss accounts and statements of cash flows present
fairly, in all material respects, the financial position of Morris Ashby plc and
its subsidiaries ("the Company") at 31 March 1997 and 1996, and the results of
their operations and their cash flows for each of the two years in the period
ended 31 March 1997, in conformity with accounting principles generally accepted
in the United Kingdom. These consolidated financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United Kingdom which do not differ in any material
respect from auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the United
States. The application of the latter would have affected the determination of
consolidated net income expressed in pounds sterling for each of the two years
in the period ended 31 March 1997 and the determination of consolidated
shareholders' equity also expressed in pounds sterling at 31 March 1997 and 31
March 1996 to the extent summarised in Note 23 to the consolidated financial
statements.
DRAFT FOR DISCUSSION PURPOSES ONLY
Birmingham, England
8 July 1997, except for note 23 which is as of 9 August 1999
- --------------------------------------------------------------------------------
F-39
<PAGE>
MORRIS ASHBY PLC
Consolidated Profit and Loss Account
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
Notes L'000 L'000
<S> <C> <C> <C>
TURNOVER 2 39,805 36,255
Cost of sales (30,284) (28,414)
--------- ---------
GROSS PROFIT 9,521 7,841
Distribution costs (678) (660)
Administrative expenses (5,012) (4,031)
--------- ---------
OPERATING PROFIT 3,831 3,150
Interest receivable and similar income 4 17
Interest payable and similar charges (339) (145)
--------- ---------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 3 3,496 3,022
Tax on profit on ordinary activities 4 (796) (684)
--------- ---------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION FOR THE FINANCIAL YEAR 2,700 2,338
Dividends 5 (1,024) (896)
--------- ---------
RETAINED PROFITS 16 1,676 1,442
--------- ---------
EARNINGS PER SHARE 6 22.5P 19.6p
--------- ---------
</TABLE>
The above amounts arise solely from continuing activities.
The profit for the financial year includes all recognised gains and losses in
the year. The historical cost profit on ordinary activities before taxation is
not materially different from the above figures.
- --------------------------------------------------------------------------------
F-40
<PAGE>
MORRIS ASHBY PLC
Balance Sheets
As at 31 March 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notes Group Company
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Tangible assets 7 22,925 17,978 21,862 17,082
Investments in group undertakings 9 - - 2,355 2,355
--------- --------- --------- ---------
22,925 17,978 24,217 19,437
CURRENT ASSETS
Stocks 10 3,298 2,381 3,230 2,287
Debtors 11 7,604 8,141 7,965 8,563
Cash at bank and in hand 1,120 - 1,119 -
--------- --------- --------- ---------
12,022 10,522 12,314 10,850
CREDITORS (amounts falling due within one
year) 12 (15,192) (12,156) (19,595) (16,554)
--------- --------- --------- ---------
NET CURRENT LIABILITIES (3,170) (1,634) (7,281) (5,704)
--------- --------- --------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES 19,755 16,344 16,936 13,733
CREDITORS (amounts falling due
after more than one year) 13 (3,645) (1,877) (4,077) (2,321)
PROVISIONS FOR LIABILITIES AND CHARGES 14 (437) (571) (401) (498)
--------- --------- --------- ---------
15,673 13,896 12,458 10,914
--------- --------- --------- ---------
CAPITAL AND RESERVES - EQUITY INTERESTS
Share capital 15 1,205 1,198 1,205 1,198
Share premium 16 5,803 5,709 5,803 5,709
Revaluation reserve 16 130 131 130 131
Capital reserve 16 376 376 364 364
Profit and loss account 16 8,159 6,482 4,956 3,512
--------- --------- --------- ---------
SHAREHOLDERS' FUNDS 21 15,673 13,896 12,458 10,914
--------- --------- --------- ---------
</TABLE>
Approved by the Board on 8 July 1997
N J Gardner
DIRECTOR
- --------------------------------------------------------------------------------
F-41
<PAGE>
MORRIS ASHBY PLC
Cash Flow Statement
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
Notes L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES 22(1) 7,593 5,071
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 4 17
Interest paid (206) (40)
Interest element of finance lease rental payments (150) (98)
--------- ---------
(352) (121)
TAXATION
UK Corporation tax paid (724) (741)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (6,511) (4,472)
Sale of tangible fixed assets 76 89
--------- ---------
(6,435) (4,383)
---------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings - (117)
Net overdraft acquired with subsidiary - (379)
--------- ---------
- (496)
EQUITY DIVIDENDS PAID (918) (831)
--------- ---------
NET CASH OUTFLOW BEFORE FINANCING (836) (1,501)
FINANCING
Issue of ordinary share capital 101 15
Debt due within one year:
Increase in loans 22(2) 200 -
Debt due beyond a year:
Increase in loans 22(2) 650
Repayment of loan notes 22(2) (285) -
Capital element of finance lease rental payments 22(2) (533) (349)
Amounts received under finance lease arrangements 22(2) 2,160 -
--------- ---------
NET CASH INFLOW/(OUTFLOW) FROM FINANCING 2,293 (334)
--------- ---------
INCREASE/(DECREASE) IN CASH 22(3) 1,457 (1,835)
--------- ---------
</TABLE>
The notes to the cash flow statement are shown in note 22 to the financial
statements.
The group have adopted the revised FRS1 "Cash Flow Statements" and accordingly
certain comparative figures have been reanalysed.
- --------------------------------------------------------------------------------
F-42
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
1 ACCOUNTING POLICIES
BASIS OF CONSOLIDATION AND ACCOUNTING
The consolidated financial statements incorporate the financial statements of
the company and its subsidiaries made up to 31 March year end. The financial
statements have been prepared under the historical cost convention as modified
by the revaluation of certain fixed assets, and comply with applicable
Accounting Standards.
DEPRECIATION OF FIXED ASSETS
Depreciation is provided on a straight line basis to write off the cost or
valuation of fixed assets over their expected useful lives at the following
annual rates:
<TABLE>
<S> <C>
Freehold property - at a rate of 2% (no depreciation on land)
Leasehold property - by equal annual instalments over the lease period
Plant and machinery - at rates varying from 10 per cent to 33 1/3 per cent.
</TABLE>
No depreciation is charged on assets in the course of construction.
GOODWILL
Goodwill on acquisition, representing the amount by which the acquisition cost
exceeds the fair value of the net assets acquired, is written off to reserves in
the year of acquisition.
GOVERNMENT GRANTS
Government grants are treated as a deferred creditor and are credited to the
profit and loss account over the lives of the fixed assets to which they relate.
LEASED ASSETS
Amounts due under finance leases are disclosed as a debtor and the interest
element of the finance charge is credited to the profit and loss account over
the primary hire period in respect of assets held for leasing to third parties.
Fixed assets acquired under hire purchase agreements and finance lease
agreements are recorded in the balance sheet as fixed tangible assets at their
equivalent capital value and depreciated over the useful life of the asset. The
corresponding liability is recorded as a creditor and the interest element of
the finance charge is charged to the profit and loss account over the primary
lease period.
STOCKS
Stocks have been valued at the lower of cost and net realisable value. Cost
includes raw materials, labour and, where applicable, a proportion of direct
overheads.
Tooling stocks are valued as costs to date net of payments on account and any
anticipated losses. Profit recognition is deferred until the tool is complete.
TURNOVER
Turnover represents the invoiced value of sales excluding sales within the group
and value added tax.
DEFERRED TAXATION
Provision is only made for deferred taxation to the extent that it is considered
that a liability will crystallise in the foreseeable future.
RESEARCH AND DEVELOPMENT
Expenditure on research and development is charged to revenue in the year in
which it is incurred.
- --------------------------------------------------------------------------------
F-43
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
1 ACCOUNTING POLICIES (CONTINUED)
PENSION COSTS
Contributions to the group's defined benefit pension scheme are charged to the
profit and loss account so as to spread the cost of pensions over the service
lives of employees in the scheme. Variations from the regular cost are spread
over the expected remaining service lives of current employees in the scheme.
The pension cost is assessed in accordance with the advice of qualified
actuaries. Differences between the charge and the contributions paid to the
pension scheme are included in provisions for liabilities and charges.
Contributions are also paid into a defined contribution pension scheme. These
costs are charged to the profit and loss account on an accruals basis.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated into
sterling or the rates of exchange ruling at the end of the financial year.
Foreign currency transactions during the year are translated into sterling at
the rate of exchange ruling on the date of the transaction. All profit and
losses on exchange realised during the year are dealt with through the profit
and loss account.
2 SEGMENT INFORMATION
<TABLE>
<CAPTION>
1997 1996
The geographical analysis of the group's turnover by destination is as follows: L'000 L'000
<S> <C> <C>
UK 31,859 29,574
Other European countries 6,434 6,245
Other 1,512 436
--------- ---------
39,805 36,255
--------- ---------
</TABLE>
The group operates a single class of business from the United Kingdom.
- --------------------------------------------------------------------------------
F-44
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
3 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS STATED AFTER
CHARGING/(CREDITING):
<TABLE>
<CAPTION>
1997 1996
L'000 L'000
<S> <C> <C>
Staff costs:
Wages and salaries 11,672 10,616
Social security costs 1,070 983
Other pension costs (Note 17) 742 592
--------- ---------
13,484 12,191
--------- ---------
Details of directors' emoluments and share options are included in the Report of the
Remuneration Committee on pages F-48 to F-49.
Depreciation of tangible fixed assets - leased (plant and machinery) 345 263
- owned 1,853 1,458
Research and development 134 168
Fees paid to Price Waterhouse:
Audit fees (including L45,000 in respect of the company (1996 - L'45,000)) 50 48
Non-audit fees 45 53
Interest payable:
Bank loans and overdrafts 159 27
Loan notes 47 13
Finance lease charges 133 105
Operating lease rentals for land and buildings (expiring after five years) 120 120
Income from government grants (18) (17)
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
1997 1996
4 TAX ON PROFIT ON ORDINARY ACTIVITIES L'000 L'000
<S> <C> <C>
Corporation tax:
On profit for the year at 33% (1996 - 33%) 879 687
Adjustment in respect of prior year 85 (21)
Deferred tax (Note 14) (168) 18
--------- ---------
796 684
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
1997 1996
5 DIVIDENDS L'000 L'000
<S> <C> <C>
Interim paid 2.6p (1996 - 2.45p) per 10p Ordinary share 313 291
Final proposed 5.9p (1996 - 5.05p) per 10p Ordinary share 711 605
--------- ---------
1,024 896
--------- ---------
</TABLE>
6 EARNINGS PER SHARE
Earnings per share are based on the profit on ordinary activities after taxation
for the year amounting to L2,700,000 (1996 - L2,338,000) divided by the average
number of 12,025,648 (1996 - 11,910,264) Ordinary shares in issue during the
year.
- --------------------------------------------------------------------------------
F-45
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
7 FIXED ASSETS
<TABLE>
<CAPTION>
Long Short Assets
Freehold leasehold leasehold Plant in the
land and land and land and and course of
buildings buildings buildings machinery construction Total
L'000 L'000 L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C> <C>
GROUP
Cost or valuation:
At 31 March 1996 2,165 3,060 - 21,309 924 27,458
Transfers - (52) 282 703 (933) -
Additions 22 - - 4,340 2,837 7,199
Disposals - - - (245) - (245)
--------- --------- ----------- ----------- ------------- ---------
At 31 March 1997 2,187 3,008 282 26,107 2,828 34,412
--------- --------- ----------- ----------- ------------- ---------
Depreciation:
At 31 March 1996 73 172 - 9,235 - 9,480
Transfers - (11) 11 - - -
Charge for the year 35 34 15 2,114 - 2,198
On disposals - - - (191) - (191)
--------- --------- ----------- ----------- ------------- ---------
At 31 March 1997 108 195 26 11,158 - 11,487
--------- --------- ----------- ----------- ------------- ---------
Net book amount:
At 31 March 1997 2,079 2,813 256 14,949 2,828 22,925
--------- --------- ----------- ----------- ------------- ---------
At 31 March 1996 2,092 2,888 - 12,074 924 17,978
--------- --------- ----------- ----------- ------------- ---------
</TABLE>
Included within the plant and machinery are assets purchased under finance
leases with original cost of L4,392,000 (1996 - L2,521,000) and accumulated
depreciation of L867,000 (1996 - L733,000).
- --------------------------------------------------------------------------------
F-46
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long Short Assets
Freehold leasehold leasehold Plant in the
land and land and land and and course of
buildings buildings buildings machinery construction Total
L'000 L'000 L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C> <C>
COMPANY
Cost or valuation:
At 31 March 1996 1,767 3,060 - 20,176 924 25,927
Transfers - (52) 282 703 (933) -
Additions 22 - - 4,048 2,837 6,907
Disposals - - - (232) - (232)
--------- --------- --------- ---------- ----------- ---------
At 31 March 1997 1,789 3,008 282 24,695 2,828 32,602
--------- --------- --------- ---------- ----------- ---------
Depreciation:
At 31 March 1996 34 172 - 8,639 - 8,845
Transfers - (11) 11 - - -
Charge for the year 30 34 15 1,994 - 2,073
On disposals - - - (178) - (178)
--------- --------- --------- ---------- ----------- ---------
At 31 March 1997 64 195 26 10,455 - 10,740
--------- --------- --------- ---------- ----------- ---------
Net book amount:
At 31 March 1997 1,725 2,813 256 14,240 2,828 21,862
--------- --------- --------- ---------- ----------- ---------
At 31 March 1996 1,733 2,888 - 11,537 924 17,082
--------- --------- --------- ---------- ----------- ---------
</TABLE>
Group and company long leasehold land and buildings include assets valued on an
open market existing use basis as at 31 March 1987 at L525,000 (1996 -
L525,000). The historic cost of these assets was L416,000 (1996 - L416,000) and
the historic cost depreciation charge L1,000 (1996 - L1,000).
Included within the company plant and machinery are assets purchased under
finance leases with original cost of L6,175,000 (1996 - L4,167,000) and
accumulated depreciation of L1,841,000 (1996 - L1,633,000).
- --------------------------------------------------------------------------------
F-47
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
8 CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
Group Company
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Future capital expenditure authorised and contracted for 7,579 1,645 7,579 1,645
--------- --------- --------- ---------
</TABLE>
9 INVESTMENTS IN GROUP UNDERTAKINGS
<TABLE>
<CAPTION>
Company
1997 1996
L'000 L'000
<S> <C> <C> <C> <C>
Shares at cost 2,101 2,101
Long term loan to group undertaking 254 254
--------- ---------
2,355 2,355
--------- ---------
</TABLE>
The subsidiary undertakings, all of which are included in the consolidated
accounts, are as follows:
<TABLE>
<CAPTION>
Principal
country of Percentage
Business operation held
<S> <C> <C> <C>
Wilson & Royston Limited Tool Manufacturers United Kingdom 100%
MAC Leasing Limited Leasing United Kingdom 100%
Morris Ashby Castings Limited High Pressure Diecasting United Kingdom 100%
Kaye (Presteigne) Limited Gravity and HIgh Pressure Diecasting United Kingdom 100%
Burdon and Miles Limited High Pressure Diecasting United Kingdom 100%
UJP Tools Limited Tooling Manufacturers United Kingdom 100%
Marketing computer prediction
Foundry Computational Services Limited software United Kingdom 51%
</TABLE>
All the shares are ordinary shares. The voting rights held in respect of each
subsidary are in the same proportion as the shares held.
Morris Ashby Castings, Kaye (Presteigne), Burdon and Miles and UJP Tools are
dormant companies which trade as agents of Morris Ashby plc.
- --------------------------------------------------------------------------------
F-48
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
10 STOCKS
<TABLE>
<CAPTION>
Group Company
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Raw materials and consumables 703 553 703 553
Work in progress:
- - Castings 1,344 688 1,344 688
- - Tooling 1,050 841 982 747
Finished goods and goods for resale 201 299 201 299
--------- --------- --------- ---------
3,298 2,381 3,230 2,287
--------- --------- --------- ---------
</TABLE>
Tooling stocks are disclosed net of L2,453,000 of payments on account (1996 -
L1,182,000).
The estimated replacement cost of stocks does not materially exceed the balance
sheet amount.
11 DEBTORS
<TABLE>
<CAPTION>
Group Company
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Trade debtors 7,184 7,880 7,046 7,543
Amounts owed by group undertakings - - 498 699
Other debtors 83 158 65 127
Prepayments and accrued income 214 103 178 97
Advance corporation tax recoverable 123 - 178 97
--------- --------- --------- ---------
7,604 8,141 7,965 8,563
--------- --------- --------- ---------
</TABLE>
Group other debtors includes L9,000 (1996 - L9,000) due under finance leases due
within a year and L9,000 (1996 - L18,000) due after more than one year.
- --------------------------------------------------------------------------------
F-49
<PAGE>
MORRIS ASHBY plc
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
12 CREDITORS (AMOUNTS FALLING DUE WITHIN ONE YEAR)
<TABLE>
<CAPTION>
Group Company
-------------------- --------------------
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Bank loans and overdrafts 232 369 200 303
Payments on account 906 657 795 515
Trade creditors 7,714 5,516 7,268 5,466
Amounts owed to group undertakings - - 5,107 4,828
Amounts owed to group undertakings under finance leases - - 92 88
Other creditors 64 240 63 224
Corporation tax payable 715 477 666 458
Advance corporation tax payable 256 227 256 227
Taxation and social security 2,319 1,805 2,266 1,737
Accruals and deferred income 1,538 1,807 1,514 1,762
Lease obligations 737 453 657 341
Proposed dividends 711 605 711 605
--------- --------- --------- ---------
15,192 12,156 19,595 16,554
--------- --------- --------- ---------
</TABLE>
13 CREDITORS (AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR)
<TABLE>
<CAPTION>
Group Company
-------------------- --------------------
1997 1996 1997 1996
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Bank loan (between 2 and 5 years) 650 - 650 -
Amounts owed to group undertakings under finance leases - - 432 524
Accruals and deferred income 42 60 42 60
Lease obligations (between 2 and 5 years) 1,910 1,087 1,910 1,007
Lease obligations (due after 5 years) 598 - 598 -
Loan notes (between 2 and 5 years) 445 730 445 730
--------- --------- --------- ---------
3,645 1,877 4,077 2,321
--------- --------- --------- ---------
</TABLE>
Accruals and deferred income relate to grants received for capital expenditure
incurred. The grants are being amortised over 10 years.
The loan notes, issued as part consideration for the acquisition of Wilson &
Royston, are secured by a guarantee from Barclays Bank plc.
- --------------------------------------------------------------------------------
F-50
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
14 PROVISION FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
Group Company
----------------------------------------- ------------------------------
Pensions and Pensions and
Deferred similar Deferred similar
taxation obligations Total taxation obligations
<S> <C> <C> <C> <C> <C>
At 31 March 1996 108 463 571 35 463
Current year charge/(utilisation) (168) (62) (230) (89) (62)
ACT set-off 96 - 96 54 -
--
----- --- ----- ---
At 31 March 1997 36 401 437 - 401
--
----- --- ----- ---
<CAPTION>
Total
<S> <C>
At 31 March 1996 498
Current year charge/(utilisation) (151)
ACT set-off 54
-----
At 31 March 1997 401
-----
</TABLE>
The full potential amount of deferred taxation calculated at 31% (1996 - 33%),
compared to the actual, are as follows:
<TABLE>
<CAPTION>
Group
----------------------------------------------
Full Provision
Partial Provision --------------------
------------------------ 1997 1996
1997 L'000 1996 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Accelerated capital allowances 107 492 1,936 1,783
Potential capital gain on revaluation surplus - - 110 117
Short-term timing differences (16) (233) (144) (213)
Advance corporation tax recoverable (55) (151) - -
--- --- --------- ---------
36 108 1,902 1,687
--- --- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Company
----------------------------------------------
Full Provision
Partial Provision --------------------
------------------------ 1997 1996
1997 L'000 1996 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Accelerated capital allowances - 304 1,714 1,545
Potential capital gain on revaluation surplus - - 110 117
Short-term timing differences - (215) (129) (195)
Advance corporation tax recoverable - (54) - -
--- --- --------- ---------
- 35 1,695 1,467
--- --- --------- ---------
</TABLE>
- --------------------------------------------------------------------------------
F-51
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
15 SHARE CAPITAL
<TABLE>
<CAPTION>
1997
L'000 1996 L'000
<S> <C> <C>
Authorised:
Ordinary shares of 10p each 1,550 1,550
--------- -----------
Allotted and fully paid:
Ordinary shares of 10p each 1,205 1,198
--------- -----------
</TABLE>
During the year, 69,880 shares were issued through the exercise of share
options. 64,200 of these were to directors as disclosed in the Report of the
Remuneration Committee, 5,300 were issued at 90p each and the remaining 380 at
167p.
At 31 March 1997 the total number of Ordinary shares under the Employee Share
Option Scheme was 14,100 (1996 - 83,600):
<TABLE>
<CAPTION>
Ordinary shares
---------------------------------
31 March 31 March Price per
Date of grant Period exercisable 1997 1996 share
<S> <C> <C> <C> <C>
11 April 1991 to 11 April
11 April 1988 1998 14,100 25,400 90p
8 July 1993 8 July 1996 to 8 July 2003 - 58,200 156p
---------- ----------
14,100 83,600
---------- ----------
</TABLE>
At 31 March 1997 the total number of Ordinary shares under the Savings Related
Share Option Scheme 1996 was 409,353 (1996 - 409,733):
<TABLE>
<CAPTION>
Ordinary shares
---------------------------------
31 March 31 March Price per
Date of grant Period exercisable 1997 1996 share
<S> <C> <C> <C> <C>
1 December 1994 1 December 1999 to 1 June 2000 281,973 282,353 167p
1 December 1994 12 December 2001 to 1 June 2002 127,380 127,380 167p
---------- ----------
409,353 409,733
---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
F-52
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
16 RESERVES
<TABLE>
<CAPTION>
Group
------------------------------------------------------------------
Share premium Revaluation Capital Profit and
account reserve reserve loss account Total
L'000 L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C>
At 31 March 1996 5,709 131 376 6,482 12,698
Premium on share issues 94 - - - 94
Transfers - (1) - 1 -
Retained earnings - - - 1,676 1,676
--------------- ------------ --------- ------------- ---------
At 31 March 1997 5,803 130 376 8,159 14,468
--------------- ------------ --------- ------------- ---------
</TABLE>
The cumulative goodwill written off against the profit and loss reserve on
acquisitions in L1,125,000 (1996 - L1,125,000).
<TABLE>
<CAPTION>
Company
------------------------------------------------------------------
Share premium Revaluation Capital Profit and
account reserve reserve loss account Total
L'000 L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C>
At 31 March 1996 5,709 131 364 3,512 9,716
Premium on share issues 94 - - - 94
Transfers (1) - 1 -
Retained earnings - - - 1,443 1,443
--------------- ------------ --------- ------------- ---------
At 31 March 1997 5,803 130 364 4,956 11,253
--------------- ------------ --------- ------------- ---------
</TABLE>
As permitted by Section 230 of the Companies Act 1985 the company has not
presented its own profit and loss account. The amount of the profit for the
financial year dealt within the accounts of the holding company is L2,467,000
(1996 - L2,275,000).
17 PENSION COSTS
The group operates a funded defined benefits pension scheme known as the Morris
Ashby plc Pension Scheme. The assets of this scheme are held in a separate
trustee administered fund. The latest actuarial valuation of this scheme was
carried out by independent actuaries as at 6 April 1996 using the projected unit
method. The principal assumptions adopted were that the long term annual rate of
return on investments would be 9.0%, that salary increases would average 7.0%
per annum and that pensions in payment guaranteed to increase at 5.0% per annum
have been assumed to increase at 5.0% per annum, pensions increasing in line
with Limited Price Indexation have been assumed to increase at 4.25% per annum.
In addition the actuary has also taken into account changes which have been
agreed with the Trustee and relevant members. These are that pension increases
for directors will be restricted to 5.0% per annum and the inclusion of a cap on
pensionable earnings for existing directors.
At the date of the latest actuarial valuation, the market value of the assets of
the scheme was L9.6 million. The actuarial value of those assets was sufficient
to cover 91% of the value of the projected benefits to which members will be
entitled for their membership up to the valuation date allowing for expected
future increases in earnings. The deficiency on a current funding level basis
was L851,000. On the recommendations of the actuary, company contributions will
be paid at the rate of 14.0% of pensionable salaries so as to eliminate the
deficit over a 10 year period.
- --------------------------------------------------------------------------------
F-53
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
17 PENSION COSTS (CONTINUED)
The SSAP 24 pension charge for the year was L717,000 (1996 - L585,000) which is
after charging an additional L35,000 as a result of the actuarial deficit (1996
- - L28,000).
Actual contributions during the year at the annual rate of 14.7% of pensionable
salaries, were L62,000 above the SSAP 24 pension charge. Hence the reduced
pension provision - see Note 14.
The group also operates a funded defined contribution pension scheme. The assets
of the scheme are held seperately from those of the company in an independently
administered fund. The pension cost charge represents contributions payable by
the company to the fund and amounted to L25,000 (1996 - L8,000).
18 EMPLOYEES
The average number of persons employed by the group during the year was:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Witham 246 207
Presteigne 236 255
Cheshunt 150 152
Birmingham 21 21
Brighouse 11 9
--------- ---------
664 644
--------- ---------
</TABLE>
19 CONTINGENT LIABILITIES
The company has guaranteed the liabilities of its subsidiaries to Barclays Bank
Plc. As at year end, the subsidiaries had no liabilities owing to Barclays Bank
plc (1996 - LNil).
20 OPERATING LEASES
At March 31, 1997, there were annual lease commitments under operating leases
which expire as follows:
<TABLE>
<CAPTION>
1997 1996
LAND AND Land and
BUILDINGS OTHER Buildings Other
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Within 1 year - 1 - 11
Between 2 and 5 years - 54 - 31
More than 5 years 120 - 120 -
---------- --------- ---------- ---------
120 55 120 42
---------- --------- ---------- ---------
</TABLE>
- --------------------------------------------------------------------------------
F-54
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
21 MOVEMENT IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Group Company
1997 1997
L'000 1996 L'000 L'000 1996 L'000
<S> <C> <C> <C> <C>
Profit for the financial year 2,700 2,338 2,467 2,275
Dividends (1,024) (896) (1,024) (896)
--------- ----------- --------- -----------
1,676 1,442 1,443 1,379
Share capital subscribed (net of expenses) 7 247 7 247
Share options exercised 94 15 94 15
Goodwill written off - (789) - -
--------- ----------- --------- -----------
Net addition to Shareholders' funds 1,777 915 1,544 1,641
Opening Shareholders' funds 13,896 12,981 10,914 9,273
--------- ----------- --------- -----------
Closing Shareholders' funds 15,673 13,896 12,458 10,914
--------- ----------- --------- -----------
</TABLE>
22 CASH FLOW STATEMENT
(1) Reconciliation of operating profit to net cash inflow
from operating activities
<TABLE>
<CAPTION>
1997
L'000 1996 L'000
<S> <C> <C>
Operating profit 3,831 3,150
Depreciation 2,198 1,721
Profit on disposal of fixed assets (22) (29)
Movement in pension provision (62) (70)
Amortization of Government Grants (18) (17)
--------- -----------
5,927 4,755
Working capital movements:
(Increase)/decrease in stocks (917) 444
Decrease/(increase) in debtors 677 (513)
Increase in creditors 1,906 385
--------- -----------
Net cash inflow from continuing operating activities 7,593 5,071
--------- -----------
</TABLE>
- --------------------------------------------------------------------------------
F-55
<PAGE>
MORRIS ASHBY plc
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
22 CASH FLOW STATEMENT (CONTINUED)
(2) Analysis of net debt
<TABLE>
<CAPTION>
At Cash Other AT
31 March 1996 flow movements 31 MARCH 1997
L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C>
Cash at bank and in hand - 1,120 - 1,120
Overdrafts (369) 337 - (32)
---------
1,457
Debt due within one year - (200) - (200)
Debt due beyond a year (730) (365) - (1,095)
Finance leases (1,540) (1,627) (78) (3,245)
---------
(2,192)
-------------- --------- ----------- ---------------
(2,639) (735) (78) (3,452)
-------------- --------- ----------- ---------------
</TABLE>
Cash flows relating to finance leases are composed of cash inflows of L2,160,000
from assets sold and leased back and cash outflows of L533,000 from capital
elements of finance lease rental payments.
Other movements represent new finance lease arrangements in respect of assets
with a capital value at the inception of the lease of L78,000.
(3) Movement in Group net debt
<TABLE>
<CAPTION>
1997 1996
L'000 L'000
<S> <C> <C>
Increase/(decrease) in cash 1,457 (1,835)
Cash (inflow)/outflow from increase in debt and lease financing (2,192) 349
--------- ---------
Movement in debt resulting from cash flows (735) (1,486)
Finance leases acquired with subsidiary - (185)
New finance leases (78) (252)
Loan notes issued on aquisition - (730)
--------- ---------
Movement in net debt (813) (2,653)
Net debt at 31 March 1996 (2,639) 14
--------- ---------
Net debt at 31 March 1997 (3,452) (2,639)
--------- ---------
</TABLE>
23 SUMMARY OF DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United Kingdom
("UK GAAP"), which differ in certain material respects from generally accepted
accounting principles in the United States ("US GAAP"). Such differences involve
methods for measuring the amounts shown in the financial statements, as well as
additional disclosures required by US GAAP.
- --------------------------------------------------------------------------------
F-56
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
23 SUMMARY OF DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
The following is a summary of the material adjustments to profit on ordinary
activities after taxation and shareholders' funds that would have been required
in applying the significant differences between UK and US GAAP.
RECONCILIATION OF CONSOLIDATED PROFIT AND LOSS ACCOUNTS
IN (L000'S)
<TABLE>
<CAPTION>
Year ended Year ended
March 31, March 31,
Notes 1997 1996
<S> <C> <C> <C>
Profit on ordinary activities after taxation as reported under UK
GAAP................................................................. 2,700 2,338
US GAAP adjustments:
Goodwill............................................................. (a) (28) (28)
Pensions............................................................. (b) 112 (57)
Capitalized interest................................................. (c) (3) 85
Fixed asset revaluation.............................................. (d) 1 --
Deferred taxation.................................................... (e) (215) (464)
Stock compensation................................................... (g) (37) (55)
------- -------
Net US GAAP adjustments................................................ (170) (519)
Tax effect of net US GAAP adjustments.............................. (111) (103)
------- -------
Net income under US GAAP............................................... 2,419 1,716
------- -------
------- -------
</TABLE>
RECONCILIATION OF CONSOLIDATED SHAREHOLDERS' FUNDS
(IN L000'S)
<TABLE>
<CAPTION>
Year ended Year ended
March 31, March 31,
Notes 1997 1996
<S> <C> <C> <C>
Total shareholders' funds as reported under UK GAAP.................... 15,673 13,896
US GAAP adjustments:
Goodwill............................................................. (a) 1,049 1,077
Pensions............................................................. (b) 32 (41)
Capitalized interest................................................. (c) 197 200
Fixed asset revaluation.............................................. (d) (130) (131)
Deferred taxation.................................................... (e) (1,866) (1,579)
Dividends............................................................ (f) 711 605
------- -------
Net US GAAP adjustments................................................ (7) 131
------- -------
Shareholders' equity under US GAAP..................................... 15,666 14,027
------- -------
------- -------
</TABLE>
- --------------------------------------------------------------------------------
F-57
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
23 SUMMARY OF DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
MOVEMENTS IN SHAREHOLDERS' EQUITY IN ACCORDANCE WITH US GAAP
(IN L000'S)
<TABLE>
<CAPTION>
Year ended Year ended
March 31, March 31,
1997 1996
<S> <C> <C> <C>
Balance, beginning of year............................................. 14,027 12,826
Net income............................................................. 2,419 1,716
New share capital issued............................................... 7 247
Share options exercised................................................ 94 15
Stock based compensation............................................... 37 55
Dividends paid......................................................... (918) (832)
------- -------
Balance, end of year................................................... 15,666 14,027
------- -------
------- -------
</TABLE>
A summary of the principal differences and additional disclosures applicable to
the Company are set out below:
(A) GOODWILL
Both UK GAAP and US GAAP require purchase consideration to be allocated to the
net assets acquired at their fair value on the date of acquisition, with the
difference between the consideration and the fair value of the identifiable net
assets recorded as goodwill.
Under UK GAAP, goodwill arising on acquisitions made on or before March 31, 1997
has been written off directly to reserves in the year of acquisition.
Under US GAAP, goodwill arising on acquisitions has been capitalized as an
intangible asset and amortized over a period of 40 years.
(B) PENSIONS
Under UK GAAP, the cost of providing pension benefits has been expensed over the
average expected service lives of eligible employees in accordance with the
provisions of SSAP 24, ACCOUNTING FOR PENSION COSTS. SSAP 24 aims to produce an
estimate of cost based on long-term actuarial assumptions. Variations from the
regular pension cost arising from, for example, experience deficiencies or
surpluses, are charged or credited to the profit and loss account over the
expected average remaining service lives of current employees in the schemes.
Under US GAAP, the annual pension cost comprises the estimated cost of benefits
accruing in the period as determined in accordance with the Statement of
Financial Accounting Standards (SFAS) No. 87, EMPLOYERS' ACCOUNTING FOR
PENSIONS, which requires readjustment of the significant actuarial assumptions
annually to reflect current market and economic conditions. Under SFAS No. 87, a
pension liability representing the excess benefit obligations over plan assets
has been accrued in the balance sheet. The pension benefit obligation is
calculated by using a projected unit credit method. Actuarial gains or losses
within a 10% "corridor" have not been recognised. In addition, in cases where
the accumulated benefit obligation exceeded the unamortized prior service cost,
the company has recorded the excess as a separate component of shareholders'
equity.
- --------------------------------------------------------------------------------
F-58
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
23 SUMMARY OF DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
The net periodic pension cost under US GAAP for the Company's defined benefit
pension plan is as follows:
COMPONENTS OF NET PERIODIC PENSION COST
(IN L000'S)
<TABLE>
<CAPTION>
Year ended Year ended
March 31, 1997 March 31, 1996
----------------- ---------------
<S> <C> <C>
Service cost.................................................................... 576 484
Interest cost................................................................... 862 757
Actual return on plan assets.................................................... (806) (1,702)
Other........................................................................... (2) 1,110
--- ------
Net periodic pension cost....................................................... 630 649
--- ------
--- ------
</TABLE>
The funded status under US GAAP for the Company's defined benefit pension plan
is as follows:
FUNDED STATUS
(IN L000'S)
<TABLE>
<CAPTION>
Year ended Year ended
March 31, 1997 March 31, 1996
--------------- -----------------
<S> <C> <C>
Accumulated benefit obligation.................................................. 10,652 8,960
Effect of expected future compensation increases................................ 903 788
------- ------
Projected benefit obligation.................................................... 11,555 9,748
Fair value of plan assets....................................................... 11,136 9,574
------- ------
Funded status................................................................... (419) (174)
Unrecognised net (gain) loss.................................................... 179 (18)
Unrecognised transition (asset) obligation...................................... 609 696
Unrecognised prior service cost................................................. -- --
------- ------
Net amount recognised........................................................... 369 504
------- ------
------- ------
</TABLE>
- --------------------------------------------------------------------------------
F-59
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
The assumptions used to determine pension cost for the Company's defined benefit
pension plan were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
March 31, 1997 March 31, 1996
----------------- -----------------
<S> <C> <C>
Discount rate................................................................... 8.5% 9.0%
Expected rate of return on plan assets.......................................... 9.0% 9.0%
Expected rate of compensation increase.......................................... 6.5% 7.0%
</TABLE>
(C) CAPITALIZED INTEREST
Under UK GAAP, companies are permitted, but not required, to capitalize interest
costs incurred during the period of construction of an asset to be capitalized.
For UK GAAP purposes, the Company has elected not to capitalize these interest
costs. Under US GAAP, such interest must be capitalized.
The adjustment to net income under US GAAP reflects the decrease in interest
expense for the period as well as the increase in depreciation expense on the
constructed assets. The adjustment to shareholders' equity under US GAAP
reflects the amount of interest capitalized on constructed assets, net of
depreciation.
(D) FIXED ASSET REVALUATION
Under UK GAAP, companies are permitted to perform revaluations of properties on
a periodic basis and adjust the carrying values of properties to market value.
Under US GAAP, tangible fixed assets are carried at cost. However, Statement of
Financial Accounting Standard No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, requires that
companies undertake an evaluation for permanent impairment when management has
reason to believe that a permanent impairment has occurred. Furthermore, unless
an analysis of the gross, undiscounted cash flows attributable to the asset over
the remaining useful life is less than the carrying value of the asset, no
permanent impairment is recognized.
The adjustment to net income under US GAAP reflects the effect of disposals of
revalued fixed assets. The adjustment to shareholders' equity under US GAAP
reflects the elimination of the fixed asset revaluation.
(E) DEFERRED TAXATION
Under UK GAAP, a provision is recorded for deferred taxation under the partial
provision method to the extent that such taxation is expected to crystallise
within the reasonable future. This means that the full potential liability is
not necessarily provided. Additionally, deferred tax assets are recognised only
when they are expected to be recoverable within the foreseeable future.
Under US GAAP, deferred tax is provided for on a full liability basis. Under the
full liability method, deferred tax assets or liabilities are recognised for
differences between the financial and tax basis of assets and liabilities and
for tax loss carry forwards at the statutory rate at each reporting date. A
valuation allowance is established when it is more likely than not that some
portion or all of the deferred tax assets will not be realised.
(F) DIVIDENDS
Under UK GAAP, ordinary dividends are provided for in the year in respect of
which they are proposed by the Board of Directors. Under US GAAP, such dividends
are provided for in the period they are declared by the Board of Directors.
(G) STOCK COMPENSATION
Under UK GAAP, the Company does not recognize compensation expense under either
the Employee Share Option Scheme or the Savings Related Share Option Scheme.
Under US GAAP, following Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, the compensation expense associated with shares
issued through these schemes, in consideration for services received, is
recognized as the
- --------------------------------------------------------------------------------
F-60
<PAGE>
MORRIS ASHBY PLC
Notes to the Accounts (continued)
For the year ended 31 March 1997
- --------------------------------------------------------------------------------
difference between the market price of the stock, at the measurement date, and
the exercise price of the option. The measurement date is defined as the
earliest date on which both the number of shares that an employee is entitled to
receive and the option or purchase price are known. Compensation costs, as
determined above, are charged to expense over the participants' vesting period.
(H) OTHER DISCLOSURES REQUIRED BY US GAAP
CASH FLOW INFORMATION
Under UK GAAP, the Company's cash flow statements are presented in accordance
with Financial Reporting Standard No. 1, as revised. These statements present
substantially the same information as is required under Statement of Financial
Accounting Standards No. 95, STATEMENT OF CASH FLOWS, in accordance with US
GAAP.
Under UK GAAP, the Company's cash balances are comprised of cash in hand and at
bank. Cash and cash equivalents are defined differently under US GAAP. For
purposes of presenting cash flow information in accordance with US GAAP, cash
equivalents are regarded as highly liquid investments with maturities of three
months or less.
Under UK GAAP, cash flows are presented for operating activities, returns on
investments and servicing of finance; taxation; capital expenditure and
financial investment; acquisitions and disposals; equity dividends paid; and
management of liquid resources and financing. US GAAP requires the
classification of cash flows resulting from operating, investing and financing
activities.
Cash flows under UK GAAP in respect of interest received, interest paid,
investment income and taxation are included within operating activities under US
GAAP. Capital expenditure and financial investment and cash flows from
acquisitions and disposals are included within investing activities. Equity
dividends paid and management of liquid resources are included within financing
activities.
A summary of the Company's operating, investing and financing activities,
classified in accordance with US GAAP, utilising the amounts shown in the UK
GAAP Company's cash flow statement, are as follows:
<TABLE>
<CAPTION>
Year ended Year ended
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Net cash provided by (used in) operating activities............................. 8,677 4,209
Net cash provided by (used in) investing activities............................. (6,435) (4,879)
Net cash provided by (used in) financing activities............................. (1,122) (827)
------ ------
Net increase (decrease) in cash and cash equivalents............................ 1,120 (1,497)
Cash and cash equivalents under US GAAP, beginning of year...................... -- 1,497
------ ------
Cash and cash equivalents under US GAAP, end of year............................ 1,120 --
------ ------
------ ------
</TABLE>
- --------------------------------------------------------------------------------
F-61
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
$175,000,000
11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
---------------------
PROSPECTUS
---------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
French Automotive is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware (the "DGCL")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
Article Six of the Restated Certificate of Incorporation of French
Automotive provides that no director of the corporation shall be personally
liable to French Automotive or its stockholders for monetary damages arising
from a breach of fiduciary duty owed to French Automotive or its stockholders,
except for liability (1) for any breach of the director's duty of loyalty to
French Automotive or its stockholders, (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (3)
pursuant to Section 174 of the DGCL or (4) for any transaction from which the
director derived an improper personal benefit.
Article V of French Automotive's Amended and Restated By-laws provides that
each person who was or is made a party or is threatened to be made a party to or
is involved in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter "a proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer, of French Automotive or is or was serving at
the request of French Automotive as a director, officer, employee, fiduciary, or
agent of another corporation or of a partnership, joint venture, trust, or other
enterprise, shall be indemnified and held harmless by French Automotive to the
fullest extent which it is empowered to do so unless prohibited from doing so by
the DGCL against all expense, liability and loss (including attorney's fees
actually and reasonably incurred by such person in connection with such
proceeding) and such indemnification shall inure to the benefit of his or her
heirs, executors, administrators; provided, however, that French Automotive
shall indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of French Automotive. The right to indemnification
conferred by French Automotive's By-Laws is a contract right and includes the
right to be paid by French Automotive the expenses incurred defending any such
proceeding in advance of its final disposition. French Automotive may, by action
of its board of directors, provide indemnification to
II-1
<PAGE>
employees and agents of French Automotive with the same scope and effect as the
indemnification of its directors and officers.
Article V of French Automotive's By-laws further provides that the rights to
indemnification and to the advancement of expenses conferred in Article V are
not exclusive of any other right which any person has under French Automotive's
Amended and Restated Certificate of Incorporation or under any statute, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 145 of the DGCL further authorizes a corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him and incurred by him in
any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
All of the directors and officers of French Automotive are covered by insurance
policies maintained and held in effect by French Automotive against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act.
French Holdings, Inc. is also incorporated under the laws of the State of
Delaware. Under French Holdings, Inc.'s Restated Certificate of Incorporation,
it is required to indemnify its directors and officers to the fullest extent
authorized by the DGCL. French Holdings' Restated Certificate provides that its
directors shall not be personally liable to French Holdings or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (1) for any breach of the director's duty of loyalty to French
Holdings or its stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) under
Section 174 of the DGCL, or (4) for any transaction from which the director
derived any improper personal benefit.
J.L. French Corporation and Allotech International, Inc. are both
incorporated under the laws of the State of Wisconsin, and as such, are
obligated to indemnify their officers and directors in accordance with Wisconsin
Corporation Law. Sections 180.0850 to 180.0859 of the Wisconsin Corporate
Statutes require a corporation to indemnify any director or officer who is a
party to any threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or
informal, which involves foreign, federal, state or local law and which is
brought by or in the right of the corporation or by any other person. A
corporation's obligation to indemnify any such person includes the obligation to
pay any judgment, settlement, penalty, assessment, forfeiture or fine, including
any excise tax assessed with respect to an employee benefit plan, and all
reasonable expenses including fees, costs, charges, disbursements, attorney's
and other expenses except in those cases in which liability was incurred as a
result of the breach or failure to perform a duty which the director or officer
owes to the corporation and the breach or failure to perform constitutes: (1) a
willful failure to deal fairly with the corporation or its shareholders in
connection with a matter in which the director or officer has a material
conflict of interest; (2) a violation of criminal law, unless the person has
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful; (3) a transaction from which the person
derived an improper personal profit; or (4) willful misconduct.
II-2
<PAGE>
ITEM 21. EXHIBITS.
(a) The following exhibits are filed as part of this Registration Statement or
incorporated by reference herein:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement, dated May 25, 1999, among J.L. French Automotive Castings, Inc., and French
Holdings, Inc., J.L. French Corporation and Allotech International, Inc. (collectively, the
"SUBSIDIARY GUARANTORS") and Banc of America Securities LLC and Chase Securities Inc. (collectively,
the "INITIAL PURCHASERS").
2.1 Recapitalization Agreement, dated March 29, 1999, by and among J.L. French Automotive Castings, Inc.,
the stockholders listed on the signature pages thereto and JLF Acquisition LLC.
2.2 Amendment No. 1 to Recapitalization Agreement, dated April 21, 1999, by and among J.L. French
Automotive Castings, Inc., JLF Acquisition LLC and Windward Capital Partners, L.P.
3.1 Restated Certificate of Incorporation of J.L. French Automotive Castings, Inc.
3.2 By-laws of J.L. French Automotive Castings, Inc.
3.3 Restated Certificate of Incorporation of French Holdings, Inc.
3.4 Amended and Restated By-laws of French Holdings, Inc.
3.5 Articles of Incorporation of J.L. French Corporation
3.6 By-laws of J.L. French Corporation
3.7 Articles of Incorporation of Allotech International, Inc.
3.8 By-laws of Allotech International, Inc.
4.1 Indenture, dated May 28, 1999, by and among J.L. French Automotive Castings, Inc., the Subsidiary
Guarantors and U.S. Bank Trust National Association, as trustee.
4.2 Registration Rights Agreement, dated May 28, 1999, by and among J.L. French Automotive Castings,
Inc., the Subsidiary Guarantors and the Initial Purchasers.
*5.1 Opinion of Kirkland & Ellis regarding the validity of the securities offered hereby.
*8.1 Opinion of Kirkland & Ellis regarding federal income tax considerations.
10.1 Credit Agreement, dated April 21, 1999, among J.L. French Automotive Castings, Inc., Automotive
Components Investments Limited, Morris Ashby Limited, the several banks and other financial
institutions from time to time parties to the agreement (the "LENDERS"), Bank of America NT&SA, as
syndication agent for the Lenders, Chase Manhattan International Limited, as administrative agent for
the English Lenders, and the Chase Manhattan Bank, as administrative agent for the Lenders.
10.2 Investor Stockholders Agreement, dated April 21, 1999, by and among J.L. French Automotive Castings,
Inc., Onex American Holdings LLC, J2R Partners III and the stockholders listed on the signature pages
thereto.
10.3 Registration Agreement, dated April 21, 1999, by and among J.L. French Automotive Castings, Inc. and
the investors listed on the signature pages thereto.
10.4 Management Agreement, dated April 21, 1999, by and between J.L. French Automotive Castings, Inc. and
Hidden Creek Industries
10.5 Sublease Agreement, dated March 25, 1998, by and between J.L. French Corporation and American Bumper
& Mfg. Co.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.6 Employment Agreement, dated April 1, 1997, by and between Morris Ashby plc and Paul A. Buckley.
10.7 Employment Agreement, dated April 30, 1998, by and between Fundiciones Viuda de Ansola S.A. and Juan
Manuel Orbea Soroa.
10.8 Employment Agreement, dated April 30, 1998, by and between Ansola Acquisition Corporation, S.R.L. and
Juan Manuel Orbea.
10.9 Management Stockholders Agreement dated July 16, 1999, by and between J.L. French Automotive
Castings, Inc., Onex American Holdings LLC and the individuals named on Schedule I thereto.
10.10 Form of Stock Subscription Agreement by and between J.L. French Automotive Castings, Inc. and certain
members of management purchasing common stock (including a schedule identifying Subscription
Agreements executed by Charles M. Waldon, Paul A. Buckley, Thomas C. Dinolfo, Donald W. Porritt,
Lowell E. Shoaf and Stephen R. Southern).
12.1 Statement Regarding Computation of Earnings to Fixed Charges and Pro Forma Earnings to Fixed Charges.
21.1 Subsidiaries of J.L. French Automotive Castings, Inc.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of PricewaterhouseCoopers LLP, Birmingham, United Kingdom.
*23.6 Consents of Kirkland & Ellis (included in Exhibits 5.1 and 8.1).
24.1 Power of Attorney (included on the signature pages hereto).
*25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939 of U.S. Bank
Trust National Association.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
- ------------------------
* To be filed by amendment.
(b) No financial statement schedules are required to be filed herewith pursuant
to this Item.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-4
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bonafide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) The undersigned registrants hereby undertake as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(5) The registrants undertake that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described in Item 20, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a directors, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue
(c) The undersigned hereby undertake to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the date of the registration statement through the date of
responding to the request.
(d) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, J.L. French
Automotive Castings, Inc. duly caused this Registration Statement on Form S-4 to
be signed on its behalf by the undersigned, thereunto duly authorized, in City
of Sheboygan, State of Wisconsin, on the 10th day of August, 1999.
<TABLE>
<S> <C> <C>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: /s/ CHARLES M. WALDON
-----------------------------------------
Charles M. Waldon
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints S.A. Johnson, Thomas C. Dinolfo and Carl E.
Nelson, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on the 10th day of August,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ S.A. JOHNSON
- ------------------------------ Chairman and Director
S.A. Johnson
President, Chief Executive
/s/ CHARLES M. WALDON Officer (Principal
- ------------------------------ Executive Officer) and
Charles M. Waldon Director
Treasurer and Chief
/s/ THOMAS C. DINOLFO Financial Officer
- ------------------------------ (Principal Financial and
Thomas C. Dinolfo Accounting Officer)
/s/ CARL E. NELSON
- ------------------------------ Director
Carl E. Nelson
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
- ------------------------------ Director
Robert H. Barton III
- ------------------------------ Director
Dugald K. Campbell
- ------------------------------ Director
A. Kipp Koester
- ------------------------------ Director
John E. Lindahl
- ------------------------------ Director
Eric J. Rosen
- ------------------------------ Director
Karl F. Storrie
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, French Holdings,
Inc. duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in City of Sheboygan,
State of Wisconsin, on the 10th day of August, 1999.
<TABLE>
<S> <C> <C>
FRENCH HOLDINGS, INC
By: /s/ CHARLES M. WALDON
-----------------------------------------
Charles M. Waldon
PRESIDENT AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints S.A. Johnson, Thomas C. Dinolfo and Carl E.
Nelson, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 10TH DAY OF AUGUST,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
President, Chief Executive
/s/ CHARLES M. WALDON Officer
- ------------------------------ (Principal Executive
Charles M. Waldon Officer) and Director
/s/ THOMAS C. DINOLFO
- ------------------------------ Chief Financial Officer
Thomas C. Dinolfo and Director
/s/ CARL E. NELSON
- ------------------------------ Director
Carl E. Nelson
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, J.L. French
Corporation duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in City of Sheboygan,
State of Wisconsin, on the 10th day of August, 1999.
<TABLE>
<S> <C> <C>
J.L. FRENCH CORPORATION
By: /s/ CHARLES M. WALDON
-----------------------------------------
Charles M. Waldon
PRESIDENT AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints S.A. Johnson, Thomas C. Dinolfo and Carl E.
Nelson, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offerings which
this Registration Statement relates), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 10TH DAY OF AUGUST,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
President, Chief Executive
/s/ CHARLES M. WALDON Officer
- ------------------------------ (Principal Executive
Charles M. Waldon Officer) and Director
/s/ THOMAS C. DINOLFO
- ------------------------------ Chief Financial Officer
Thomas C. Dinolfo and Director
/s/ CARL E. NELSON
- ------------------------------ Director
Carl E. Nelson
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Allotech
International, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Sheboygan, State of Wisconsin, on the 10th day of August, 1999.
<TABLE>
<S> <C> <C>
ALLOTECH INTERNATIONAL, INC.
By: /s/ CHARLES M. WALDON
-----------------------------------------
Charles M. Waldon
PRESIDENT AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints S.A. Johnson, Thomas C. Dinolfo and Carl E.
Nelson, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this registration
statement (any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, for the offerings which this Registration
Statement relates), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on the 10th day of August,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
President, Chief Executive
/s/ CHARLES M. WALDON Officer
- ------------------------------ (Principal Executive
Charles M. Waldon Officer) and Director
/s/ THOMAS C. DINOLFO
- ------------------------------ Chief Financial Officer
Thomas C. Dinolfo and Director
/s/ CARL E. NELSON
- ------------------------------ Director
Carl E. Nelson
/s/ DANIEL F. MOORSE
- ------------------------------ Director
Daniel F. Moorse
</TABLE>
II-10
<PAGE>
Exhibit 1.1
J. L. French Automotive Castings, Inc.
French Holdings, Inc.
J. L. French Corporation
Allotech International, Inc.
$175,000,000
11 1/2% Senior Subordinated Notes due 2009
Purchase Agreement
dated May 25, 1999
Banc of America Securities LLC
Chase Securities Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Representations and Warranties.....................................2
Section 2. Purchase, Sale and Delivery of the Securities.....................11
Section 3. Additional Covenants..............................................12
Section 4. Payment of Expenses...............................................15
Section 5. Conditions of the Obligations of the Initial Purchasers...........15
Section 6. Reimbursement of Initial Purchasers' Expenses.....................17
Section 7. Offer, Sale and Resale Procedures.................................18
Section 8. Indemnification...................................................19
Section 9. Contribution......................................................22
Section 10. Termination of this Agreement....................................23
Section 11. Representations and Indemnities to Survive Delivery..............23
Section 12. Notices..........................................................24
Section 13. Successors.......................................................24
Section 14. Partial Unenforceability.........................................25
Section 15. Agreement........................................................25
Section 16. Default of One or More of the Several Initial Purchasers.........25
Section 17. General Provisions...............................................25
</TABLE>
<PAGE>
PURCHASE AGREEMENT
May 25, 1999
BANC OF AMERICA SECURITIES LLC
Chase Securities Inc.
As Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
231 South LaSalle Street
Chicago, Illinois 60697
Ladies and Gentlemen:
Introductory. J. L. French Automotive Castings, Inc., a Delaware
corporation (the "Company), proposes to issue and sell to the several Initial
Purchasers named in SCHEDULE A (the "Initial Purchasers"), acting severally and
not jointly, the respective amounts set forth in such SCHEDULE A of an aggregate
in principal amount of $175,000,000 of the Company's 11 1/2% Senior Subordinated
Notes due 2009 (the "Notes"). Banc of America Securities LLC and Chase
Securities Inc. have agreed to act as the several Initial Purchasers in
connection with the offering and sale of the Securities (as defined below).
The Securities will be issued pursuant to an indenture dated as of May
28, 1999 (the "Indenture") among French Holdings, Inc., J. L. French
Corporation, and Allotech International, Inc. (collectively, the "Guarantors"),
the Company and U.S. Bank Trust National Association, as trustee (the
"Trustee"). Securities issued in book-entry form will be issued in the name of
Cede & Co., as nominee of The Depository Trust Company (the "Depository")
pursuant to a DTC Agreement, to be dated as of May 28, 1999 (the "DTC
Agreement"), among the Company, the Trustee and the Depository.
The holders of the Notes will be entitled to the benefits of a
registration rights agreement to be dated as of May 28, 1999 (the "Registration
Rights Agreement"), among the Company, the Guarantors and the Initial
Purchasers, pursuant to which the Company will agree to file, within 90 days of
the Closing Date, a registration statement with the Commission (as defined
herein) registering the Exchange Securities (as defined herein) under the
Securities Act (as defined herein). The payment of principal of, premium and
Liquidated Damages (as defined in the Indenture), if any, and interest on the
Notes and the Exchange Notes (as defined below) will be fully and
unconditionally guaranteed on a senior subordinated basis, jointly and severally
by the Guarantors and any subsidiary of the Company formed or acquired after the
Closing Date that executes an additional guarantee in accordance with the terms
of the Indenture, and their respective successors and assigns, pursuant to their
guaranties (the "Guaranties"). The Notes and the Guaranties attached thereto are
herein collectively referred to as the "Securities"; and the Exchange Notes and
the Guaranties attached thereto are herein collectively referred to as the
"Exchange Securities."
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
in the Offering Memorandum (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the "Subsequent Purchasers") at any
time after the date of this Agreement. The
1
<PAGE>
Securities are to be offered and sold to or through the Initial Purchasers
without being registered with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (as amended, the "Securities
Act," which term, as used herein, includes the rules and regulations of the
Commission promulgated thereunder), in reliance upon exemptions therefrom. The
terms of the Securities and the Indenture will require that investors that
acquire Securities expressly agree that Securities may only be resold or
otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemptions
afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S")
thereunder).
The Company has prepared and delivered to each Initial Purchaser copies
of a Preliminary Offering Memorandum, dated May 11, 1999 (the "Preliminary
Offering Memorandum"), and has prepared and will deliver to each Initial
Purchaser, copies of the Offering Memorandum, dated May 25, 1999, describing the
terms of the Securities, each for use by such Initial Purchaser in connection
with its solicitation of offers to purchase the Securities. As used herein, the
"Offering Memorandum" shall mean, with respect to any date or time referred to
in this Agreement, the Company's Offering Memorandum, dated May 25, 1999,
including amendments, supplements or exhibits thereto, in the most recent form
that has been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of offers to purchase Securities. Further,
any reference to the Preliminary Offering Memorandum or the Offering Memorandum
shall be deemed to refer to and include any Additional Issuer Information (as
defined in Section 3(h)) furnished by the Company prior to the completion of the
distribution of the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (as amended, the "Exchange Act," which term,
as used herein, includes the rules and regulations of the Commission promulgated
thereunder) which is incorporated or deemed to be incorporated by reference in
the Offering Memorandum.
The Company and the Guarantors hereby confirm their agreements with the
Initial Purchasers as follows:
SECTION
1. REPRESENTATIONS AND WARRANTIES.
The Company and the Guarantors, jointly and severally, hereby
represent, warrant and covenant to each Initial Purchaser as follows:
1. NO REGISTRATION REQUIRED
Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 2(e) hereof and with the
procedures set forth in Section 7 hereof, it is not necessary in connection with
the offer, sale and delivery of the Securities to the Initial Purchasers and to
each Subsequent Purchaser in the manner contemplated by this Agreement and the
Offering Memorandum to register the Securities under the Securities Act or,
until such time as the Exchange Securities are issued pursuant to an effective
registration statement, to qualify the Indenture under
2
<PAGE>
the Trust Indenture Act of 1939 (the "Trust Indenture Act," which term, as used
herein, includes the rules and regulations of the Commission promulgated
thereunder).
2. NO INTEGRATION OF OFFERINGS OR GENERAL SOLICITATION
The Company has not, directly or indirectly, solicited any offer to buy
or offered to sell, and will not, directly or indirectly, solicit any offer to
buy or offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered under
the Securities Act. None of the Company, its affiliates (as such term is defined
in Rule 501(b) under the Securities Act (each, an "Affiliate")), or, to the
Company's knowledge, any person acting on its or any of their behalf (other than
the Initial Purchasers, as to whom the Company makes no representation or
warranty) has engaged or will engage, in connection with the offering of the
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act. With respect to those
Securities sold in reliance upon Regulation S, (i) none of the Company, its
Affiliates or, to the Company's knowledge, any person acting on its or their
behalf (other than the Initial Purchasers, as to whom the Company makes no
representation or warranty) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S and (ii) each of the Company and its
Affiliates and, to the Company's knowledge, any person acting on its or their
behalf (other than the Initial Purchasers, as to whom the Company makes no
representation or warranty) has complied and will comply with the offering
restrictions set forth in Regulation S.
3. ELIGIBILITY FOR RESALE UNDER RULE 144A
The Securities are eligible for resale pursuant to Rule 144A and will
not be, at the Closing Date, of the same class as securities listed on a
national securities exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated interdealer quotation system.
4. THE OFFERING MEMORANDUM
The Offering Memorandum does not, and at the Closing Date will not,
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to statements in or
omissions from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Company in writing by any Initial Purchaser
through Banc of America Securities LLC expressly for use in the Offering
Memorandum. Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4). The Company has not distributed
and will not distribute, prior to the later of the Closing Date and the
completion of the Initial Purchasers' distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than a Preliminary Offering Memorandum or the Offering Memorandum.
5. THE PURCHASE AGREEMENT
This Agreement has been duly authorized, executed and delivered by, and
is a valid and binding agreement of, the Company and the Guarantors, enforceable
in accordance with its terms, except as rights to indemnification hereunder may
be limited by applicable law and except as the
3
<PAGE>
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
6. THE REGISTRATION RIGHTS AGREEMENT AND THE DTC AGREEMENT
At the Closing Date, each of the Registration Rights Agreement and the
DTC Agreement will be duly authorized, executed and delivered by, and will be a
valid and binding agreement of, the Company and the Guarantors, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles and except as rights to indemnification under the
Registration Rights Agreement may be limited by applicable law. Pursuant to the
Registration Rights Agreement, the Company will agree to file with the
Commission, under the circumstances set forth therein, (i) a registration
statement under the Securities Act relating to another series of debt securities
of the Company with terms substantially identical to the Notes (the "Exchange
Notes") to be offered in exchange for the Notes (the "Exchange Offer"), and (ii)
to the extent required by the Registration Rights Agreement, a shelf
registration statement pursuant to Rule 415 of the Securities Act relating to
the resale by certain holders of the Notes, and in each case, to use its
reasonable best efforts to cause such registration statement to be declared
effective.
7. AUTHORIZATION OF THE SECURITIES AND THE EXCHANGE
SECURITIES
The Notes to be purchased by the Initial Purchasers from the Company
are in the form contemplated by the Indenture, have been duly authorized for
issuance and sale pursuant to this Agreement and the Indenture and, at the
Closing Date, will have been duly executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered against
payment of the purchase price therefor, will constitute valid and binding
agreements of the Company and the Guarantors enforceable in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture. The Guaranties
of the Notes and the Exchange Notes are in the forms contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant to this
Agreement and the Indenture and, at the Closing Date, the Guaranties of the
Notes will have been duly executed by each of the Guarantors and, when the Notes
have been authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding agreements of each Guarantor, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
8. AUTHORIZATION OF THE INDENTURE
The Indenture has been duly authorized by the Company and the
Guarantors and, at the Closing Date, will have been duly executed and delivered
by the Company and the Guarantors and will constitute a valid and binding
agreement of the Company and the Guarantors, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
4
<PAGE>
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
9. DESCRIPTION OF THE SECURITIES AND THE INDENTURE
The Notes, the Exchange Notes, the Guaranties of the Notes and of the
Exchange Notes and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Offering Memorandum.
10. NO MATERIAL ADVERSE CHANGE
Except as otherwise disclosed in the Offering Memorandum, subsequent to
the respective dates as of which information is given in the Offering
Memorandum: (i) there has been no material adverse change, or any development
that could reasonably be expected to result in a material adverse change, in the
financial condition, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity (any such change is
called a "Material Adverse Change"); (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
11. INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP, who have expressed their opinion with respect to
the financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules of the Company and its
subsidiaries included in the Offering Memorandum are independent public or
certified public accountants within the meaning of Regulation S-X under the
Securities Act and the Exchange Act. Price Waterhouse, who have expressed their
opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) and supporting schedules of Morris
Ashby plc included in the Offering Memorandum are independent public or
certified public accountants within the meaning of Regulation S-X under the
Securities Act and the Exchange Act.
12. PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Company and Morris Ashby plc, together
with the related notes, included in the Offering Memorandum present fairly the
consolidated financial position of the Company and its subsidiaries and of
Morris Ashby plc and its subsidiaries as of and at the dates indicated and the
results of their operations and cash flows for the periods specified. Such
financial statements of the Company have been prepared in conformity with
generally accepted accounting principles as applied in the United States applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The financial statements of
Morris Ashby plc have been prepared in conformity with accounting principles
generally accepted in the United Kingdom applied on a basis consistent
throughout the periods involved, except as may be expressly stated in the
related notes thereto. The historical financial data set forth in the Offering
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Memorandum under the captions "Offering Memorandum Summary--Summary Historical
and Pro Forma Financial Data" and "Selected Financial Data" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Offering Memorandum. The pro forma
consolidated financial statements of the Company and its subsidiaries and the
related notes thereto included under the captions "Offering Memorandum
Summary--Summary Historical and Pro Forma Financial Data" and "Unaudited Pro
Forma Financial Statements" and elsewhere in the Offering Memorandum present
fairly the information contained therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented on the bases described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
13. INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES
Each of the Company, the Guarantors and each other Significant
Subsidiary (as that term is defined in Rule 102(w) of Regulation S-X under the
Securities Act of 1933) has been duly incorporated or formed and is validly
existing in good standing under the laws of the jurisdiction of its organization
and has power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and, in the case of
the Company and the Guarantors, to enter into and perform their respective
obligations under each of this Agreement, the Registration Rights Agreement, the
DTC Agreement, the Notes, the Exchange Notes, the Guaranties and the Indenture.
Each of the Company, the Guarantors and each other Significant Subsidiary is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change. All of the issued and outstanding capital
stock of the Guarantors and each other Significant Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim (except for those set
forth in the Offering Memorandum and such other security interest, mortgage,
pledge, lien, encumbrance or claim that would not reasonably be expected to have
a Material Adverse Change). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit A hereto.
14. CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS
At March 31, 1999, on a consolidated basis, after giving pro forma
effect to the issuance and sale of the Notes pursuant hereto, the Company would
have an authorized and outstanding capitalization as set forth in the Offering
Memorandum under the caption "Capitalization" (other than for subsequent
issuances of capital stock, if any, pursuant to employee benefit plans and stock
purchase agreements described in the Offering Memorandum or upon exercise of
outstanding options described in the Offering Memorandum). The Company's
authorized capital stock (the "Common Stock") conforms in all material respects
to the description thereof set forth in the Offering Memorandum. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
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and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Offering
Memorandum. The description of the Company's stock option, stock purchase and
other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Offering Memorandum describes such plans,
arrangements, options and rights in all material respects.
15. NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED
Neither the Company nor any of the Guarantors or any other Significant
Subsidiary is in violation of its charter or by-laws or is in default (or, with
the giving of notice or lapse of time, would be in default) ("Default") under
any indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which the Company, the Guarantors or any other
Significant Subsidiary is a party or by which it or any of them may be bound
(including, without limitation, the Senior Credit Facility (as defined in the
Offering Memorandum)), or to which any of the property or assets of the Company,
the Guarantors or any of its Significant Subsidiaries is subject (each, an
"Existing Instrument"), except for such Defaults as would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Change.
The Company's and the Guarantors' execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the DTC Agreement, and the
Indenture, and the issuance and delivery of the Securities and the Exchange
Securities, and consummation of the transactions contemplated hereby and thereby
and by the Offering Memorandum (i) have been duly authorized by all necessary
action and will not result in any violation of the provisions of the charter or
by-laws of the Company, the Guarantors or any other Significant Subsidiary of
the Company, (ii) will not conflict with or constitute a breach of, or Default
or a Debt Repayment Triggering Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company, the Guarantors or any other Significant Subsidiary of the
Company pursuant to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, Debt Repayment
Triggering Events, liens, charges or encumbrances as would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Change
and (iii) will not result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company, the Guarantors or
any subsidiary of the Company, except such violations of law, administrative
regulation or administrative or court decree that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company's or the Guarantors' execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the DTC
Agreement or the Indenture, the Guaranties or the issuance and delivery of the
Notes or the Exchange Notes, or consummation of the transactions contemplated
hereby and thereby and by the Offering Memorandum, except (x) such as have been
obtained or made by the Company and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws or (y) such
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as may be required by federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement. As used herein, a
"Debt Repayment Triggering Event" means any event or condition that gives, or
with the passage of time would give, the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such person's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.
16. NO MATERIAL ACTIONS OR PROCEEDINGS
Except as otherwise disclosed in the Offering Memorandum, there are no
legal or governmental actions, suits or proceedings pending or, to the best of
the Company's knowledge, threatened (i) against or affecting the Company, the
Guarantors or any other Significant Subsidiary, (ii) which has as the subject
thereof any property owned or leased by the Company, the Guarantors or any other
Significant Subsidiary, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined adversely
to the Company, the Guarantors or such Significant Subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Company, the Guarantors or any other
Significant Subsidiary, exists or, to the best of the Company's knowledge, is
threatened or imminent.
17. INTELLECTUAL PROPERTY RIGHTS
The Company and its subsidiaries own or possess those trademarks, trade
names, patent rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights") that are material
to the conduct their businesses as now conducted; and the expected expiration of
any of such Intellectual Property Rights would not reasonably be expected to
result in a Material Adverse Change. Neither the Company nor any of its
subsidiaries has received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would reasonably be expected to result in a
Material Adverse Change.
18. ALL NECESSARY PERMITS, ETC.
Except as otherwise disclosed in the Offering Memorandum, the Company,
the Guarantors and each other Significant Subsidiary possess all material
certificates, authorizations or permits necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Change.
19. TITLE TO PROPERTIES
The Company and each of its subsidiaries has good and marketable title
to all the properties and assets reflected as owned in the financial statements
referred to in Section 1(l) above (or elsewhere in the Offering Memorandum), in
each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except as otherwise disclosed
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in the Offering Memorandum or such as do not materially and adversely affect the
value of or materially interfere with the use made or proposed to be made of
such property by the Company or such subsidiary. The real property,
improvements, equipment and personal property held under lease by the Company or
any subsidiary are held under valid and enforceable leases, with such exceptions
as are not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.
20. TAX LAW COMPLIANCE
The Company and its consolidated subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be
being contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(l) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its consolidated subsidiaries has not been
finally determined.
21. COMPANY NOT AN "INVESTMENT COMPANY"
The Company is not, and after receipt of payment for the Notes will not
be, an "investment company" within the meaning of Investment Company Act of 1940
(the "Investment Company Act") and will conduct its business in a manner so that
it will not become subject to the Investment Company Act.
22. NO PRICE STABILIZATION OR MANIPULATION
The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Notes.
23. SOLVENCY
The Company is, and immediately after the Closing Date will be,
Solvent. As used herein, the term "Solvent" means, with respect to the Company
on a particular date, that on such date (i) the fair market value of the assets
of the Company is greater than the total amount of liabilities (including
contingent liabilities) of the Company, (ii) the present fair salable value of
the assets of the Company is greater than the amount that will be required to
pay the probable liabilities of the Company on its debts as they become absolute
and matured, (iii) the Company is able to realize upon its assets and pay its
debts and other liabilities, including contingent obligations, as they mature
and (iv) the Company does not have unreasonably small capital.
24. NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS
Except as otherwise disclosed in the Offering Memorandum, neither the
Company nor any of its subsidiaries nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law.
25. COMPANY'S ACCOUNTING SYSTEM
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The Company maintains a system of accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
26. RELATED PARTY TRANSACTIONS
There are no business relationships or related-party transactions
involving the Company, the Guarantors or any other person that would be required
by Item 404 of Regulation S-K to be described in the Offering Memorandum were it
to be filed as a part of a Registration Statement on Form S-1 under the
Securities Act, which have not been described as would have been so required.
27. NO DEFAULT IN SENIOR INDEBTEDNESS
No event of default exists under any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument constituting Senior
Debt (as defined in the Indenture).
28. COMPLIANCE WITH ENVIRONMENTAL LAWS
Except as otherwise disclosed in the Offering Memorandum or as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change, (i) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign law or regulation relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, "Materials of
Environmental Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"), which
violation includes, but is not limited to, noncompliance with any permits or
other governmental authorizations required for the operation of the business of
the Company or its subsidiaries under applicable Environmental Laws, nor has the
Company or any of its subsidiaries received any written communication, whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed with
a court or governmental authority of which the Company has been served,
notified, or otherwise made aware, no investigation with respect to which the
Company has received written notice, and no written notice by any person or
entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the Company
or any of its subsidiaries, now or in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's knowledge, threatened against
the Company or any of its
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subsidiaries or any person or entity whose liability for such Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the best of the Company's
knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that reasonably could result in a violation of any Environmental Law or
form the basis of an Environmental Claim against the Company or any of its
subsidiaries or against any person or entity whose liability for such
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law.
29. PERIODIC REVIEW OF COSTS OF ENVIRONMENTAL COMPLIANCE
In the ordinary course of its business, the Company monitors the effect
of Environmental Laws on the business, operations and properties of the Company
and its subsidiaries, and identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties). On the
basis of such monitoring and the amount of its established reserves, the Company
has reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change.
30. ERISA COMPLIANCE
The Company and its subsidiaries and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
"ERISA")) established or maintained by the Company, its subsidiaries or their
"ERISA Affiliates" (as defined below) are in compliance in all material respects
with ERISA or, if not in material compliance, would not reasonably be expected
to result in a Material Adverse Change. "ERISA Affiliate" means, with respect to
the Company or a subsidiary, any member of any group of organizations described
in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations thereunder (the
"Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any material "amount of unfunded benefit liabilities" (as defined under ERISA).
Neither the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification.
31. REGULATION S REQUIREMENTS
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The Company, the Guarantors and their respective affiliates and, to the
best of their knowledge, all persons acting on their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Securities outside the United States and, in connection therewith, the Offering
Memorandum will contain the disclosure required by Rule 902(h).
The Securities sold in reliance on Regulation S will be represented
upon issuance by a temporary global security that may not be exchanged for
definitive securities until the expiration of the 40-day restricted period
referred to in Rule 903(b)(3) of the Securities Act and only upon certification
of beneficial ownership of such Securities by non-U.S. persons or U.S. persons
who purchased such Securities in transactions that were exempt from the
registration requirements of the Securities Act.
Any certificate signed by an officer of the Company or the Guarantors
and delivered to the Initial Purchasers or to counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by the Company to each
Initial Purchaser as to the matters set forth therein.
SECTION
1. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
1. THE SECURITIES
The Company agrees to issue and sell to the several Initial Purchasers,
severally and not jointly, all of the Notes upon the terms herein set forth. On
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Initial
Purchasers agree, severally and not jointly, to purchase from the Company the
aggregate principal amount of Notes set forth opposite their names on SCHEDULE
A, at a purchase price of ___% of the principal amount thereof payable on the
Closing Date.
2. THE CLOSING DATE
Delivery of certificates for the Notes in definitive form to be
purchased by the Initial Purchasers and payment therefor shall be made at the
Chicago offices of Latham & Watkins (or such other place as may be agreed to by
the Company and the Initial Purchasers) at 10:00 a.m. Chicago time, on May 28,
1999, or such other time and date as the Initial Purchasers and the Company
shall agree (the time and date of such closing are called the "Closing Date").
3. DELIVERY OF THE NOTES
The Company shall deliver, or cause to be delivered, to Banc of America
Securities LLC for the accounts of the several Initial Purchasers certificates
for the Notes at the Closing Date against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Notes shall be in such denominations and
registered in the name of Cede & Co., as nominee of the Depository, pursuant to
the DTC Agreement, and shall be made available for inspection on the business
day preceding the Closing Date at a location in Chicago, as the Initial
Purchasers may designate. Time shall be of the essence, and delivery at the
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time and place specified in this Agreement is a further condition to the
obligations of the Initial Purchasers.
4. DELIVERY OF OFFERING MEMORANDUM TO THE INITIAL PURCHASERS
Not later than 12:00 p.m. Chicago time on the second business day
following the date of this Agreement, the Company shall deliver or cause to be
delivered copies of the Offering Memorandum in such quantities and at such
places as the Initial Purchasers shall reasonably request.
5. INITIAL PURCHASERS AS QUALIFIED INSTITUTIONAL BUYERS
Each Initial Purchaser, severally and not jointly, represents and
warrants to, and agrees with, the Company that it is a "qualified institutional
buyer" within the meaning of Rule 144A (a "Qualified Institutional Buyer").
SECTION
1. ADDITIONAL COVENANTS
The Company and the Guarantors further covenant and agree with each
Initial Purchaser as follows:
1. INITIAL PURCHASERS' REVIEW OF PROPOSED AMENDMENTS AND
SUPPLEMENTS
Prior to amending or supplementing the Offering Memorandum, the Company
shall furnish to the Initial Purchasers for review a copy of each such proposed
amendment or supplement, and the Company shall not use any such proposed
amendment or supplement to which the Initial Purchasers reasonably object.
2. AMENDMENTS AND SUPPLEMENTS TO THE OFFERING MEMORANDUM AND
OTHER SECURITIES ACT MATTERS
If, prior to the completion of the placement of the Notes by the
Initial Purchasers with the Subsequent Purchasers, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Offering Memorandum in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to a Subsequent
Purchaser, not misleading, or if in the written opinion of the Initial
Purchasers or counsel for the Initial Purchasers it is otherwise necessary to
amend or supplement the Offering Memorandum to comply with applicable law, the
Company agrees to promptly prepare (subject to Section 3(a) hereof), and furnish
at its own expense to the Initial Purchasers, amendments or supplements to the
Offering Memorandum so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Offering Memorandum is delivered to a Subsequent Purchaser, be misleading or so
that the Offering Memorandum, as amended or supplemented, will comply with
applicable law.
Following the consummation of the Exchange Offer or the effectiveness
of the shelf registration statement and for so long as the Securities are
outstanding if, in the reasonable judgment of the Initial Purchasers, the
Initial Purchasers or any of their affiliates (as such term is defined in the
rules and regulations under the Securities Act) are required to deliver a
prospectus in connection with sales of, or market-making activities with respect
to, such securities, (i) to periodically amend
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the applicable registration statement so that the information contained therein
complies with the requirements of Section 10(a) of the Securities Act, (ii) to
amend the applicable registration statement or supplement the related prospectus
or the documents incorporated therein when necessary to reflect any material
changes in the information provided therein so that the registration statement
and the prospectus will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing as of the date the
prospectus is so delivered, not misleading and (iii) to provide the Initial
Purchasers with copies of each amendment or supplement filed and such other
documents as the Initial Purchasers may reasonably request.
The Company hereby expressly acknowledges that the indemnification and
contribution provisions of Sections 8 and 9 hereof are specifically applicable
and relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 3(b).
3. COPIES OF THE OFFERING MEMORANDUM
The Company agrees to furnish the Initial Purchasers, without charge,
as many copies of the Offering Memorandum and any amendments and supplements
thereto as they shall have reasonably requested, provided that such requests are
made prior to the original printing of the Offering Memorandum or any amendment
or supplement thereto.
4. BLUE SKY COMPLIANCE
The Company shall cooperate with the Initial Purchasers and counsel for
the Initial Purchasers to qualify or register the Notes for sale under (or
obtain exemptions from the application of) the Blue Sky or state securities laws
of those jurisdictions designated by the Initial Purchasers, shall comply with
such laws and shall continue such qualifications, registrations and exemptions
in effect so long as required for the distribution of the Notes. The Company
shall not be required to qualify as a foreign corporation or to take any action
that would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to taxation as
a foreign corporation. The Company will advise the Initial Purchasers promptly
of the suspension of the qualification or registration of (or any such exemption
relating to) the Notes for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.
5. USE OF PROCEEDS
The Company shall apply the net proceeds from the sale of the Notes
sold by it in the manner described under the caption "Use of Proceeds" in the
Offering Memorandum.
6. THE DEPOSITORY
The Company will cooperate with the Initial Purchasers and use its best
efforts to permit the Securities to be eligible for clearance and settlement
through the facilities of the Depository.
7. ADDITIONAL ISSUER INFORMATION
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At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, the Company, for the benefit of holders and beneficial owners
from time to time of Notes, shall furnish, at its expense, upon request, to
holders and beneficial owners of Notes and prospective purchasers of Securities
information ("Additional Issuer Information") satisfying the requirements of
subsection (d)(4) of Rule 144A.
8. FUTURE REPORTS TO THE INITIAL PURCHASERS
For so long as any Notes or Exchange Notes remain outstanding, the
Company will furnish to Banc of America Securities LLC (i) as soon as reasonably
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of operations, stockholders' investment and cash
flows for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as reasonably
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
or other report filed by the Company with the Commission, the National
Association of Securities Dealers, Inc. or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock or debt securities (including the
holders of the Notes).
9. NO INTEGRATION
The Company agrees that it will not and will use its best efforts to
cause its affiliates not to make any offer or sale of securities of the Company
of any class if, as a result of the doctrine of "integration" referred to in
Rule 502 under the Securities Act, such offer or sale would render invalid (for
the purpose of (i) the sale of the Notes by the Company to the Initial
Purchasers, (ii) the resale of the Notes by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Notes by such Subsequent Purchasers to
others) the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or by Rule 144A or by Regulation S thereunder
or otherwise.
10. LEGENDED SECURITIES
Each certificate for a Note will bear the legend contained in "Notice
to Investors" in the Offering Memorandum for the time period and upon the other
terms stated in the Offering Memorandum.
11. PORTAL
The Company will use its reasonable best efforts to cause the Notes to
be eligible for the National Association of Securities Dealers, Inc. PORTAL
market (the "PORTAL market").
12. USURY
The Company and the Guarantors agree not to voluntarily claim, and to
resist actively any attempts to claim the benefits of any usury laws against the
holders of any Securities.
13. DUE DILIGENCE
In connection with the original distribution of the Securities, the
Company agrees that, prior to any offer or resale of the Securities by the
Initial Purchasers, the Initial Purchasers and counsel
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for the Initial Purchasers shall have the right to make reasonable inquiries
during normal business hours into the business of the Company.
Banc of America Securities LLC, on behalf of the several Initial
Purchasers, may, in its sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION
1. PAYMENT OF EXPENSES
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Notes (including all
printing and engraving costs), (ii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Notes to the Initial
Purchasers, (iii) all fees and expenses of the Company's and the Guarantors'
counsel, independent public or certified public accountants and other advisors,
(iv) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of each Preliminary Offering
Memorandum and the Offering Memorandum (including financial statements and
exhibits), and all amendments and supplements thereto, (v) all filing fees,
reasonable attorneys' fees and expenses incurred by the Company or the Initial
Purchasers in connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of), all or any part of the Securities
for offer and sale under the Blue Sky laws and, if requested by the Initial
Purchasers, preparing and printing a "Blue Sky Survey" or memorandum, and any
supplements thereto, advising the Initial Purchasers of such qualifications,
registrations and exemptions, (vi) the fees and expenses of the Trustee,
including the reasonable fees and disbursements of counsel for the Trustee and
in connection with the Indenture, the Notes and the Exchange Notes, (vii) any
fees payable in connection with the rating of the Notes or the Exchange Notes
with the rating agencies and the listing of the Notes with the PORTAL market,
(viii) all fees and expenses (including reasonable fees and expenses of counsel)
of the Company and the Guarantors in connection with approval of the Notes by
DTC for "book-entry" transfer, (ix) all roadshow expenses of the Company's
representatives and (x) the performance by the Company and the Guarantors of
their respective other obligations under this Agreement. Except as provided in
this Section 4, Section 6, Section 8 and Section 9 hereof, the Initial
Purchasers shall pay their own expenses, including the fees and disbursements of
their counsel.
SECTION 1.0.1. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS
The obligations of the several Initial Purchasers to purchase and pay
for the Notes, as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Guarantors set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and to the timely performance by the Company
and the Guarantors of their respective covenants and other obligations
hereunder, and to each of the following additional conditions:
1. ACCOUNTANTS' COMFORT LETTER
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On the date hereof, the Initial Purchasers shall have received from
Arthur Andersen LLP, independent public or certified public accountants for the
Company, a letter dated the date hereof addressed to the Initial Purchasers, in
form and substance reasonably satisfactory to the Initial Purchasers, containing
statements and information of the type ordinarily included in accountant's
"comfort letters" to Initial Purchasers, delivered according to Statement of
Auditing Standards Nos. 72 and 76 (or any successor bulletins), with respect to
the audited and unaudited financial statements and certain financial information
contained in the Offering Memorandum.
2. NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE
For the period from and after the date of this Agreement and prior to
the Closing Date:
3. in the judgment of the Initial Purchasers there
shall not have occurred any Material Adverse Change, the effect of
which, in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering, or the
delivery of Securities on the terms and in the manner contemplated by
the Offering Memorandum and this Agreement; and
4. there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act.
5. OPINION OF COUNSEL FOR THE COMPANY
On the Closing Date the Initial Purchasers shall have received the
opinion of Kirkland & Ellis, counsel for the Company, dated as of such Closing
Date, in form and substance satisfactory to the Initial Purchasers and their
counsel.
6. OPINION OF COUNSEL FOR THE INITIAL PURCHASERS
On the Closing Date the Initial Purchasers shall have received the
opinion of Latham & Watkins, counsel for the Initial Purchasers, dated as of
such Closing Date, with respect to such matters as may be reasonably requested
by the Initial Purchasers and are customary in this type of financing.
7. OFFICERS' CERTIFICATE
On the Closing Date the Initial Purchasers shall have received a
written certificate executed by the Chairman of the Board, Chief Executive
Officer or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of the Closing Date, to the effect
set forth in subsection (b)(ii) of this Section 5, and further to the effect
that:
8. for the period from and after the date of this
Agreement and prior to the Closing Date, there has not, to their
knowledge, occurred any Material Adverse Change;
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9. the representations, warranties and covenants of
the Company and the Guarantors set forth in Section 1 of this Agreement
are true and correct with the same force and effect as though expressly
made on and as of the Closing Date; and
10. the Company and the Guarantors have complied in
all material respects with all the agreements and satisfied all the
conditions on their respective parts to be performed or satisfied at or
prior to the Closing Date.
11. BRING-DOWN COMFORT LETTER
On the Closing Date the Initial Purchasers shall have received from
Arthur Andersen LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance reasonably satisfactory
to the Initial Purchasers, to the effect that they reaffirm the statements made
in the letter furnished by them pursuant to subsection (a) of this Section 5,
except that the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the Closing Date.
12. PORTAL LISTINGS
At the Closing Date the Notes shall have been designated for trading on
the PORTAL market.
13. INDENTURE
On the Closing Date the Company and the Guarantors shall have executed
and delivered the Indenture.
14. REGISTRATION RIGHTS AGREEMENT
The Company and the Guarantors shall have entered into the Registration
Rights Agreement and the Initial Purchasers shall have received executed
counterparts thereof.
15. ADDITIONAL DOCUMENTS
On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them
to pass upon the issuance and sale of the Securities as contemplated herein,
or in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
SECTION
1. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES
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If this Agreement is terminated by the Initial Purchasers pursuant to
Section 5, or if the sale to the Initial Purchasers of the Securities on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Initial Purchasers (or
such Initial Purchasers as have terminated this Agreement for any of the
foregoing reasons with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the Initial
Purchasers in connection with the proposed purchase and the offering and sale of
the Securities, including but not limited to reasonable fees and disbursements
of counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
SECTION 1.0.1. OFFER, SALE AND RESALE PROCEDURES
Each of the Initial Purchasers, on the one hand, and the Company and
each of the Guarantors, on the other hand, hereby establish and agree to observe
the following procedures in connection with the offer and sale of the
Securities:
1. OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS
AND NON-US PERSONS
Offers and sales of the Securities will be made only by the Initial
Purchasers or affiliates thereof qualified to do so in the jurisdictions in
which such offers or sales are made. Each such offer or sale shall only be made
to persons whom the offeror or seller reasonably believes to be (i) qualified
institutional buyers (as defined in Rule 144A under the Securities Act) or (ii)
non-U.S. persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in reliance
upon Regulation S under the Securities Act, upon the terms and conditions set
forth in ANNEX I hereto, which ANNEX I is hereby expressly made a part hereof.
2. NO GENERAL SOLICITATION
The Securities will be offered by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the Securities Act) will be
used in the United States in connection with the offering of the Securities.
3. RESTRICTIONS ON TRANSFER
Upon original issuance by the Company, and until such time as the same
is no longer required under the applicable requirements of the Securities Act,
the Securities (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the
following legend:
"THE NOTE (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES
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ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE NOTES (THE FORM OF SUCH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), OR (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED THAT
IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (E) SUCH TRANSFER
IS EFFECTED BY THE DELIVERY TO THE TRANSFEREE OF DEFINITIVE
SECURITIES REGISTERED IN ITS NAME (OR ITS NOMINEE'S NAME) IN
THE BOOKS MAINTAINED BY THE REGISTRAR, AND IS SUBJECT TO THE
RECEIPT BY THE REGISTRAR (AND THE COMPANY, IF THEY SO REQUEST)
OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL
TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (II) TO THE COMPANY OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."
Following the sale of the Securities by the Initial Purchasers to
Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers shall
not be liable or responsible to the Company for any losses, damages or
liabilities suffered or incurred by the Company, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Security.
SECTION
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1. INDEMNIFICATION.
1. INDEMNIFICATION OF THE INITIAL PURCHASERS
The Company and the Guarantors (for purposes of Sections 8, 9 and 10 of
this Agreement, the term Company shall include the Guarantors), jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser, its
directors, officers and employees, and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which
such Initial Purchaser or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and to reimburse each
Initial Purchaser and each such controlling person for any and all expenses
(including the reasonable fees and disbursements of counsel chosen by Banc of
America Securities LLC) as such expenses are reasonably incurred by such Initial
Purchaser or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchasers expressly for use in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement thereto);
PROVIDED FURTHER, HOWEVER, that the indemnification contained in this paragraph
(a) with respect to the Preliminary Offering Memorandum shall not inure to the
benefit of the Initial Purchasers (or to the benefit of any person controlling
the Initial Purchasers) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Securities by the Initial Purchasers to any
person if a copy of the Offering Memorandum (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) shall
not have been delivered or sent to such person and each untrue statement of a
material fact contained in, and each omission or alleged omission of a material
fact from, such Preliminary Offering Memorandum was corrected in the Offering
Memorandum (as so amended or supplemented) and it shall have been determined
that any Initial Purchaser and each person, if any, who controls such Initial
Purchasers would not have incurred such losses, claims, damages, liabilities and
expenses had the Offering Memorandum been delivered or sent. The indemnity
agreement set forth in this Section 8(a) shall be in addition to any liabilities
that the Company may otherwise have.
2. INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND
OFFICERS
Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company and each of its directors and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or
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expense, as incurred, to which the Company or any such director, or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Initial Purchaser), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue or alleged untrue statement of
a material fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Initial Purchasers expressly
for use therein; and to reimburse the Company, or any such director or
controlling person for any legal and other expenses reasonably incurred by the
Company, or any such director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company hereby acknowledges that the
only information that the Initial Purchasers have furnished to the Company
expressly for use in any Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto) are the statements set forth
in the first sentence of the third paragraph, the first two sentences of the
fourth paragraph, the third, fourth and fifth sentences of the fifth paragraph,
the seventh paragraph and the first six sentences of the eighth paragraph under
the caption "Plan of Distribution" in the Offering Memorandum; and the Initial
Purchasers confirm that such statements are correct. The indemnity agreement set
forth in this Section 8(b) shall be in addition to any liabilities that each
Initial Purchaser may otherwise have.
3. NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party (for contribution or
otherwise) under the indemnity agreement contained in this Section 8 except to
the extent the indemnifying party is prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying
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party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party (Banc of America Securities LLC in the case
of Section 8(b) and Section 9), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
4. SETTLEMENTS
The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final nonappealable judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement or delivered notice to the indemnified party of its good
faith objection to such claim of indemnification. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
SECTION
1. CONTRIBUTION
If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is
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appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company, and the total discount received by the
Initial Purchasers bear to the aggregate initial offering price of the
Securities. The relative fault of the Company, on the one hand, and the Initial
Purchasers, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact or any such inaccurate
or alleged inaccurate representation or warranty relates to information supplied
by the Company, on the one hand, or the Initial Purchasers, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the discount received by
such Initial Purchaser in connection with the Securities distributed by it. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute pursuant to this Section 9 are several, and not joint,
in proportion to their respective commitments as set forth opposite their names
in SCHEDULE A. For purposes of this Section 9, each director, officer and
employee of an Initial Purchaser and each person, if any, who controls an
Initial Purchaser within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Initial Purchaser, and each
director of the Company, and each person, if any,
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who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
SECTION 1.0.1. TERMINATION OF THIS AGREEMENT
Prior to the Closing Date, this Agreement may be terminated by the
Initial Purchasers by notice given to the Company if at any time (i) trading in
securities generally on either the NASDAQ Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any federal or New York authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States' or international political,
financial or economic conditions, as in the judgment of the Initial Purchasers
is material and adverse and makes it impracticable to market the Securities in
the manner and on the terms described in the Offering Memorandum or to enforce
contracts for the sale of securities; or (iv) in the judgment of the Initial
Purchasers there shall have occurred any Material Adverse Change, the effect of
which, in the sole judgment of the Initial Purchasers makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated by the Offering Memorandum and in this
Agreement. Any termination pursuant to this Section 10 shall be without
liability on the part of (a) the Company to any Initial Purchaser, except that
the Company shall be obligated to reimburse the expenses of the Initial
Purchasers pursuant to Sections 4 and 6 hereof, (b) any Initial Purchaser to the
Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 1.0.2. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of the Guarantors, of their respective officers
and of the several Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Initial Purchaser or the Company, the Guarantors or
any of its or their partners, officers or directors or any controlling person,
as the case may be, and will survive delivery of and payment for the Securities
sold hereunder and any termination of this Agreement.
SECTION 1.0.3. NOTICES
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
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If to the Initial Purchasers:
Banc of America Securities LLC
231 South LaSalle Street
Chicago, IL 60697
Facsimile: (312) 974-0140
Attention: Brad A. Bernstein
with a copy to:
Latham & Watkins
233 South Wacker Drive, Suite 5800
Chicago, IL 60606
Facsimile: (312) 993-9767
Attention: Christopher Lueking
If to the Company:
J.L. French Automotive Castings, Inc.
4508 IDS Center
Minneapolis, MN 55402
Facsimile: (612) 332-2012
Attention: Chief Financial Officer
with a copy to:
Kirkland & Ellis
200 East Randolph Street
Chicago, IL 60601
Facsimile: (312) 861-2200
Attention: Carter W. Emerson, P.C.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 1.0.4. SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Initial Purchasers pursuant to Section
16 hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.
SECTION 1.0.5. PARTIAL UNENFORCEABILITY
26
<PAGE>
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 1.0.6. AGREEMENT
1. GOVERNING LAW PROVISIONS
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN SUCH STATE.
SECTION
1. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS
If any one or more of the several Initial Purchasers shall fail or
refuse to purchase Securities that it or they have agreed to purchase hereunder
on the Closing Date, and the aggregate number of Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase does not exceed 10% of the aggregate number of the Securities to be
purchased on such date, the other Initial Purchasers shall be obligated,
severally, in the proportions that the number of Securities set forth opposite
their respective names on SCHEDULE A bears to the aggregate number of Securities
set forth opposite the names of all such non-defaulting Initial Purchasers, or
in such other proportions as may be specified by the Initial Purchasers with the
consent of the non-defaulting Initial Purchasers, to purchase the Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on such date. If any one or more of the Initial
Purchasers shall fail or refuse to purchase Securities and the aggregate number
of Securities with respect to which such default occurs exceeds 10% of the
aggregate number of Securities to be purchased on the Closing Date, and
arrangements satisfactory to the Initial Purchasers and the Company for the
purchase of such Securities are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any such
case either the Initial Purchasers or the Company shall have the right to
postpone the Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Offering
Memorandum or any other documents or arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall be deemed
to include any person substituted for a defaulting Initial Purchaser under this
Section 16. Any action taken under this Section 16 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.
SECTION 1.0.1. GENERAL PROVISIONS
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and
27
<PAGE>
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
[Signature Page Follows]
28
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By:
/s/ Carl E. Nelson,
Vice President and Secretary
FRENCH HOLDINGS, INC.
By:
/s/ Carl E. Nelson,
Vice President and Secretary
J.L. FRENCH CORPORATION
By:
/s/ Carl E. Nelson,
Vice President and Secretary
ALLOTECH INTERNATIONAL, INC.
By:
/s/ Carl E. Nelson,
Vice President and Secretary
The foregoing Purchase Agreement is hereby confirmed and accepted by
the Initial Purchasers in Chicago, Illinois as of the date first above written.
<PAGE>
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
As the several Initial Purchasers
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Anthony W. Maniscalco
Name:
Title:
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT
INITIAL PURCHASERS OF SECURITIES TO BE PURCHASED
- ------------------ -----------------------------
<S> <C>
Banc of America Securities LLC................. $87,500,000
Chase Securities Inc........................... $87,500,000
Total:................................ $175,000,000
</TABLE>
A-1
<PAGE>
EXHIBIT A
---------
J.L. French Automotive Castings, Inc.
French Holdings, Inc.
J.L. French Corporation
Allotech International, Inc.
J.L. French FSC Corporation
Automotive Components Investments Ltd.
Morris Ashby Limited
Morris Ashby Castings Limited
Kaye (Presteigne) Limited
UJP Tools Limited
MAC Leasing Limited
Burdon & Miles Limited
Wilson & Royston Limited
Foundry Computational Services Limited1
Ansola Acquisition Corp., SRL
Fundiciones Viuda de Ansola, s.a.
Auxicomp Auxiliary Componentes, SL2
- -------------
(1) Foundry Computational Services Limited is inactive. Morris Ashby Limited
owns 51%.
(2) Ansola holds a 20% interest in Auxicomp Auxiliary Componentes, SL, which
is a German company.
A-1
<PAGE>
ANNEX I
Resale Pursuant to Regulation S or Rule 144A. Each Initial Purchaser
understands that:
(a) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Securities in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Securities Act (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities pursuant hereto and the Closing
Date, other than in accordance with Regulation S of the Securities Act or
another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not
cause any advertisement with respect to the Securities (including any
"tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Securities, except such advertisements as permitted by and include the
statements required by Regulation S.
(b) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(c)(3) under the Securities Act, it
will send to such distributor, dealer or person receiving a selling concession,
fee or other remuneration a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the
Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the
Notes covered hereby in reliance on Regulation S during the
period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in
Regulation S."
(c) Such Initial Purchaser agrees that the Securities offered
and sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the
Securities Act and only upon certification of beneficial ownership of such
Securities by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the
Securities Act.]
ANNEX-1
<PAGE>
Exhibit 2-1
- -------------------------------------------------------------------------------
RECAPITALIZATION AGREEMENT
by and among
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.;
The Stockholders
Listed on
the Signature Pages Hereto
and
JLF ACQUISITION LLC
Dated as of March 29, 1999
- -------------------------------------------------------------------------------
<PAGE>
RECAPITALIZATION AGREEMENT, dated as of March 29, 1999 (this
"AGREEMENT"), by and among J.L. FRENCH AUTOMOTIVE CASTINGS, INC., a Delaware
corporation (the "COMPANY"); Windward Capital Associates, L.P., a Delaware
limited partnership ("WINDWARD CAPITAL"), Windward/Merban, L.P., a Delaware
limited partnership ("WINDWARD/MERBAN"), Windward/Merchant, L.P. a Delaware
limited partnership ("WINDWARD/MERCHANT"), Windward/Northwest, L.P., a
Delaware limited partnership ("WINDWARD/NORTHWEST"), Windward/Metropolitan,
L.L.C., a Delaware limited liability company ("WINDWARD/METROPOLITAN"),
Windward/Park JLF, L.L.C. a Delaware limited liability company
("WINDWARD/PARK JLF"), Windward/Park WACI, L.L.C., a Delaware limited
liability company ("WINDWARD/PARK WACI"), Windward/Badger JLF, L.L.C., a
Delaware limited liability company ("WINDWARD/BADGER JLF"), Windward/Badger
WACI, L.L.C., a Delaware limited liability company ("WINDWARD/BADGER WACI"),
CS First Boston Merchant Investments 1995/96, L.P., a Delaware limited
partnership ("CS FIRST BOSTON") and Charles M. Waldon (collectively the
"SELLERS"); and JLF Acquisition LLC, a Delaware limited liability company
("BUYER") and together with any assignees of Buyer pursuant to Section 10.7
hereof, the ("BUYER GROUP").
W I T N E S S E T H
WHEREAS, Sellers, collectively own all of the outstanding Shares
(as defined in Section 2.2 hereof) of the Company;
WHEREAS, the Buyer Group desires to acquire certain Shares from
the Company, and the Company desires to sell such Shares to The Buyer Group
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company desires to repurchase certain Shares from
the Sellers and the Sellers desire to sell such Shares to the Company.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements and conditions hereafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
<PAGE>
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 PURCHASE AND SALE OF COMMON STOCK. Upon the terms
and subject to the satisfaction or waiver, if permissible, of the conditions
hereof, each member of the Buyer Group severally agrees to purchase from the
Company, and the Company agrees to sell and issue to each such member of the
Buyer Group at the Closing, free and clear of all Encumbrances (as defined in
Section 2.3 hereof), the number and class of shares of the Company's common
stock, as set forth opposite the name of such member of the Buyer Group in
Section 1.1 (which Section may be modified or supplemented) of the disclosure
schedule of Buyer attached hereto (the "BUYER DISCLOSURE SCHEDULE"), having the
rights and preferences set forth in the Amendment to the Certificate of
Incorporation (the "CHARTER AMENDMENT") attached hereto as Exhibit E-1, for an
aggregate purchase price equal to the excess of (i) $155,000,000 over (ii) the
product of (A) the number of Charles Waldon Shares (as defined below) multiplied
by (B) the Cash Payment Per Share (as defined below) (the "PURCHASE PRICE"),
such that immediately following the consummation of the recapitalization
transactions described herein (the "RECAPITALIZATION") the Buyer Group shall
hold in the aggregate the excess of (i) 88.57143% of the total outstanding
common stock of the Company over (ii) the Charles Waldon Shares. For the
purposes of this Agreement, the "CHARLES WALDON SHARES" shall mean the shares
owned by Charles Waldon immediately following the Closing.
SECTION 1.2 REDEMPTION OF SHARES AND ADDITIONAL RECAPITALIZATION
TRANSACTION.
(a) Upon the terms and subject to the satisfaction or waiver, if
permissible, of the conditions hereof, each Seller, jointly and not severally,
agrees to sell, assign, transfer, convey and deliver to the Company, and the
Company agrees to purchase, redeem, accept, acquire and take assignment and
delivery of the Shares to be redeemed listed opposite each Seller's name on
Section 1.2 of the disclosure schedule of the Company attached hereto (the
"COMPANY DISCLOSURE SCHEDULE") as being purchased for a price per Share equal
(as the same may be modified from time to time) to the Cash Payment Per Share
(as defined below). Immediately following the consummation of the
Recapitalization, the Sellers shall hold only shares of Class A Common Stock,
representing in the aggregate the sum of (A) 11.42857% of the total outstanding
common stock of the Company and (B) the Charles Waldon Shares and, concurrently
with the Closing, the Charter Amendment shall be filed with the Secretary of
State of the State of Delaware.
2
<PAGE>
(b) Notwithstanding the fact that the transactions contemplated
by this Agreement to occur at Closing shall occur simultaneously at the Closing,
but such transactions shall be deemed to have occurred in the following order:
(i) conversion of any shares of Class B Common Stock not to be redeemed into
shares of Class A Common Stock, (ii) the obtaining of the Financing by the
Company, (iii) the redemption of the Sellers' Shares pursuant to Section 1.2
hereof, (iv) the filing of the Charter Amendment, (v) the purchase of the Shares
by the Buyer Group pursuant to Section 1.1 hereof and (vi) the execution and
delivery of the Shareholders Agreement.
(c) For purposes of this Agreement, "CASH PAYMENT PER SHARE"
shall mean an amount equal to the quotient obtained by dividing (i) the sum of
(A) the Redemption Price (as defined herein) and (B) the aggregate exercise
price of all Options outstanding immediately prior to the Closing (as defined in
Section 2.2 hereof) (the "AGGREGATE OPTION EXERCISE PRICE") by (ii) the
aggregate number of all Shares outstanding immediately prior to the Closing
(other than Shares, if any, held in the treasury of the Company or owned by
Buyer) or subject to Options outstanding immediately prior to the Closing,
assuming full exercisability thereof (the "FULLY DILUTED SHARES"). For purposes
of this Agreement, the "REDEMPTION PRICE" shall be equal to the excess of
(i) $610,000,000 over (ii) the sum of (A) the Debt Amount and (B) the Fees and
Expenses.
(d) For purposes of this Agreement, the "DEBT AMOUNT" shall
equal the excess of (x) the sum of (1) the Preferred Stock Redemption Amount (as
defined in Section 5.12 hereof), (2) the Senior Debt Repayment Amount (as
defined in Section 5.11 hereof), (3) the Subordinated Debt Repayment Amount (as
defined in Section 5.11 hereof), (4) the Assumed Debt (as defined in Section
5.11 hereof) and (5) bonuses paid to non-U.S. employees in lieu of options
which shall be paid in cash concurrently with the Closing over (y) the available
cash and cash equivalents (excluding any cash paid in respect of the Ford
Tooling Receivable (as defined herein) from January 1, 1999 through the Closing
Date) on the consolidated balance sheet of the Company as of the Closing Date.
For purposes of calculating the payment to be made at the Closing, the Company
will provide the Buyer with a good faith estimate of cash and cash equivalents
as of the Closing Date (the "ESTIMATED CLOSING CASH").
(e) For purposes of this Agreement, "FEES AND EXPENSES" shall
mean those fees and expenses of the Persons set forth on Exhibit A hereto (which
Exhibit shall be provided two days prior to Closing).
3
<PAGE>
SECTION 1.3 CLOSING.
(a) The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Kirkland & Ellis,
200 East Randolph Drive, Chicago, Illinois 60601, at 10:00 a.m., New York City
time, on April 20, 1999 unless the conditions set forth in Articles VI and VII
hereof shall not have been satisfied or duly waived in which case the closing
shall occur on the business day following such satisfaction or waiver; or if the
Sellers' Representative and Buyer mutually agree on a different date, the date
upon which they have mutually agreed (such date, the "CLOSING DATE").
(b) At the Closing, the Company shall deliver the following to
the Buyer Group:
(i) stock certificates representing the number of Shares to
be received by each member of the Buyer Group, as set forth in
Section 1.1 of the Buyer Disclosure Schedule;
(ii) all other documents required to be delivered by the
Company on or prior to the Closing Date pursuant to this Agreement
or otherwise required from the Company in connection herewith;
(iii) the resignations of the members of the board of
directors of the Company and each of its Subsidiaries (as defined
herein); and
(iv) the stock books, stock ledgers, minute books and
corporate seal of the Company; PROVIDED THAT any of the foregoing
items shall be deemed to have been delivered pursuant to this Section
1.3(b)(iv) if such item has been delivered to or is otherwise located
at the Company or any offices of the Company.
(c) At the Closing, the Buyer Group shall deliver:
(i) to the Company, by wire transfer of immediately
available funds to a bank account designated by the Company, the
Purchase Price; and
(ii) all other documents required to be delivered by the
Buyer on or prior to the Closing Date pursuant to this Agreement or
otherwise required from Buyer in connection herewith.
4
<PAGE>
(d) At the Closing, the Company will provide from the proceeds of
the Financing:
(i) to the Sellers and the Working Capital Escrow Agent (as
defined herein, and allocated as provided in Section 1.4(e) of this
Agreement), the Cash Payment Per Share for each Share to be redeemed;
(ii) to the Preferred Stock Holders (as defined in
Section 5.12 hereof) the Preferred Stock Redemption Amount;
(iii) to the Senior Debt Holders (as defined in Section
5.11(a) hereof) the Senior Debt Repayment Amount; and
(iv) to the Subordinated Debt Holders (as defined in
Section 5.11(b) hereof) in accordance with Section 5.11(b) hereof, the
Subordinated Debt Repayment Amount.
(e) At the Closing, each Seller shall deliver to the Company
stock certificates representing the Shares that such Seller is selling to the
Company and the Company shall pay to each Seller an amount equal to the Cash
Payment Per Share for each such Share to be redeemed, as set forth on Section
1.2 of the Company Disclosure Schedule (as the same may be modified from time to
time), payable by wire transfer of immediately available funds on the Closing
Date to accounts designated by such Sellers to the Company.
SECTION 1.4 POST-CLOSING ADJUSTMENT. (a) The Redemption Price
(and, hence the Cash Payment Per Share (as adjusted, the "ADJUSTED CASH PAYMENT
PER SHARE")) shall be subject to adjustment after the Closing as specified in
this Section 1.4 and Section 1.4 of the Company Disclosure Schedule (the
"POST-CLOSING ADJUSTMENT").
(b) Within 45 days following the Closing Date, the Company shall
prepare and deliver to the Sellers' Representative the statement (the
"STATEMENT") setting forth the Working Capital (as defined below) of the Company
as of the Closing Date and cash and cash equivalents (excluding any cash paid in
respect of the Ford Tooling Receivable from January 1, 1999 through the Closing
Date) held by the Company as of the Closing Date, together with the review
thereon of Arthur Andersen LLP (the "BUYER'S ACCOUNTANTS") confirming that the
Statement fairly presents Working Capital and cash and cash equivalents
(excluding any cash paid in
5
<PAGE>
respect of the Ford Tooling Receivable from January 1, 1999 through the Closing
Date) held by the Company on the Closing Date in conformity with the standards
set forth in this Section 1.4 and Section 1.4 of the Company Disclosure
Schedule. The Statement shall be prepared in accordance with GAAP, consistent
with the principles and methods set forth in Section 1.4 of the Company
Disclosure Schedule. Following the Closing, the Company shall provide the
Sellers and any independent auditors (and other representatives) of the Sellers
with access (and to examine and make copies of) at all reasonable times to the
properties, books, records, work papers (including those of the parties'
respective accountants) and personnel of the Company for purposes of preparing
and reviewing the Statement. The Sellers' Representative shall have 30 days
after delivery to the Sellers' Representative of the Statement during which to
notify the Company of any dispute of any item contained in the Statement, which
notice shall set forth in reasonable detail the basis for such dispute. If the
Sellers' Representative fails to notify the Company of any such dispute within
such 30-day period, the Statement shall be deemed to be the Final Statement.
In the event that the Sellers' Representative shall so notify the Company of any
dispute, the Company and the Sellers' Representative and their respective
accountants shall cooperate in good faith to resolve such dispute as promptly as
possible. "WORKING CAPITAL" shall mean the sum of Current Assets less Current
Liabilities (excluding therefrom any Tax benefit or liability arising as a
result of the payment of the Redemption Price, the cancellation and payment in
respect of the Options (as provided in Section 5.9 hereof), the payment of the
Debt Amount or the payment of the Fees and Expenses). "CURRENT ASSETS" shall
mean the current assets of the Company as set forth on a balance sheet prepared
in accordance with GAAP, consistent with the standards and procedures set forth
in Section 1.4 of the Company Disclosure Schedule excluding (i) cash and cash
equivalents and (ii) the Ford Tooling Receivable. "CURRENT LIABILITIES" shall
mean the current liabilities of the Company as set forth on a balance sheet
prepared in accordance with GAAP, consistent with the standards and provisions
set forth on Section 1.4 of the Company Disclosure Schedule excluding (i) the
current portion of long-term debt and accrued interest on any debt and (ii)
payables arising from or related to capital expenditures. "FORD TOOLING
RECEIVABLE" shall mean the net amount recorded as a receivable in accordance
with GAAP pertaining to the tooling for the 4R100 Transmission Cases and the
4.6L 2V Front Covers under the letter agreement with Ford dated July 30, 1998.
(c) If the Company and the Sellers' Representative and their
respective accountants are unable to resolve any such dispute within 15 days of
the Sellers' Representative's delivery of such dispute notice, such dispute
shall be resolved by a jointly selected nationally recognized accounting firm
retained to resolve any
6
<PAGE>
disputes between the Company and the Sellers over any items contained in the
Statement (the "INDEPENDENT ACCOUNTING FIRM"), which shall make its
determination as promptly as practicable, and such determination shall be final
and binding on the parties. The Independent Accounting Firm shall, acting as
experts and not as arbitrators, determine on the basis of the standards set
forth in this Section 1.4 and Section 1.4 of the Company Disclosure Schedule,
whether and to what extent, if any, the Statement requires adjustment. If the
Sellers' Representative and the Company cannot jointly agree on the identity of
the Independent Accounting Firm, the Sellers' Representative and the Company
shall each submit to their respective accountants the name of an accounting firm
which does not at the time and has not in the prior two years provided services
to the Sellers or the Buyer or any of their respective affiliates, and the
Independent Accounting Firm shall be selected by lot from these two firms by the
respective accountants of the two parties. Any expenses relating to the
engagement of the Independent Accounting Firm shall be shared equally by the
Company and the Sellers. The Independent Accounting Firm shall be instructed to
use every reasonable effort to perform its services within 15 days of submission
of the Statement to it and, in any case, as soon as practicable after
submission. The Statement, as modified by resolution of any disputes by the
Company and the Sellers or by the Independent Accounting Firm, shall be the
Final Statement (the "FINAL STATEMENT"). Upon the determination of the Final
Statement, the Company and the Sellers' Representative shall deliver joint
written instructions to the Escrow Agent directing the Escrow Agent to deliver
the Working Capital Escrow Fund in the manner specified in such instructions
(including with respect to any claims for indemnification made against such Fund
in accordance with Section 1.4(g) hereof).
(d) The Redemption Price (and hence, the Cash Payment Per Share)
shall be increased by the positive amount by which the sum of (x)(i) the Working
Capital as set forth in the Final Statement (the "CLOSING WORKING CAPITAL") and
(ii) the cash and cash equivalents (excluding any cash paid in respect of the
Ford Tooling Receivable from the date of this Agreement through the Closing
Date) held by the Company as of the Closing Date as set forth in the Final
Statement (the "ACTUAL CLOSING CASH") exceeds (y) the product of (i)(1) the sum
of (A) $32,000,000 and (B) the Estimated Closing Cash multiplied by (2) 110%, or
the Redemption Price shall be decreased by the positive amount by which the
product of (i) the sum of (A) $32,000,000 and (B) the Estimated Closing Cash
multiplied by (ii) 90% exceeds the sum of (x) the Closing Working Capital and
(y) the Actual Closing Cash, as the case may be. To the extent that the
Redemption Price (and hence, the Cash Payment Per Share) is increased, (i) the
Company shall within ten business days after delivery of the Final Statement
make payment to the Sellers' Representative as agent for the
7
<PAGE>
Sellers by wire transfer of immediately available funds of the amount of such
difference as determined pursuant to the preceding sentence, together with
interest thereon at a fixed rate equal to the prime rate per annum as quoted in
the Wall Street Journal from the Closing Date to the date of payment and (ii)
the Redemption Price shall be increased and the Sellers' Representative
following receipt thereof shall make payment by wire transfer of immediately
available funds the amount of such increase as determined pursuant to the
preceding sentence, together with interest thereon at a fixed rate equal to the
prime rate per annum as quoted in the Wall Street Journal from the Closing Date
to the date of payment, to (x)(1) each holder of an Option, the amount equal to
the excess (together with interest thereon) of (A) the amount that would have
been paid at Closing pursuant to Section 5.9 of this Agreement had the Cash
Payment Per Share as adjusted above been the Cash Payment Per Share as of the
Closing Date, over (B) the amount actually paid to such holder of such Option on
the Closing Date in accordance with Section 5.9 of this Agreement and (2) each
Seller, an amount equal to the product of (A) the excess of (I) such increase
(and interest thereon) over (II) the aggregate amount paid to holders of Options
pursuant to the preceding clause (x)(1) above, and (B) such Seller's Seller
Percentage (as defined herein). For purposes of this Agreement, "SELLER
PERCENTAGE" shall mean the percentage set forth next to each Seller's name on
Section 1.2 of the Company's Disclosure Schedule (as the same may be modified
from time to time). To the extent that the Redemption Price (and hence, the Cash
Payment Per Share) is decreased, the Working Capital Escrow Agent shall release
to the Company within ten business days after delivery of the Final Statement an
amount equal to such decrease by wire transfer of immediately available funds
together with interest thereon at a fixed rate equal to the prime rate per annum
as quoted in the Wall Street Journal from the Closing Date to the date of
payment.
(e) In order to satisfy the obligations of the Sellers and the
holders of any Options pursuant to this Section 1.4, at the Closing, $5.0
million (the "WORKING CAPITAL ESCROW FUND") shall be deposited by the Company
with United States Trust Company of New York, (the "WORKING CAPITAL ESCROW
AGENT") pursuant to the Working Capital Escrow Agreement, substantially in the
form attached hereto as Exhibit B, (the "ESCROW AGREEMENT"), to be entered into
between the Company, the Sellers and the Working Capital Escrow Agent. Solely
for purposes of determining the amount to be distributed at Closing to the
Sellers and to the holders of any Options, the Redemption Price shall be deemed
to be reduced by the Working Capital Escrow Fund. The Escrow Agreement shall
provide for distributions of the Working Capital Escrow Fund (i) first, to pay
fees and expenses of the Working Capital Escrow Fund, (ii) second, to the
Company, as provided in the penultimate
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sentence of Section 1.4(d) of this Agreement and (iii) any remainder to (x) the
holder of any Option and the Sellers, calculated (I) with respect to the holder
of an Option, as if the Redemption Price were the Redemption Price minus the
amounts paid pursuant to clauses (i) and (ii) above and (II) to the Sellers, an
amount equal to the product of (A) the net amount available from the Working
Capital Escrow Fund, after deducting payments made pursuant to clauses (i), (ii)
and (iii) (x)(I) above and (B) such Seller's Seller Percentage. All
determinations pursuant to clause (iii) above shall be made by the Sellers'
Representative and shall be final and binding. To the extent that the amount
deposited in the Working Capital Escrow Fund is not sufficient to satisfy the
obligations pursuant to (i) and (ii) of the preceding sentence, the Sellers
shall severally and not jointly (pro rata based on each such Sellers' Seller
Percentage) be responsible for any additional amount necessary to satisfy such
obligations.
(f) Any payment paid to the Sellers in respect of Shares redeemed
shall be treated as an increase to the Redemption Price. Any cash paid to
Sellers in respect of Shares not to be redeemed pursuant to the first sentence
of Section 1.2(a) shall be paid in consideration of the redemption of a number
of Shares equal to the quotient of (i) the product of (A) such Seller's Seller
Percentage multiplied by (B) any increase in the Redemption Price (together with
interest thereon at a fixed rate equal to the prime rate per annum as quoted in
the Wall Street Journal from the Closing Date to the date of payment) pursuant
to this Section 1.4 divided by (ii) the Adjusted Cash Payment Per Share. The
Buyer Group shall simultaneously therewith have a number of Shares cancelled
(without any payment therefor) so as to maintain the ownership ratio, existing
immediately following the Closing, of the Sellers as a group in comparison to
the Buyer Group. Immediately following the redemption and cancellation referred
to in the preceding two sentences, the Company shall effect a stock split such
that each of the Sellers and the each member of the Buyer Group shall own a
number of Shares equal to the number of Shares owned by such Person prior to
such redemption or cancellation, as the case may be.
(g) Immediately following any distribution to the Company from
the Working Capital Escrow Fund pursuant to Section 1.4(e) hereof and
immediately preceding any distribution to the Sellers and Option holders from
the Working Capital Escrow Fund pursuant to Section 1.4(e) hereof and if and to
the extent that the Buyer/Company Indemnified Parties (as such term is defined
in Section 9.2 hereof) are entitled (either on the basis of (i) agreement among
the parties hereto (in which case the Company and the Sellers' Representative
shall deliver joint written instructions to the Escrow Agent to deliver the
amount agreed to be owed in respect
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of such claims in the manner specified in such instructions) or (ii) by a Final
Decree (as defined in the Escrow Agreement) existing on such date) to
indemnification pursuant to Article IX hereof, such parties shall be entitled to
make claims against the Working Capital Escrow Fund; PROVIDED THAT in no event
shall the term of the Working Capital Escrow Fund or the Escrow Agreement be
lengthened as a result of the foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Buyer Group to enter into this
Agreement, the Company represents and warrants to the Buyer Group as follows:
SECTION 2.1 CORPORATE ORGANIZATION AND AUTHORITY.
(a) Each of the Company and its Subsidiaries (as defined in
Section 2.3 hereof) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to own, lease and operate the
properties owned, leased and operated by it and to carry on the operations of
its business as now being conducted by it. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it with respect to its business or the nature of the business conducted by it
makes such licensing or qualification necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not have a material adverse effect on the Company. The Company has heretofore
made available to Buyer true, complete and correct copies of the certificate of
incorporation and bylaws of the Company, as currently in effect.
(b) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by the Board of
Directors of the Company (the "COMPANY BOARD") and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this
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Agreement by Buyer, a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to or limited by (i) bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
SECTION 2.2 CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 450,000 shares of common stock, par value $0.0001 per
share, of which 300,000 shares are designated Class A Common Stock (the "CLASS A
COMMON STOCK"), 75,000 shares are designated Class B Common Stock (the "CLASS B
COMMON STOCK"), 50,000 shares are designated Class C Common Stock (the "CLASS C
COMMON STOCK") and 25,000 shares are designated Class D Common Stock (the "CLASS
D COMMON STOCK") (the Class A Common Stock, the Class B Common Stock, the Class
C Common Stock and the Class D Common Stock are collectively referred to as the
"SHARES") and (ii) 3,000 shares of preferred stock, par value $0.0001 per share
(the "PREFERRED STOCK"), of which 1,500 shares are designated Series A
Convertible Preferred Stock (the "SERIES A PREFERRED STOCK") and 1,500 are
designated Series B Redeemable Preferred Stock (the "SERIES B PREFERRED STOCK").
As of the date of this Agreement, there were (i) 1,500 shares of Series A
Preferred Stock issued and outstanding, (ii) 60,492.73027 shares of Class A
Common Stock issued and outstanding, (iii) 16,016.36228 shares of Class B Common
Stock issued and outstanding, (iv) 2,651.05529 shares of Class C Common Stock
issued and outstanding, (v) 294.5617 shares of Class D Common Stock issued and
outstanding and (vi) options to purchase 5,193.8570 shares of Class A Common
Stock (the "OPTIONS"). As of the date hereof, the Company has outstanding
$85,000,000 principal amount of 12.0% Notes due March 31, 2006 (the "COMPANY
NOTES") issued pursuant to the Subordinated Note Agreement dated as of April 2,
1996 and amended and restated as of March 16, 1998, by and among the Company,
Metropolitan Life Insurance Company, a New York corporation, Windward/Merban,
Windward/Merchant, Windward/Northwest, Windward/Metropolitan, and The
Northwestern Mutual Life Insurance Company, a Wisconsin company (the "AMENDED
AND RESTATED SUBORDINATED NOTE AGREEMENT"). Immediately prior to the Closing,
the Company shall provide the Buyers with an amended capitalization chart in
form substantially similar to Section 2.2 of the Company Disclosure Schedule,
which will update such section of the Company Disclosure Schedule to accurately
reflect the capitalization of the Company at such time. All outstanding Shares
of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and except as provided for in the Amended and Restated
Stockholders Agreement between
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Windward Automotive Components International, Inc. (now J.L. French Automotive
Castings, Inc.) and the Sellers dated March 16, 1998 (the "COMPANY STOCKHOLDERS'
AGREEMENT"), are not subject to, and have not been issued in violation of, any
preemptive rights. Except as set forth in this Section 2.2 and Section 2.2 of
the Company Disclosure Schedule, there are no outstanding (i) shares of capital
stock or other voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company and (iii) options or other rights to acquire from the
Company, or any obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company. Except as set forth in this Section 2.2 and
Section 2.2 of the Company Disclosure Schedule, there are no outstanding
obligations of the Company to issue, sell, repurchase, redeem or otherwise
acquire any capital stock of the Company or any Shares. Section 2.2 of the
Company Disclosure Schedule sets forth (i) a list of each individual to whom
Options were granted, (ii) the dates of grants of such Options, (iii) the number
of Shares subject to such Options and (iv) the exercise prices per share. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights. Except as provided in Section 2.2 of the Company Disclosure Schedule,
there are no voting trusts or proxies or similar voting arrangements with
respect to the Company's capital stock.
SECTION 2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure
Schedule contains a true and complete list of all Subsidiaries of the
Company. All of the capital stock or other equity interests of each of the
Company's Subsidiaries have been validly issued and are fully paid and
nonassessable and have not been issued in violation of any preemptive rights
and, except as otherwise set forth in Section 2.3 of the Company Disclosure
Schedule, are owned by the Company or one or more of its Subsidiaries free and
clear of all Encumbrances. For purposes of this Agreement, "ENCUMBRANCES" shall
mean any lien, encumbrance, security interest, charge, mortgage, option, pledge
or restriction on transfer of any nature whatsoever. For purposes of this
Agreement, "SUBSIDIARY" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which are
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
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(a) Except as set forth in Section 2.4(a) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries; (ii)
result in a violation or breach of, or default (or give rise to any right of
termination, cancellation or acceleration) or result in the creation of any
Lien (as defined below) under any of the terms, conditions or provisions of
any note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, license, lease or agreement or similar instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which them or
any of their assets may be bound or (iii) assuming that the filings,
registrations, notifications, authorizations, consents and approvals referred
to in subsection (b) below have been obtained or made, as the case may be,
violate any order, injunction, decree, statute, rule or regulation of any
governmental agency or authority or court to which the Company or any of its
Subsidiaries is subject, excluding from the foregoing clauses (ii) and (iii)
such requirements, defaults, breaches, rights or violations that would not
individually, or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries, taken as a whole, or that would not prevent or
delay the consumma tion of the transactions contemplated hereby. For purposes
of this Agreement, "LIEN" means, with respect to any asset, any Encumbrance
of any kind in respect of such asset.
(b) Except as set forth in Section 2.4(b) of the Company
Disclosure Schedule, no filing or registration with, notification to, or
authorization, consent or approval of, any local, state, federal or foreign
court, legislative, executive, governmental or regulatory authority or agency
(each, a "GOVERNMENTAL AUTHORITY") is required in connection with the
execution and delivery of this Agreement by the Company or the performance by
the Company of its obligations hereunder, except (i) compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), or any other competition or antitrust
law in relevant jurisdictions (ii) those that become applicable as a result
of the matters specifically related to Buyer or its Affiliates (as such term
is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended)
and (iii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings the failure of which
to be obtained or made would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole or that would not prevent or
delay the consummation of the transactions contemplated hereby.
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SECTION 2.5 FINANCIAL STATEMENTS. The Company has delivered to
Buyer true and complete copies of audited consolidated balance sheets of the
Company and audited consolidated statements of income and cash flows of the
Company (or its predecessor, as the case may be) for the period from April 2,
1996 to December 31, 1996 and for the fiscal year ended December 31, 1997 and
unaudited consolidated balance sheets of the Company and unaudited consolidated
statements of income and cash flows of the Company for the fiscal year ended
December 31, 1998 (including, in each case, any notes thereto) (collectively,
the "COMPANY FINANCIAL STATEMENTS"). The Company Financial Statements were
prepared in accordance with generally accepted accounting principles ("GAAP"),
applied on a consistent basis, and fairly present, in all material respects, the
financial condition of the Company and its Subsidiaries as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring and year-end
audit adjustments and the exclusion of certain footnotes thereto).
SECTION 2.6 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except as
set forth in Section 2.6 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement, since December 31, 1998, the Company and its
Subsidiaries have conducted their respective businesses in the ordinary course
consistent with past practice and there has not occurred a material adverse
change in the Company and its Subsidiaries, taken as a whole, excluding for such
purposes, (i) any change resulting from general economic, financial or market
conditions, (ii) any change resulting from conditions or circumstances generally
affecting the businesses or industries, as a whole, in which the Company and/or
its Subsidiaries operate and (iii) any change resulting from the entering into
of this Agreement with the Buyer. Except as set forth in Section 2.6 of the
Company Disclosure Schedule or as other wise contemplated by this Agreement,
since December 31, 1998, the Company and its Subsidiaries have:
(a) not amended its certificate of incorporation or bylaws;
(b) not issued, delivered, sold, pledged, disposed of or
encumbered, or authorized or committed to the issuance, sale, pledge,
disposition or encumbrance of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock of, or any kind of other ownership interest in, the
Company (including, but not limited to, stock appreciation rights or phantom
stock);
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(c) except with respect to the Preferred Stock, not declared,
set aside, made or paid any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock or any
security or right exchangeable or exercisable for, or convertible into, its
capital stock;
(d) not reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock, or any security or right exchangeable or exercisable for, or convertible
into, its capital stock;
(e) other than in the ordinary course of business and consistent
with past practice, not (i) incurred any indebtedness for borrowed money; (ii)
made any capital expenditures in excess of an aggregate of $10 million; (iii)
sold or disposed of any other their properties or assets having a value
individually or in the aggregate in excess of $500,000; (iv) except as has been
required by contractual obligations, made any loans, advances or capital
contributions to, or investments in, any other Person on behalf of the Company
or (v) made any change in any of their accounting methods and practices of
their business, except as required by changes in GAAP;
(f) other than in the ordinary course of business and consistent
with past practice, not entered into, amended or terminated any Material
Contracts;
(g) other than in the ordinary course of business and consistent
with past practice, not changed the employment arrangements with its senior
executive officers (including hiring, termination, promotion or relocation),
entered into or amended any employment, severance, termination or other similar
agreement, adopted or amended any new employee benefit plan, program, agreement
or arrangement that would otherwise constitute an employee benefit plan, or
made any loans to any of its officers, directors, employees, agents or
consultants or made any changes in its existing borrowing or lending
arrangements for or on behalf of any of such persons; and
(h) not agreed, committed, or adopted any plan or proposal to
take any of the actions set forth in clauses (a) through (g) above.
SECTION 2.7 NO UNDISCLOSED LIABILITIES. Except as and to the
extent set forth in the Audited December 31, 1998 Balance Sheet (the "BALANCE
SHEET"), neither the Company nor any of its Subsidiaries had at December 31,
1998 any liabilities (whether accrued, absolute, contingent, known or unknown)
except such liabilities which (i) were incurred in the ordinary course of
business, (ii) are
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performance liabilities under contracts, arrangements, understandings or the
like, or (iii) in the aggregate, are not material to the Company and its
Subsidiaries, taken as a whole. Except as and to the extent set forth in Section
2.7 of the Company Disclosure Schedule since December 31, 1998, neither the
Company nor any of its Subsidiaries has incurred any liabilities except such
liabilities which were incurred in the ordinary course of business or which, in
the aggregate, are not material to the Company and its Subsidiaries taken as a
whole.
SECTION 2.8 TAXES.
(a) Except as set forth in Section 2.8 of the Company
Disclosure Schedule:
(i) the Company and its Subsidiaries have filed all
Tax Returns (as defined herein) required to be filed by them in the
manner prescribed by law, or have a valid extension to file such Tax
Returns, and all such Tax Returns are true, correct and complete in
all material respects;
(ii) the Company and its Subsidiaries have paid or
adequately reserved for all Taxes (as defined herein) due and owing by
them, and neither the Company nor any of its Subsidiaries has incurred
any liability for Taxes outside the ordinary course of business since
December 31, 1998;
(iii) all Taxes due by the Company and its Subsidiaries with
respect to any completed and settled audit, examination or deficiency
litigation have been paid in full;
(iv) no deficiencies for any Tax have been proposed, asserted
or assessed in writing by any taxing authority against the Company or
any of its Subsidiaries, no written requests for information related
to Tax matters by any taxing authority has been received by the
Company or any of its Subsidiaries and no written notice indicating an
intent to open an audit or other review has been received by the
Company or any of its Subsidiaries from any taxing authority;
(v) neither the Company nor any of its Subsidiaries is a party to
any tax sharing agreement or is liable for the Taxes of another Person
that is not a Subsidiary of the Company as a transferee or successor,
by contract or indemnity, or otherwise;
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(vi) there is no agreement or other documents extending, or
having the effect of extending, the period of assessment or collection of Taxes
of the Company or any of its Subsidiaries;
(vii) neither the Company nor any of its Subsidiaries is a party
to any agreement, contract or arrangement that has resulted within the past two
taxable years or would result in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code (or any comparable provision of
state, local or foreign law);
(viii) neither the Company nor any of its. Subsidiaries will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (A) change in method of accounting for a
taxable period ending on or prior to the Closing Date, or (B) "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law), entered into on or prior
to the Closing Date;
(ix) neither the Company nor any of its Subsidiaries has been a
member of an Affiliated Group other than the ones of which the Company or any of
its Subsidiaries (or any of their respective predecessors) was the common
parent, or filed or been included in a combined, consolidated or unitary income
Tax Return, other than one filed by the Company;
(x) Buyer will not be required to deduct and withhold any amount
pursuant to Section 1445(a) of the Code upon the transfer of the Shares to the
Buyer; and
(xi) the Company is not a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(b) For purposes of this Agreement, (i) "AFFILIATED GROUP" means
any affiliated group within the meaning of Section 1504(a) of the Code (or any
similar group defined under a corresponding provision of state, local or foreign
law), (ii) "CODE" means the Internal Revenue Code of 1986, as amended, (iii)
"TAXES" means all taxes, levies or other like assessments, charges or fees
(including estimated taxes, charges and fees), including, without limitation,
income, corporation, gross receipts, transfer, excise, property, sales, use,
value-added, license, payroll, pay as
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you earn, withholding, social security and franchise or other governmental taxes
or charges, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, and such term shall include any
interest, penalties or additions to tax attributable to such taxes, and (iv)
"TAX RETURN" means any report, return, statement, claim for refund, information
return or other written information supplied to a taxing authority in connection
with Taxes.
SECTION 2.9 EMPLOYEE BENEFIT PLANS.
(a) Section 2.9(a) of the Company Disclosure Schedule lists, as
of the date of this Agreement, all stock option plans, employment, consulting
and severance agreements, pension, profit-sharing and retirement plans and all
bonus and other employee benefit or fringe benefit plans, including, without
limitation, "em ployee benefit plans" as such term is defined under Section 3(3)
of ERISA maintained or with respect to which contributions are made by the
Company and its Subsidiaries or with respect to which the Company or any
Subsidiaries has any liability except employment, consulting and severance
agreements and bonus and other employee benefit or fringe benefit plans, in each
case, involving annual payment to any one individual less than $100,000.
Accurate and complete copies of all such plans, programs or agreements have been
made available to Buyer.
(b) With respect to the employee benefit plans, programs and
arrangements maintained or contributed to by the Company and its Subsidiaries or
with respect to which the Company or any Subsidiaries has any liability (the
"COMPANY PLANS"), except as set forth in Section 2.9(b) of the Company
Disclosure Schedule and except as would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole: (i) each Company Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service that it is so
qualified, and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such Company Plan; (ii)
each Company Plan has been operated in all material respects in accordance with
its terms and the requirements of applicable law; and (iii) the Company and its
Subsidiaries have not incurred any direct or indirect liability under, arising
out of or by operation of Title IV of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), in connection with the termination of, or
withdrawal from, any Company Plan or other retirement plan or arrangement
(including, without limitation, any "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) that the Company, any Subsidiary or any other entity,
that together with the Company or any Subsidiary is treated as a single
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employer under Section 414 of the Code, maintains or ever has maintained or to
which any of them contributes, ever has contributed, or ever has been required
to contribute), and, to the knowledge of the Company, no fact or event exists
that could reasonably be expected to give rise to any such liability. Except as
set forth in Section 2.9(b) of the Company Disclosure Schedule, the aggregate
accumulated benefit obligations of each defined benefits plan as of the Closing
Date do not exceed the fair market value of the assets of such plan as of the
Closing Date.
(c) To the knowledge of the Company, all employee benefit plans
that are subject to the laws of any jurisdiction outside the United States are
in material compliance with such applicable laws, including relevant Tax laws
relating thereto, and the requirements of any trust deed under which they are
established.
(d) Except as set forth on Section 2.9(d) of the Company
Disclosure Schedule, none of the Company Plans provide for medical or life
insurance benefits to retired or former employees.
SECTION 2.10 ENVIRONMENTAL MATTERS.
(a) (i) "ENVIRONMENTAL CLAIM" means any claim, action, cause
of action, investigation or notice (written or oral) by any Person or entity
alleging potential liability arising out of, based on or resulting from (a) the
presence or Release of any Hazardous Materials at any location, whether or not
owned or operated by the Company, or (b) circumstances forming the basis of any
violation of any Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all federal, state, local
and foreign laws and regulations, all common law and all other provisions having
the force or effect of law relating to pollution or the environment, including,
without limitation, those relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Materials.
(iii) "HAZARDOUS MATERIALS" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined
as such by, or regulated as such under, any Environmental Law.
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(iv) "RELEASE" means any release, spill, emission,
discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal,
dispersal, leaching or migration of Hazardous Materials into the environment
(including, without limitation, ambient air, surface water, groundwater and
surface or subsurface strata).
(b) (i) Except as set forth in Section 2.10(b)(i) of the
Company Disclosure Schedule, to the knowledge of the Company, the Company and
its Subsidiaries are in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by the Company and
its Subsidiaries of all permits and other governmental authorizations required
under applicable Environmental Laws, which are in full force and effect, and
compliance with the terms and conditions thereof), except where failure to be in
compliance would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. As of the date of this Agreement, the Company
and its Subsidiaries have not received since January 1, 1997 any written
communication, whether from a governmental authority, citizens' group, employee
or otherwise, alleging that the Company and its Subsidiaries is not in such
compliance.
(ii) Except as set forth in Section 2.10(b)(ii) of the
Company Disclosure Schedule, there is no Environmental Claim pending or to the
knowledge of the Company, threatened against the Company and its Subsidiaries or
against any Person or entity whose liability for any Environmental Claim the
Company and its Subsidiaries has or may have retained or assumed either
contractually or by opera tion of law that would have a material adverse effect
on the Company and its Subsidiaries, taken as a whole.
(iii) There have been no Releases of Hazardous Materials
at any of the Real Property (as defined below) or to the knowledge of the
Company at any other location that would have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(c) Notwithstanding any other provision of this Agreement, the
representations and warranties made in this Section 2.10 are the sole and
exclusive representations made in this Agreement by the Sellers, the Company and
its Subsid iaries with respect to environmental matters.
SECTION 2.11 LEGAL PROCEEDINGS, ETC. Except as set forth in
Section 2.11 of the Company Disclosure Schedule, as of the date of this
Agreement,
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there are no suits, actions, claims, proceedings or investigations pending, or,
to the knowledge of the Company, threatened against or involving the Company or
any of its Subsidiaries (or any of its stockholders, officers or directors in
connection with the business or affairs of the Company), before any court,
arbitrator or administrative or governmental body, United States or foreign
which (i) are criminal in nature or (ii) are of any other nature and which, if
adversely determined, would have a material adverse effect on the Company and
its Subsidiaries, taken as a whole. As of the date of this Agreement, there are
no such suits, actions, claims, proceedings or investigations pending or, to the
knowledge of the Company, threatened challenging the validity or propriety of
the transactions contemplated by this Agreement. The Company and its
Subsidiaries are not subject to any judgments, decrees, injunctions, or orders
of any (i) United States court or (ii) any other court which have had or would
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
SECTION 2.12 COMPLIANCE WITH APPLICABLE LAW. Except as set
forth in Section 2.12 of the Company Disclosure Schedule, each of the Company
(or its predecessor, as the case may be) and its Subsidiaries has since April 2,
1996 (except in the case of the Subsidiaries of the Company, in which case the
relevant date shall be date of acquisition of such Subsidiary) complied with and
is in compliance, with all applicable laws, ordinances, rules and regulations of
any federal, state, local or foreign governmental authority applicable to its
business and operations except for such noncompliance which would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
All governmental approvals, permits, licenses and other governmental
authorizations (collectively, "PERMITS") required to conduct the business of the
Company and its Subsidiaries are in the possession of the Company or any of its
Subsidiaries, are in full force and effect and are being complied with, except
for such Permits the failure of which to possess or be in compliance with which
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. Sellers have delivered or made available copies of the Permits
to Buyer.
SECTION 2.13 CERTAIN CONTRACTS AND ARRANGEMENTS. Section 2.13
of the Company Disclosure Schedule sets forth a list of all written Insurance
Policies (as defined in Section 2.16 hereof), Leases (as defined in Section 2.14
hereof), employee benefit agreements or arrangements, collective bargaining
agreements, personal property leases involving annual payments in excess of
$100,000, guarantees, indentures, mortgages and notes or other debt instruments
evidencing indebtedness, material leases or agreements under which it is lessor
of or permits any third
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party to hold or operate any property, real or personal, owned or controlled by
it, contracts or group of related contracts with the same party for the purchase
or sale of supplies, products or other personal property or for the furnishing
or receipt of services which involves a sum in excess of $1,000,000 annually
(excluding any purchase orders or tooling orders), contracts which prohibit the
Company or its Subsidiaries from freely engaging in business anywhere in the
world and any other material contracts not in the ordinary course of business
(collectively, the "MATERIAL CONTRACTS") to which the Company or any Subsidiary
of the Company is a party. Except as set forth in Section 2.13 of the Company
Disclosure Schedule, none of the Company or any of its Subsidiaries, or, to the
knowledge of the Company, any other party thereto, is in breach of, or default
under, any of the Material Contracts, and no event has occurred that with notice
or passage of time or both would constitute such a breach or default thereunder
by the Company or any of its Subsidiaries, or, to the knowledge of the Company,
any other party thereto, except for such breaches and defaults as individually
or in the aggregate would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole. Sellers have delivered or made available
copies of the Material Contracts to Buyer.
SECTION 2.14 REAL PROPERTY.
(a) For purposes of this Agreement, "PERMITTED LIENS" means
(i) mechanics', carriers', workers', repairers', materialmen's, warehousemen's,
landlord's and other similar Liens arising or incurred in the ordinary course of
business, (ii) Liens arising or resulting from any action taken by Buyer, (iii)
Liens for current Taxes, assessments and other governmental charges not yet due
and payable or that may subsequently be paid without penalty (iv) Liens for
current Taxes, assessments and other governmental charges that have become due
and payable that are being contested in good faith by appropriate proceedings
for which appropriate reserves in accordance with GAAP have been established,
(v) Liens which would appear on an accurate survey of Real Property (as herein
defined), (vi) any other covenants, conditions, restrictions, reservations,
rights, claims, rights-of-ways, easements and other encumbrances or matters of
record affecting title, which do not individually or in the aggregate materially
adversely affect the value or current use of any of the Real Property, (vii)
zoning, building, land use, and other similar restrictions imposed by law,
statute, rule, regulation, ordinance, order or process promulgated by any
Governmental Authority, (viii) matters of public record, and (ix) matters set
forth in Section 2.14(a) of the Company Disclosure Schedule. "LEASES" means the
real property leases, subleases, licenses and use or occupancy agreements
pursuant to which the Company is the lessee, sublessee, licensee, user or
occupant of real
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property, or interests therein, necessary for the conduct of, or otherwise
material to, the business of the Company as it is currently conducted. "LEASED
REAL PROPERTY" means all interests in real property leased, subleased, licensed,
used or occupied by the Company pursuant to the Leases. "OWNED REAL PROPERTY"
means the real property owned by the Company. "REAL PROPERTY" means the Owned
Real Property and the Leased Real Property.
(b) Section 2.14(b) of the Company Disclosure Schedule
contains a complete and correct list of all Owned Real Property setting forth
information sufficient to identify specifically such Owned Real Property and the
legal owner thereof. The Company has good and valid title to the Owned Real
Property, free and clear of any material Liens other than Permitted Liens.
Except as set forth in Section 2.14(b) of the Company Disclosure Schedule, there
are no outstanding options or rights of first refusal to purchase the Owned Real
Property, or any material portion thereof or interest therein. Except as set
forth on Section 2.13 of the Company Disclosure Schedule, there are no leases,
subleases, licenses, concessions, or other agreements, written or oral, granting
to any person the right of use or occupancy of any portion of the Owned Real
Property. The current use of the Owned Real Property does not violate any
instrument of record or agreement affecting such Owned Real Property except for
such violations that, individually or in the aggregate, would not have a
material adverse affect on the Owned Real Property.
(c) Section 2.14(c) of the Company Disclosure Schedule sets
forth a complete and correct list of all Leased Real Property setting forth
information sufficient to identify specifically such Leased Real Property. Each
Lease grants the lessee under the Lease the right to use and occupy the premises
and rights demised thereunder in accordance with the terms thereof, subject to
Permitted Liens. The Company has good and valid title to the leasehold estate or
other interest created under its respective Leases free and clear of any Liens
other than Permitted Liens and except as otherwise provided in the Leases.
(d) The Real Property constitutes all the fee, leasehold and
other interests in real property held by the Company, and constitutes all of the
fee, leasehold and other interests in real property, necessary for the conduct
of, or otherwise material to, the business of the Company as it is currently
conducted, except for any fee, leasehold or other interest acquired or disposed
of in the ordinary course of business after the date hereof.
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SECTION 2.15 LABOR MATTERS. Except as set forth in Section
2.15 of the Company Disclosure Schedule, (i) the Company and its Subsidiaries
are not a party to or bound by any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company, nor does the
Company know of any activities or proceedings on behalf of or by any labor union
to organize any such employees, (ii) there are no unfair labor practice charges
or complaints, or any current union representation questions, involving
employees or former employees of the Company pending against the Company before
the National Labor Relations Board or similar foreign entity and (iii) there is
no labor strike, lockout, organized slowdown or organized work stoppage in
effect or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries other than, in cases of clauses (ii) and (iii), those
matters which would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
SECTION 2.16 INSURANCE. All material insurance policies (the
"INSURANCE POLICIES") with respect to the property, assets, operation and
business of the Company and the Subsidiaries of the Company are in full force
and effect. Except as set forth in Section 2.16 of the Company Disclosure
Schedule, as of the date of this Agreement, there are no pending claims having a
value in excess of $500,000 under the Insurance Policies by the Company or any
Subsidiary of the Company.
SECTION 2.17 PATENTS, TRADEMARKS, ETC. (a) Except as set forth
in Section 2.17 of the Company Disclosure Schedule (i) the Company and the
Subsidiaries of the Company own or possess adequate licenses or other valid
rights to use free and clear of all Encumbrances all United States and foreign
patents, trademarks, trade names, service marks, copyrights, and applications
and registrations for the foregoing which are currently used in the conduct of
the business of the Company and the Subsidiaries of the Company (the
"INTELLECTUAL PROPERTY RIGHTS"), (ii) as of the date of this Agreement, the
validity of the Intellectual Property Rights and the title or rights to use
thereof of the Company or any Subsidiary of the Company are not being
questioned in any litigation to which the Company or any Subsidiary of the
Company is a party, nor to the knowledge of the Company, is any such litigation
threatened, (iii) as of the date of this Agreement, neither the Company nor any
Subsidiary of the Company is a party to any litigation in connection with which
a Person has alleged that the conduct of the business of the Company and the
Subsidiaries of the Company infringed or infringes with any valid patents, trade
marks, trade name, service marks or copyrights of others, nor, to the knowledge
of the Company, is any such litigation threatened except for any such litigation
which
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would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole, and (iv) to the knowledge of the Company, (A) no person is
materially infringing upon or violating any of the Intellectual Property Rights
and (B) no material claim is pending or threatened to that effect. Section 2.17
of the Company Disclosure Schedule sets forth a complete and correct list of all
applications to register and all registered Intellectual Property Rights and all
written licenses (other than off-the-shelf licenses) for Intellectual Property
Rights.
(b) All of the computer software, computer firmware, computer
hardware (whether general or special purpose), and other similar or related
items of automated, computerized, and/or software system(s) that are used or
relied on by the Company or its Subsidiaries in the conduct of such Company's
business will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when processing,
providing, and/or receiving (i) date related data into and between the twentieth
and twenty-first centuries and (ii) date related data in connection with any
valid date in the twentieth and twenty-first centuries, except for any such
malfunctions which would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
SECTION 2.18 CERTAIN FEES. Except as set forth in Section 2.18
of the Company Disclosure Schedule and included on Exhibit A hereto, (i) the
Company has not and will not employ any financial advisor or finder and (ii) the
Company has not and will not incur any liability for any financial advisory or
finders' fees or similar compensation in connection with this Agreement or the
transactions contemplated hereby.
SECTION 2.19 TRANSACTIONS WITH AFFILIATES. Except as set forth
in Section 2.19 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary of the Company is involved in any contract, commitment, transaction
or other situation with any of its officers, directors, Affiliates or
shareholders which may generally be characterized as a "conflict of interest,"
including, direct or indirect interest in the business of competitors, suppliers
or customers of the Company or any Subsidiary of the Company.
SECTION 2.20 ACCOUNTS RECEIVABLE; INVENTORIES.
(a) All notes and accounts receivable of the Company have arisen
from bona fide transactions by the Company in the ordinary course of business.
All accounts receivable reflected in the Balance Sheet and the Final Statement,
are good
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and collectible in the ordinary course of business at the aggregate recorded
amounts thereof, net of any applicable allowance for doubtful accounts reflected
in such Balance Sheet or Final Statement.
(b) The inventory of the Company (including raw materials,
supplies, work-in-process, finished goods and other materials) reflected in the
Balance Sheet and the Final Statement (i) are in good, merchantable and useable
condition, (ii) are at the lower of cost (determined by the last-in, first-out
method) or market in accordance with GAAP, (iii) are, in the case of the
aluminum inventory, of a quality such that the recovery rate is consistent with
the most recent history of the Company, and (iv) are, in the case of the
finished goods, of a quality and quantity saleable in the ordinary course of
business and, in the case of all other inventories are of a quality and quantity
useable in the ordinary course of business. None of the inventory is consigned
inventory. The inventory obsolescence policies of the Company are appropriate
for the nature of the products sold and the marketing methods used by the
Company.
SECTION 2.21 INDEBTEDNESS. Except for Indebtedness included in
the Debt Amount, the Company or its Subsidiaries have no contracts, agreements,
understandings or other obligations relating to Indebtedness. For the purposes
hereof, "INDEBTEDNESS" means, without duplication, (i) all indebtedness or other
obligations of the Company and its Subsidiaries for borrowed money, whether
current, short-term, or long-term, secured or unsecured, (ii) all indebtedness
of the Company and its Subsidiaries for the deferred purchase price for
purchases of property outside the ordinary course which is not evidenced by
trade payables, (iii) all lease obligations of the Company and its Subsidiaries
under leases which are capital leases in accordance GAAP, (iv) all off-balance
financings of the Company and Subsidiaries including, without limitation,
synthetic leases and project financing, (v) any payment of obligations of the
Company or its Subsidiaries in respect of banker's acceptances or letters of
credit (other than stand-by letters of credit in support of ordinary course
trade payables), (vi) any liability of the Company or its Subsidiaries with
respect to interest rate swaps, collars, caps and similar hedging obligations,
(vii) any obligations of the Company or its Subsidiaries entered into with any
employees, directors, shareholders and their affiliates since August 13, 1998
providing for bonuses or other payment (excluding Options) to such Persons
(other than in respect of Fees and Expenses), (viii) the obligations pursuant to
any class of preferred stock and any dividends accrued thereon, (ix) any
indebtedness referred to in clauses (i) through (viii) above of any person or
entity other than the Company which is either guaranteed by, or secured by a
Lien upon any property owned by, the
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Company or any of its Subsidiaries, and (x) any prepayment penalties resulting
from the discharge of any of the foregoing obligations which are actually
prepaid pursuant to a pre-existing contractual arrangement as a result of the
transactions contemplated by this Agreement.
SECTION 2.22 ISSUANCE OF SHARES. The Shares to be purchased
pursuant to Section 1.1 hereof will, upon the issuance and sale thereof pursuant
to the terms hereof, not have been issued in violation of any preemptive rights,
be duly and validly authorized and issued by the Company, be fully paid and
nonassessable and be free from any Encumbrances.
SECTION 2.23 PRODUCT WARRANTY AND LIABILITY.
(a) To the knowledge of the Company, all products currently
being designed, manufactured, merchandised, serviced, distributed, sold or
delivered by the Company or its Subsidiaries have been in conformity with all
material applicable contractual commitments and all express warranties. No
liability exists for replacement thereof or other damages in connection with
such sales or deliveries except for such liabilities or damages which would not
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
(b) None of the Company or its Subsidiaries is subject to
any pending actions, or to the knowledge of the Company, any threatened action,
asserting liability arising out of any injury to individuals or property as a
result of the ownership, possession or use of any product currently being
manufactured, sold, leased or delivered by the Company or its Subsidiaries
except for such actions which if adversely determined would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
In order to induce the Buyer Group to enter into this Agreement,
each Seller severally (as to himself, herself or itself and not as to any other
Seller) represents and warrants to the Buyer Group as follows:
SECTION 3.1 AUTHORITY AND RELATED MATTERS. Such Seller has all
requisite power to execute and deliver this Agreement and to perform its
obligations
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hereunder and to consummate the transactions contemplated hereby. With respect
to any Seller that is a corporation or a partnership, the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
by such Seller have been duly and validly authorized by the Board of Directors
or other governing body of such Seller and no other corporate or similar
proceedings on the part of such Seller, and, as the case may be, its Board of
Directors or other governing body or its stockholders or partners are necessary
therefor. This Agreement has been duly executed and delivered by such Seller,
and, assuming the due execution hereof by each of the Company, Buyer and the
other Sellers, this Agreement constitutes the legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms, except for (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting the rights
of creditors generally and (ii) the effect of equitable principles of general
application. With respect to any Seller that is a corporation or partnership,
such Seller, to the extent applicable, is duly organized, validly existing and
in good standing under the laws of its state of organization.
SECTION 3.2 SHARE OWNERSHIP. Except as set forth in Section 3.2
of the disclosure schedule of the Sellers attached hereto (the "SELLERS
DISCLOSURE SCHEDULE"), such Seller is the record and beneficial owner of the
aggregate number of Shares and Options listed opposite its respective name in
Section 1.2 of the Company Disclosure Schedule (such Schedule also setting forth
the number of shares of Series A Preferred Stock held by such Seller and the
number of additional shares of Common Stock and Series B Preferred Stock to be
held by such Seller after giving effect to the conversion described in Section
5.12 hereof). Upon transfer to the Company of Certificates representing the
Shares set forth on Section 1.2 of the Company Disclosure Schedule, such
redeemed shares shall become authorized, unissued shares of the Company's Common
Stock, free and clear of all Encumbrances. Except for this Agreement and the
transactions contemplated hereby, and except as disclosed in Section 2.2 of the
Company Disclosure Schedule, there are no agreements, arrangements, warrants,
options, puts, calls, rights or other commitments or understandings of any
character to which such Seller is a party or by which any of his, her or its
respective assets is bound and relating to the issuance, sale, purchase,
redemption, conversion, exchange, registration, voting or transfer of any shares
of Common Stock or other capital stock of the Company or other securities
convertible into capital stock of the Company.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
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(a) Except as described in Section 3.3(b) hereof, neither the
execution and delivery by such Seller of this Agreement nor the performance by
such Seller of its obligations hereunder will (i) conflict with or result in any
breach of any provision of any certificate of incorporation, by-laws, trust
agreement, partnership agreement, or certificate of partnership or other
constitutive documents of such Seller, (ii) result in the creation or imposition
of any Encumbrance upon any of such Seller's Shares or (iii) assuming that the
filings, registrations, notifications, authorizations, consent and approvals
referred to in subsection (b) below have been obtained or made, as the case may
be, violate any order, injunction, decree, statute, rule or regulation of any
Governmental Authority to which such Seller is subject, excluding from the
foregoing clause (ii) and (iii) such requirements, defaults, breaches, rights
or violations that would not have a material adverse effect on the ability of
such Seller to consummate the transactions contemplated hereby.
(b) No filing or registration with, notification to, or
authorization, consent or approval of any Governmental Authority is required in
connection with the execution and delivery of this Agreement by such Seller or
the performance by such Seller of its obligations hereunder, except for (i)
those set forth in Sections 2.4(b) and 3.3(b) of the Company Disclosure
Schedule, (ii) filings under the HSR Act, (iii) those that become applicable as
a result of matters specifically related to Buyer or its Affiliates, or (iv)
such other consents, approvals orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made would not have a material adverse effect on the ability of such Seller to
consummate the transactions contemplated hereby.
SECTION 3.4 BROKERS, FINDERS, ETC. Except as set forth in
Section 2.18 or in Section 2.18 of the Company Disclosure Schedule, (i) such
Seller has not employed any financial advisor or finder and (ii) such Seller has
not incurred any liability for any financial advisor or finders' fees in
connection with this Agreement or the transactions contemplated hereby. The
Company is solely responsible for any payment, fee or commission that may be due
to Donaldson, Lufkin & Jenrette and Merrill Lynch, Pierce, Fenner & Smith
Incorporated in connection with the transactions contemplated hereby, which
shall be set forth on Exhibit A.
SECTION 3.5 LEGAL PROCEEDINGS. There are no suits, actions,
claims, proceedings, or investigations pending against any Seller before any
court, arbitrator or administrative or governmental body, United States or
foreign which, if adversely determined, would have a material adverse effect on
the ability of such Seller to consummate the transactions contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER GROUP
In order to induce the Company and each of the Sellers to enter
into this Agreement, the Buyer hereby represents and warrants to the Company and
Sellers as follows:
SECTION 4.1 CORPORATE ORGANIZATION AND AUTHORITY.
(a) Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to own, lease and
operate the properties owned, leased and operated by it and to carry on the
operations of its business as now being conducted by it. Buyer is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it with respect to its business or the
nature of the business conducted or proposed to be conducted by it makes such
licensing or qualification necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing would not have a
material adverse effect on Buyer. Buyer has heretofore made available to the
Company a complete and correct copy of the certificate of incorporation and
bylaws or other organizational documents of Buyer, as currently in effect.
(b) Buyer has the requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the performance of its obligations hereunder
have been duly and validly authorized by the Manager Committee of Buyer and no
other proceedings on the part of Buyer are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by Buyer and constitutes, assuming due authorization,
execution and delivery of this Agreement by the Company and Sellers, a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' right generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
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SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except as set forth in Section 4.2 of the Buyer Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
performance by Buyer of its obligations hereunder will (i) conflict with or
result in any breach of any provision of the certificate of incorporation or
bylaws (or similar organizational documents) of Buyer; (ii) result in a
violation or breach of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar instrument or
obligation relating to the business of Buyer or to which Buyer is a party or by
which Buyer or any of the assets used or held for use by Buyer may be bound or
(iii) assuming that the filings, registrations, notifications, authorizations,
consents and approvals referred to in subsection (b) below have been obtained or
made, as the case may be, violate any order, injunction, decree, statute, rule
or regulation of any Governmental Authority to which Buyer is subject, excluding
from the foregoing clauses (ii) and (iii) such requirements, defaults, breaches,
rights or violations that would not in the aggregate have a material adverse
effect on Buyer and its subsidiaries, taken as a whole, or that would not
prevent or delay the consummation of the transactions contemplated hereby.
(b) Except as set forth in Section 4.2 of the Buyer Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Authority is required in connection
with the execution and delivery of this Agreement by Buyer or the performance by
Buyer of its obligations3 hereunder, except (i) compliance with any applicable
requirements of the HSR Act and similar applicable foreign merger control laws;
and (ii) such other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made would not have a material adverse effect on Buyer and its Subsidiaries,
taken as a whole or that would not prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 4.3 LEGAL PROCEEDINGS, ETC. Except as set forth in
Section 4.3 of the Buyer Disclosure Schedule, as of the date of this Agreement,
there are no suits, actions, claims, proceedings or investigations pending, or,
to the knowledge of Buyer, threatened against or involving Buyer or any of its
Subsidiaries (or any of their respective officers or directors in connection
with the business or affairs of Buyer and its Subsidiaries) before any court,
arbitrator or administrative or govern-
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mental body, United States or foreign which, if adversely determined, would have
a material adverse effect on Buyer and its Subsidiaries, taken as a whole. As of
the date of this Agreement, there are no such suits, actions, claims,
proceedings or investigations pending or, to the knowledge of Buyer, threatened
challenging the validity or propriety of the transactions contemplated by this
Agreement. Neither Buyer nor any of its Subsidiaries is subject to any judgment,
decree, injunction or order of any court, which has had or would have a material
adverse effect on Buyer and its Subsidiaries, taken as a whole.
SECTION 4.4 CERTAIN FEES. Except as set forth in Section 4.4
of the Buyer Disclosure Schedule, (i) the Buyer has not employed any financial
advisor or finder and (ii) the Buyer has not incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
SECTION 4.5 FINANCING. The Company has received copies of
commitment letters dated March 26, 1999 and March 24, 1999, respectively, from
NationsBridge, L.L.C. and Chase Securities Inc., and Nationsbanc Montgomery
Securities LLC, Bank of America NT&SA, Chase Securities Inc. and the Chase
Manhattan Bank (the "FINANCING COMMITMENT LETTERS"), pursuant to which the
foregoing has committed, subject to the terms and conditions set forth therein,
to enter into one or more credit agreements providing for loans to the Company
of up to $500,000,000. The aggregate commitments under the Financing Commitment
Letters, together with the Buyer Group's commitment to purchase equity, are in
an amount sufficient to (i) pay the Fees and Expenses required to be paid in
connection with the transactions contemplated hereby, (ii) provide the Company
with available borrowings of at least $20.0 million following the Closing, (iii)
provide the Company with adequate funds to meet its obligations under the
Assumed Debt and (iv) satisfy the obligation of the Company to make all
necessary cash payments to (A) make the payment of the Redemption Price to the
Sellers, (B) make the payment of the Subordinated Debt Repayment Amount to the
Subordinated Debt Holders, (C) repay and discharge all indebtedness outstanding
(including any accrued interest, premiums, if any, and expense reimbursement, if
required) under the Credit Agreement, dated as of March 16, 1998, among the
Company, French Holdings, Inc., a Delaware corporation, Automotive Components
Investment Limited, a private limited company incorporated under the laws of
England and Wales, Morris Ashby Limited, a private limited liability company
incorporated under the laws of England and Wales, the several banks and other
financial institutions from time to time parties to the Credit Agreement, Chase
Manhattan International Limited, any Future Foreign
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Subsidiary Agent, and the Chase Manhattan Bank, a New York banking corporation
(the "CREDIT AGREEMENT") and (D) make the payment of the Preferred Stock
Redemption Amount to the Preferred Stock Holders (the financing and the
available cash to provide for the payment of all of the obligations referred to
in this sentence, including, without limitation, the agreement relating thereto,
being referred to herein as the "FINANCING").
SECTION 4.6 ACQUISITION OF SHARES FOR INVESTMENT. Each member
of the Buyer Group has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its purchase of
the Shares. Buyer confirms that the Company and the Sellers have made available
to Buyer the opportunity to ask questions of the officers and management
employees of the Company and to acquire additional information about the
business and financial condition of the Company and its Subsidiaries. Each
member of the Buyer Group is acquiring the Shares for investment and not with a
view toward or for sale in connection with any distribution thereof, or with any
present intention of distributing or selling the Shares. Each member of the
Buyer Group agrees that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Shares Act of 1933, as amended, except pursuant to an exemption from such
registration available under such Act.
SECTION 4.7 SOLVENCY. At and following the Closing, the Company
and its Subsidiaries will be, on a consolidated basis, Solvent after giving
effect to the purchase and sale of the Shares and any other transactions
contemplated hereby or by Buyer or any of its affiliates on such date or which
would be otherwise taken into account in determining whether any of the
transactions contemplated hereby were a fraudulent conveyance or impermissible
dividend under applicable law. For purposes of this Agreement, "SOLVENT" shall
mean with respect to any Person that (a) the fair saleable value of the property
of such Person is, on the date of determination, greater than the total amount
of liabilities (including contingent and unliquidated liabilities) of such
Person as of such date, (b) as of such date, such Person is able to pay all of
its liabilities as such liabilities mature, (c) such Person does not have
unreasonably small capital for conducting the business theretofore or proposed
to be conducted by such Person and its Subsidiaries, and (d) such Person has not
incurred nor does it plan to incur debts beyond its ability to pay as they
mature.
ARTICLE V
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COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS. The Company agrees that,
during the period from the date hereof until the earlier of the Closing or the
termination of this Agreement, except as (i) otherwise expressly contemplated
hereby, (ii) set forth in Section 5.1 of the Company Disclosure Schedule or
(iii) consented to by Buyer, in writing, (which consent shall not be
unreasonably withheld) the Company shall, and shall cause each of its
Subsidiaries to:
(a) use its commercially reasonable efforts to (x)cause its
business operations to be conducted in the ordinary course consistent with past
practice, including without limitation, maintenance of working capital balances,
the collection of accounts receivable, the payment of accounts payables, the
making of capital expenditures in accordance with the budget set forth on
Section 5.1(a) of the Company Disclosure Schedule and cash management practices
generally and (y) preserve intact its assets, properties, business organization
in all material respects and relationships with suppliers, employees and
customers;
(b) promptly (once the Company or any Seller has knowledge
thereof) inform Buyer in writing of any breach of any of the representations and
warranties contained in Article II or Article III hereof or any breach of any
covenant hereunder by Seller or the Company;
(c) not amend its certificate of incorporation or by-laws;
(d) not issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or encumbrance
of any shares of capital stock of any class (except upon the exercise of Options
outstanding on the date hereof), or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock
of, or any other ownership interest in, the Company (including, but not limited
to, stock appreciation rights or phantom stock);
(e) not declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or any security or right exchangeable or exercisable for,
or convertible into, its capital stock;
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(f) not reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock, or any
security or right exchangeable or exercisable for, or convertible into, its
capital stock;
(g) other than in the ordinary course of business and consistent
with past practice, not (i) incur any indebtedness for borrowed money (except
for short term indebtedness incurred in the ordinary course of business); (ii)
make any capital expenditures in excess of an aggregate of $15 million; (iii)
sell or dispose of any of their properties or assets having a value individually
or in the aggregate in excess of $500,000; (iv) except as may be required by
existing contracts, make any loans, advances or capital contributions to, or
investments in, any other Person on behalf of the Company or (v) make any change
in any of the present accounting methods and practices of their business, except
as required by changes in GAAP;
(h) other than in the ordinary course of business and consistent
with past practice, not enter into, amend or terminate any Material Contracts;
(i) other than in the ordinary course of business and consistent
with past practice, not change the employment arrangements with its senior
executive officers (including hiring, termination, promotion or relocation),
enter into or amend any employment, severance, termination or other similar
agreement, adopt or amend any new employee benefit plan, program, agreement or
arrangement that would otherwise constitute an employee benefit plan, or make
any loans to any of its officers, directors, employees, agents or consultants or
make any changes in its existing borrowing or lending arrangements for or on
behalf of any of such persons;
(j) comply with all material applicable legal requirements and
material contractual obligations applicable to the operations of the Company and
pay all material taxes required by applicable law to be paid prior to the
Closing; and
(k) not agree, commit, or adopt any plan or proposal to take any
of the actions set forth in clauses (c) through (j) above.
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SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Upon reasonable advance notice, between the date hereof and
the earlier of the Closing or the termination of this Agreement in accordance
with its terms, the Company shall (i) give Buyer, its counsel, financial
advisors, financing sources, auditors and other authorized representatives
(collectively, "REPRESENTATIVES") reasonable access during normal business
hours upon reasonable advance written notice to the offices, properties, books
and records of the Company, (ii) furnish to Buyer and such Representatives such
financial and operating data and other information as such Persons may
reasonably request, and (iii) instruct its employees, counsel, financial
advisors and auditors to cooperate with Buyer in its investigation of the
business of the Company.
(b) The confidentiality agreement between Hidden Creek
Industries and the Company dated October 21, 1998 (the "CONFIDENTIALITY
AGREEMENT") shall remain in full force and effect and the other members of the
Buyer Group shall agree to be bound by the terms of, and comply with the
obligations of Hidden Creek Industries under, such Confidentiality Agreement.
SECTION 5.3 NO SHOP. Each Seller and the Company and its
Subsidiaries (and each of their respective directors, officers, employees,
advisors, representatives, agents or Affiliates) shall not engage in, solicit or
initiate any discussions or negotiations with, or provide any information to
(except, that in the event Buyer shall be obligated by law to publicly disclose
that this Agreement exists, the Sellers and the Company and its Subsidiaries may
provide information to other Persons for the sole purpose of advising them of
this Agreement), or negotiate or enter into any agreement or agreement in
principle with, any other Person with respect to a sale of the Company or any
Subsidiary, their assets (except as permitted by Section 5.1) or capital stock
or any similar transaction.
SECTION 5.4 NON-SOLICITATION OF EMPLOYEES; NON-COMPETE.
(a) If this Agreement is terminated, Buyer and its affiliates
agree that they will not for a period of two years thereafter, without the prior
written approval of the Company, directly or indirectly, solicit the employment
of, or offer employ ment to or hire any person who is a member of management of
the Company or any of its Subsidiaries, at the date hereof or at any time
hereafter that precedes such termination.
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(b) For a period of two years from and after the Closing Date,
Windward Capital Associates, L.P. (or any entity controlled by it or under
common control with it) will not, directly or indirectly, engage (whether as an
officer, director, employee, investor, partner, stockholder, member, sole
proprietor, trustee or consultant) in the manufacture, design and sale of any
Products (defined herein) which the Company or its Subsidiaries produces as of
the Closing Date in any location in which the Company or any Subsidiary
manufacturers, designs and sells any of its Products as of the Closing Date;
provided, however, that ownership of less than 5% of the outstanding stock of
any publicly traded corporation shall not be deemed to be engaging in the
manufacture and sale of any Products which the Company or its Subsidiaries
produces; PROVIDED, FURTHER, THAT, Windward Capital Associates, L.P. (or any
entity controlled by it or under common control with it) shall not be prohibited
from owning equity in the Company. For the purposes of this Agreement,
"PRODUCTS" shall mean the range of medium and large high pressure aluminum
diecast engine and drivetrain components including oil pans, engine front
covers, transmission cases, timing chain housings, water pump housings, cam
covers and ladderframes. Windward Capital Associates, L.P. represents that it
is the general partner or manager of all the Sellers except for itself, CS
First Boston and Charles M. Waldon).
(c) For a period of two years from and after the date hereof,
Windward Capital Associates, L.P. will not, without the prior written approval
of the Company, directly or indirectly, solicit the employment of, or offer
employment to or hire any person (other than (i) Robert Barton or (ii) Charles
M. Waldon for the purposes of being a director of an entity controlled by
Windward Capital Associates, L.P. or its affiliates or to evaluate investment
opportunities for Windward Capital Associates, L.P. or its affiliates (to the
extent not in violation of clause (b) above) who was a member of management of
the Company or any of its Subsidiaries at the date hereof.
(d) Each member of the Buyer Group, the Company and Windward
Capital Associates, L.P. agree that any remedy at law for any breach by it of
this Section 5.4 would be inadequate, and the Company would be entitled to
injunctive relief in such a case. If it is ever held that the restriction placed
on the Buyer Group and Windward Capital Associates, L.P. by this Section 5.4 is
too onerous and is not necessary for the protection of the Company, each member
of the Buyer Group and Windward Capital Associates, L.P. agree that any court of
competent jurisdiction may impose lesser restrictions which such court may
consider to be necessary or appropriate to properly protect the Company.
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SECTION 5.5 DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION.
(a) If the Closing occurs, the Company agrees that all rights to
indemnification and all limitations on liability existing in favor of any
Company Indemnitee as provided in the certificates of incorporation or bylaws of
the Company or any Subsidiary of the Company, or any Indemnity Agreement to
which the Company or any Subsidiary of the Company is a party, shall survive the
consummation of the transactions contemplated by this Agreement and continue in
full force and effect and be honored by the Company and the Subsidiaries of the
Company after the Closing. To the extent permitted by (i) the certificate of
incorporation and bylaws of the Company or any Subsidiary of the Company or (ii)
any agreement providing for indemnification by the Company, any Subsidiary of
the Company or any Company Indemnitee in effect on the date of this Agreement
(an "INDEMNITY AGREEMENT"), advancement of Expenses pursuant to this Section
5.5(a) shall be mandatory rather than permissive and the Company shall advance
any Expenses in connection with such indemnification. In addition to the other
rights provided for in this Section 5.5(a) and not in limitation thereof, for
six years from and after the Closing Date, the Company shall, and shall cause
the Subsidiaries of the Company to, to the fullest extent permitted by
applicable law, (i) indemnify and hold harmless the individuals who on or prior
to the Closing Date were officers, directors or employees of the Company or any
Subsidiary of the Company, and the heirs, trustees, fiduciaries and
administrators of such officers, directors or employees (collectively, the
"COMPANY INDEMNITEES") against all losses, Expenses, claims, damages,
liabilities, judgments, or amounts paid in settlement (collectively, "COSTS") in
respect of any threatened, pending or completed claim, action, suit or
proceeding, whether criminal, civil, administrative or investigative to the
extent based on, or arising out of or relating to the fact that such person is
or was a director, officer or employee of the Company or any Subsidiary of the
Company and arising out of acts or omissions occurring on or prior to the
Closing Date (including, without limitation, in respect of acts or omissions in
connection with this Agreement and the transactions contemplated hereby) (an
"INDEMNIFIABLE CLAIM") and (ii) advance to such Company Indemnitees all Expenses
incurred in connection with any Indemnifiable Claim promptly after receipt of a
reasonably detailed statement therefor. In the event any Indemnifiable Claim is
asserted or made within such six year period, all rights to indemnification and
advancement of Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such Indemnifiable Claim are fully
satisfied; PROVIDED, HOWEVER, that the Company shall not be liable for any
settlement effected without its written consent (which consent
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shall not be unreasonably withheld or delayed). The obligations of the Company
and the Subsidiaries of the Company under this Section 5.5(a) shall not be
terminated or modified in such a manner as to adversely affect any Company
Indemnitee to whom this Section 5.5(a) applies without the consent of such
affected Company Indemnitee (it being expressly agreed that the Company
Indemnitees to whom this Section 5.5(a) applies shall be third party
beneficiaries of this Section 5.5(a)). If the Closing occurs, the Company shall,
and shall cause the Subsidiaries of the Company to pay all Expenses to any
Company Indemnitee incurred in enforcing the indemnity or other obligations
provided for in this Section 5.5(a).
(b) For six years after the Closing, the Company will provide
and will cause the Subsidiaries of the Company to provide officers' and
directors' liability insurance in respect of acts or omissions occurring at or
prior to the Closing Date covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount not materially less favorable than those of such
policy in effect on the date hereof; PROVIDED, HOWEVER, that in no event shall
the Company or the Subsidiaries of the Company be required to expend more than
an amount per year equal to 200% of current annual premiums paid by the Company
for such insurance (the "MAXIMUM AMOUNT"). In the event that any Company
Indemnitee is entitled to coverage under an officers' and directors' liability
insurance policy pursuant to this Section 5.5(b) and such policy has lapsed,
terminated, been repudiated or is otherwise in breach or default as a result of
the Company's or the Company's Subsidiaries' failure to maintain and fulfill its
obligations pursuant to such policy as provided in this Section 5.5(b), the
Company and the Subsidiaries of the Company shall pay to the Company Indemnitee
such amounts and provide any other coverage or benefits as the Company
Indemnitee shall have received pursuant to such policy.
(c) In the event the Company or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company (or their successors and assigns)
shall assume the obligations set forth in this Section 5.5.
SECTION 5.6 REASONABLE BEST EFFORTS. Upon the terms and subject
to the conditions herein provided, except as otherwise provided in
Section 5.7, each of the parties hereto agrees to use its reasonable best
efforts to take or cause to be
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taken all action, to do or cause to be done, and to assist and cooperate with
the other party hereto in doing (including cooperating at the Buyer Group's
expense in assisting in the process required to obtain title insurance policies
and surveys with respect to the Real Property), all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to, (i) the
satisfaction of the conditions precedent to the obligations of any of the
parties hereto, (ii) the obtaining of consents, waivers or approvals of third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the performance of the
obligations hereunder, and (iv) the execution and delivery of such instruments,
and the taking of such other actions as the other party hereto may reasonably
require in order to carry out the intent of this Agreement.
SECTION 5.7 GOVERNMENTAL AUTHORIZATIONS.
(a) The Company and the Sellers, on the one hand, and Buyer, on
the other hand, shall promptly file all necessary registrations and filings,
including, but not limited to, filings under the HSR Act or any other
competition or antitrust law in relevant jurisdictions and submissions of
additional information requested by any Governmental Authority; PROVIDED THAT
the parties agree to take reasonable best efforts to cause the filing under the
HSR Act shall occur not later than three business days following the execution
of this Agreement. Each of Buyer, the Company and the Sellers further agrees
that it will, and will cause its affiliates to, comply with any applicable
post-Closing notification or requirements of any antitrust, trade competition,
investment or control reporting or similar law or regulation or any Government
Authority with competent jurisdiction. Each of Buyer, the Company and the
Sellers agrees to cooperate with and promptly to consult with, to provide any
reasonably available information with respect to, and to provide, subject to
appropriate confidentiality provisions, copies of all presentations and filings
to any Governmental Authority to the other party or its counsel.
(b) In addition to the agreements set forth in (a) above, the
Company and Buyer shall each use its reasonable best efforts to ensure that the
consents, approvals, waivers or other authorizations from Governmental
Authorities, including without limitation, antitrust clearance under the HSR
Act, are obtained as promptly as practicable and that any conditions set forth
in or established by any such Governmental Authorities are wholly satisfied. In
fulfillment of this covenant,
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the Company and Buyer each agrees, among other steps or actions and without
limiting the scope of Buyer's and the Company's obligations, to:
(i) take reasonable best efforts to satisfy any additional
conditions imposed by Governmental Authorities with respect to the
acquisition of the Company; and
(ii) oppose vigorously any litigation relating to this
Agreement or the transactions contemplated hereby, including, without
limitation, to appeal promptly any adverse decision or order by any
Governmental Authority or, if reasonably requested by the other party
hereto, to commence or threaten to commence and to pursue vigorously
litigation reasonably believed by the other party hereto to be helpful
in obtaining authorization from Governmental Authorities or in
terminating any outstanding proceedings; it being understood that the
costs and expenses of all such legal action shall be borne by Buyer.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. No press release or
announcement concerning the transactions contemplated hereby shall be issued by
the Company, any member of the Buyer Group or any Seller without the prior
consent of the Buyer, Sellers and the Company, except as such release or
announcement may be required by law, rule or regulation, in which case the party
required to issue the release or announcement shall allow Buyer, Sellers and the
Company reasonable time to comment on such release or announcement in advance of
its issuance.
SECTION 5.9 STOCK OPTIONS.
(a) Each Option granted to a Company employee that is
outstanding immediately prior to the Closing Date, whether or not then vested or
exercisable, shall, effective as of the Closing Date, but subject to Section
1.4(e) of this Agreement, be cancelled in exchange for a single lump sum cash
payment (net of required withholding Taxes) equal to the product of (1) the
number of Shares subject to such Option and (2) the excess, if any, of (A) Cash
Payment Per Share on the Closing Date over (B) the exercise price per Share
subject to such Option. At or prior to the Closing, the Company shall make
available to the Buyer evidence, reasonably satisfactory to the Buyer that no
Options shall remain outstanding immediately after the Closing.
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(b) Sellers shall cause the Board to prepare and deliver to
Buyer on or before the Closing Date resolutions terminating the Company's (i)
1998 Stock Option Plan and (ii) 1998 Performance Stock Option Plan, each in
accordance with the terms of such plans.
(c) Sellers shall cause the Board to shorten the period during
which the options under the Company's 1998 Stock Option Plan and 1998
Performance Stock Option Plan are exercisable to provide for an exercise date of
no later than the Closing Date. The Board shall deliver written notice, in
accordance with the terms of such plans, of such acceleration no less than
eleven days prior to the Closing Date.
SECTION 5.10 EMPLOYEE MATTERS.
(a) Each individual who is employed by the Company or any
Subsidiary immediately prior to the Closing Date shall remain an employee of the
Company or such Subsidiary following the Closing Date (each such employee, an
"AFFECTED EMPLOYEE"); PROVIDED, HOWEVER, that this Section 5.10 shall not be
construed to limit the ability of the applicable employer to terminate the
employment of any Affected Employee at any time.
(b) The Company will, or will cause the applicable Subsidiary
of the Company to, give Affected Employees full credit for purposes of
eligibility, vesting, benefit accrual (except with respect to benefit accrual
under any defined benefit pension plans) and determination of the level of
benefits under any employee benefit plans or arrangements maintained by the
Company or any Subsidiary of the Company for such Affected Employees' service
with the Company or any Subsidiary of the Company to the same extent recognized
by the Company or such Subsidiary immediately prior to the Closing Date.
(c) The Company will, or will cause the applicable Subsidiary
of the Company to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans that such employees may be eligible to participate in after the Closing
Date, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Closing
Date under any welfare plan maintained for the Affected Employees immediately
prior to the Closing Date, and (ii) provide each Affected Employee with credit
for any co-payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements
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under any welfare plans that such employees are eligible to participate in after
the Closing Date.
(d) For a period of one year immediately following the Closing
Date, the coverage and benefits provided to Affected Employees pursuant to
employee benefit plans or arrangements maintained by the Company or Company
Subsidiary shall be, in the aggregate, not less favorable than those provided to
such employees immediately prior to the Closing Date.
(e) As of the Closing Date, the Company shall expressly assume
and agree to perform, or cause the applicable Subsidiary of the Company to
perform, in accordance with their terms, all employment, severance and other
compensation agreements and arrangements then existing between the Company or
any Subsidiary of the Company with any director, officer or employee thereof.
SECTION 5.11 REPAYMENT OF INDEBTEDNESS.
(a) Simultaneously with the Closing and from the Financing
arranged by the Buyer as contemplated by this Agreement for consummation of the
transactions contemplated hereby, the Company shall repay and discharge in full
all amounts due under the Credit Agreement, including accrued and unpaid
interest thereon and any premiums, fees and expenses related to the prepayment
thereof (the "SENIOR DEBT REPAYMENT AMOUNT"), and shall repay and discharge such
indebtedness in a manner acceptable to the parties to the Credit Agreement (the
"SENIOR DEBT HOLDERS").
(b) Simultaneously with the Closing and from the Financing
arranged by the Buyer as contemplated by this Agreement for consummation of the
transactions contemplated hereby, the Company shall repay and discharge in full
the Company Notes, including accrued and unpaid interest thereon and any
premiums, fees and expenses related to the prepayment thereof (the "SUBORDINATED
DEBT REPAYMENT AMOUNT"), and shall repay and discharge such indebtedness in a
manner acceptable to the holders of the Subordinated Debt (the "SUBORDINATED
DEBT HOLDERS").
(c) Following the Closing Date, the following debt of the
Company or its Subsidiaries shall remain outstanding as an obligation of the
Company or its Subsidiaries and shall continue to be due and payable in
accordance with its terms: (i) the Guaranteed Unsecured Floating Rate Loan Notes
due 2003 Series A, Series B,
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Series C and Series D, (ii) the Morris Ashby Loan Notes due 2000, (iii) hedging
contracts for the forward sale of Pesetas from U.S. dollars, (iv) all
capitalized leases referred to in Section 2.13 of the Company Disclosure
Schedule and (v) all of the Peseta denominated debt at Ansola referred to in
Section 2.13 of the Company Disclosure Schedule (with respect to the foregoing
items, all outstanding principal and accrued interest shall be included
collectively (calculated on a net basis) as, the "ASSUMED DEBT").
SECTION 5.12 PREFERRED STOCK. Immediately prior to the Closing,
in accordance with their terms, the Company shall cause the shares of Series A
Preferred Stock to automatically, and without any action on the part of the
holders thereof, be converted into shares of Common Stock and Series B Preferred
Stock in accordance with the terms of the Amended and Restated Certificate of
Incorporation of the Company. From the Financing arranged by Buyer as
contemplated by this Agreement for consummation of the transactions contemplated
hereby, the Company shall redeem the shares of Series B Preferred Stock for the
Series B Preferred Redemption Price (as such term is defined in the Amended and
Restated Certificate of Incorporation of the Company) (the "PREFERRED STOCK
REDEMPTION AMOUNT") from the holders of the Preferred Stock (the "PREFERRED
STOCK HOLDERS"). The shares of Common Stock issued in such conversion shall be
redeemed by the Company or shall remain outstanding, as the case may be, in
accordance with Article I hereof.
SECTION 5.13 SHAREHOLDER APPROVAL OF PAYMENTS. Prior to the
Closing, the Company and Sellers shall have satisfied the shareholder approval
requirements of Section 280G(b)(5)(B) of the Code with respect to all payments
to be made to disqualified individuals (within the meaning of Section 280G(c) of
the Code) in connection with the transactions contemplated hereby.
SECTION 5.14 SHAREHOLDERS AGREEMENT; BOARD OF DIRECTORS;
BUYER'S FURTHER ASSURANCES. At or prior to the Closing, the Buyer Group, the
Sellers (to the extent they continue to own equity of the Company following the
redemption contemplated by Section 1.2 of this Agreement) and the Company shall
enter into a Shareholders Agreement (the "SHAREHOLDERS AGREEMENT") substantially
in the form of Exhibit D hereto. At or immediately following the Closing, the
Buyer Group shall cause the Company to appoint a Person designated by the
Sellers' Representative at least five days prior to Closing (which designee
shall be reasonably acceptable to the Buyer Group) to the Board of Directors of
the Company. The Shareholders Agreement shall provide for the right of the
Sellers' Representative to appoint one member of the Board of Directors of the
Company for so long as the Sellers or their
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affiliates shall own in the aggregate at least 5% of the outstanding capital
stock of the Company. Following the Closing, each member of the Buyer Group
agrees to vote all shares owned by such Buyer to cause the Company to fully
comply with the post-closing covenants contained in this Agreement; PROVIDED
THAT the foregoing provision is not a guarantee of the Company's obligations
hereunder and the members of the Buyer Group shall not be obligated to make any
payment with respect to, or otherwise perform, the obligations of the Company
hereunder and the Sellers' sole remedy shall be an action for specific
performance, injunctive and/or other equitable relief.
SECTION 5.15 ORGANIZATIONAL DOCUMENTS. At or prior to the
Closing, Seller and the Company shall obtain or grant such approval, as the case
may be, and shall take such other action as is necessary, including, without
limitation, amending the Articles of Incorporation, substantially in the form of
Exhibit E-1 attached hereto, and By-Laws of the Company substantially in the
form of Exhibit E-2 attached hereto.
SECTION 5.16 FINANCING.
(a) In connection with the transactions contemplated hereby,
at the Closing, the Company shall execute and contemporaneously with the closing
of all transactions contemplated hereby, deliver agreements and instruments
relating to the Financing.
(b) Buyer will update the Company on a regular basis in
connection with the process of obtaining the Financing described in Section 4.5
hereto. The Company agrees to provide, and will cause its Subsidiaries and its
and their respective officers, employees, counsel and accountants to provide, to
the Buyer reasonable cooperation in connection with the arrangement of the
Financing and any other financing to be consummated contemporaneous with or at
or after the Closing in respect of the transactions contemplated by this
Agreement, including without limitation, the execution and delivery of any
pledge or security documents, underwriting or placement agreements, other
definitive financing documents, or other requested certificates, documents or
financial information as may be requested by Buyer.
(c) The Buyer shall use reasonable best efforts to obtain the
Financing contemplated by the Financing Commitment Letters to consummate the
transactions contemplated hereby.
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SECTION 5.17 SOLVENCY OPINION. The Board of Directors of the
Company shall have been permitted to rely on the solvency opinion of the firms
retained by Buyer in connection with the Financing Commitment Letters in
reaching its determination to consummate the transactions contemplated by
Section 1.2 hereof.
ARTICLE VI
CONDITIONS TO BUYER GROUP'S OBLIGATION TO CLOSE
The Buyer Group's obligation to consummate the transactions
contemplated herein shall be subject to the satisfaction or written waiver by
Buyer on or prior to the Closing Date, of all of the following conditions:
SECTION 6.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. (a) The
representations and warranties of the Company, without giving any effect to any
materiality qualifications or limitations therein, shall be true and correct in
all respects on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date) (without
taking into account any disclosure made by the Company to Buyer pursuant to
Section 5.1(b) hereof), except (i) as otherwise contemplated by this Agreement,
(ii) for such failures to be true and correct which in the aggregate would not
have a material adverse effect (excluding therefrom effects to the extent
arising as a result of (A) general economic, financial or market conditions,
conditions or circumstances generally affecting the businesses or industries, as
a whole, in which the Company and/or its Subsidiaries operate or (B) the
identity of the Buyer Group) on the Company and its Subsidiaries, taken as a
whole. The Company shall have performed in all material respects each of its
respective agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Closing
pursuant to the terms hereof.
(b) The representations and warranties of the Sellers, without
giving effect to any materiality qualifications or limitations therein shall be
true and correct in all respects on and as of the Closing Date as though made on
and as of the Closing Date (except for representations and warranties made as of
a specified date, which need be true and correct only as of the specified date)
(without taking into account any disclosure made by the Sellers to Buyer
pursuant to Section 5.1(b) hereof), except (i) as otherwise contemplated by this
Agreement and (ii) for such failures to
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be true and correct which in the aggregate would not have a material adverse
effect on the ability of the Sellers to consummate the transactions contemplated
hereby. Each of the Sellers shall have performed in all material respects each
of its respective agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Closing
pursuant to the terms hereof.
SECTION 6.2 FILINGS; CONSENTS; WAITING PERIODS. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers set forth in Section 6.2 of the Company Disclosure
Schedule shall have been filed, made or obtained, and all waiting periods
applicable under the HSR Act and similar applicable foreign merger control laws
shall have expired or been terminated.
SECTION 6.3 NO INJUNCTION. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the transactions contemplated herein.
SECTION 6.4 SHARE CERTIFICATES. The Sellers shall have
delivered to the Company certificates representing all of the Shares in
accordance with Section 1.2 hereof.
SECTION 6.5 PAY-OFF LETTERS. The Company shall have received
pay-off letters relating to the indebtedness for borrowed money which the
Company is obligated to repay or prepay on the Closing Date including, without
limitation, the Senior Debt and Subordinated Debt, and releases of any and all
security interests relating to such indebtedness held by third parties will have
been obtained, all on terms reasonably satisfactory to Buyer.
SECTION 6.6 FINANCING. The Company shall have obtained the
proceeds of the Financing pursuant to the Financing Commitment Letters. The
Company shall be obligated to accept any changes to such Commitment Letters or
the Financing made pursuant to the third full paragraph of the third page of the
Commitment Letter provided by Nationsbanc Montgomery Securities LLC , Bank of
America NT&SA, Chase Securities Inc. and The Chase Manhattan Bank (which
provides for changes to the pricing (by up to .50% per annum for each Senior
Credit Facility (as such term is defined in such Commitment Letter)), terms and
structure of the Senior Credit Facilities after March 31, 1999 if the
syndication has not been completed and if Chase, Bank of America and the Lead
Arrangers determine that
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such changes are necessary to insure a successful syndication of the Senior
Credit Facilities).
SECTION 6.7 SELLERS' OPINION. Buyer shall have received an
opinion, dated as of the Closing Date, of Skadden, Arps, Slate, Meagher & Flom
LLP counsel to Sellers, substantially in the form set forth on Exhibit F
attached hereto.
SECTION 6.8 PROCEEDINGS. All proceedings to be taken by Sellers
in connection with the consummation of the Closing transactions and the other
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to be delivered by Sellers to effect the transactions
contemplated hereby reasonably requested by Buyer will be reasonably
satisfactory in form and substance to Buyer.
SECTION 6.9 ANCILLARY AGREEMENTS. The Shareholders Agreement
shall have been executed and delivered by the applicable Sellers.
SECTION 6.10 ARTICLES OF INCORPORATION. The Articles of
Incorporation, as amended, shall have been filed and accepted by the Secretary
of State of Delaware.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
Sellers' and the Company's obligation to consummate the
transactions contemplated herein shall be subject to the satisfaction or written
waiver, by Sellers' Representative on or prior to the Closing Date, of all of
the following conditions:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of the Buyer Group, without giving any effect to
any materiality qualifications or limitations therein shall be true and correct
in all respects on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date), except (i)
as otherwise contemplated by this Agreement and (ii) for such failures to be
true and correct which in the aggregate would not have a material adverse effect
on Buyer and its subsidiaries, taken as a whole. Each member of the Buyer Group
shall have performed in all
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material respects each of its respective agreements and covenants contained in
or contemplated by this Agreement that are required to be performed by it at or
prior to the Closing pursuant to the terms hereof.
SECTION 7.2 ANCILLARY AGREEMENTS. The Shareholders Agreement
shall have been executed and delivered by the Buyer Group and the Company, to
the extent applicable.
SECTION 7.3 FILINGS; CONSENTS; WAITING PERIODS. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers set forth in Section 7.3 of the Buyer Disclosure
Schedule shall have been filed, made or obtained, and all applicable waiting
periods under the HSR Act and similar applicable foreign merger control laws
shall have expired or been terminated.
SECTION 7.4 NO INJUNCTION. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the transactions contemplated hereby.
SECTION 7.5 PURCHASE PRICE AND FINANCING. The Buyer Group
shall have delivered the Purchase Price to the Company and the Company shall
have obtained the Financing and have the funds available to pay the Redemption
Price, the Fees and Expenses, the Preferred Stock Redemption Amount, the Senior
Debt Repayment Amount and the Subordinated Debt Repayment Amount.
SECTION 7.6 PROCEEDINGS. All proceedings to be taken by the
Buyer Group in connection with the consummation of the Closing transactions and
the other transactions contemplated hereby and all certificates, opinions,
instruments and other documents required to be delivered by the Buyer Group to
effect the transactions contemplated hereby reasonably requested by Sellers will
be reasonably satisfactory in form and substance to the Sellers' Representative.
SECTION 7.7 ARTICLES OF INCORPORATION. The Articles of
Incorporation, as amended, shall have been filed and accepted by the Secretary
of State of Delaware.
ARTICLE VIII
TERMINATION
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SECTION 8.1 TERMINATION. Notwithstanding anything herein to
the contrary, this Agreement may be terminated at any time prior to the Closing
by:
(a) the mutual written consent of the Company, the Sellers'
Representative and Buyer;
(b) Buyer in the event that any condition set forth in Article
VI hereof shall not be satisfied and shall not be reasonably
capable of being remedied by May 14, 1999;
(c) the Company or the Sellers' Representative in the event than
any condition set forth in Article VII hereof shall not be satisfied
and shall not be reasonably capable of being remedied by May 14, 1999;
or
(d) either the Sellers' Representative or Buyer if the Closing
has not occurred by the close of business on May 14, 1999; provided,
however, that no party may terminate this Agreement pursuant to clause
(b) or (c) above, or pursuant to this clause (d), if the failure of the
applicable condition in Article VI or VII (as the case may be) to be
satisfied or the failure of the Closing to occur on or before the date
required in this Section 8.1(d) results from the willful and material
breach by the Sellers or the Company in the case of a termination by
the Sellers' Representative or the Company, or by Buyer in the case of
a termination by Buyer, of any covenant in this Agreement.
SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by a party hereto pursuant to Section 8.1 hereof,
written notice thereof shall forthwith be given by the terminating party to the
other parties hereto, and this Agreement shall thereupon terminate and become
void and have no effect, and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto, except that the
provisions of Sections 5.2(b), 5.4(a), 5.4(d), 5.8 and 9.6 shall survive the
termination of this Agreement; provided, however, that such termination shall
not relieve any party hereto of any liability for any breach of this Agreement
(other than nonwillful breaches of representations, warranties and covenants, as
to which no party shall be liable hereunder).
ARTICLE IX
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INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Closing, except with
respect to (i) the representations and warranties set forth in Sections 2.2 and
3.2 contained herein which shall survive the Closing Date indefinitely and (ii)
the representation and warranty set forth in Section 2.21 hereof which shall
survive for four years following the Closing Date.
SECTION 9.2 INDEMNIFICATION BY THE SELLERS. The Sellers shall
severally and not jointly (with each Seller only responsible for its pro rata
share based upon the Seller Percentage of any Damages) indemnify the Buyer Group
and the Company (collectively, "BUYER/COMPANY INDEMNIFIED PARTIES") against, and
hold the Buyer/Company Indemnified Parties harmless from, all reasonable
out-of-pocket expenditures and all demands, actions, losses, damages,
liabilities, equitable relief, litigation, suits, proceedings, claims,
judgments, awards, obligations, responsibilities, penalties, reasonable costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively "DAMAGES"), directly arising out of
or resulting from any breach of any warranty or representation of the Company or
the Sellers contained in this Agreement that survives the Closing in accordance
with Section 9.1 hereof.
SECTION 9.3 LIMITATION ON INDEMNIFICATION. Notwithstanding the
foregoing, no indemnification shall be required in respect of any individual
claim pursuant to Section 9.2 hereof unless the aggregate amount of Damages
resulting from such claim exceeds $25,000, in which event the Buyer/Company
Indemnified Parties, shall be entitled to indemnification for the full amount of
such Damages without regard to the $25,000 threshold. The determination of
Damages shall take into account, and such Damages shall be reduced by, (i) any
reduction in income taxes of the party claiming indemnification as a result of
the event giving rise to such indemnification if and when such reduction in
income taxes is actually realized by the party claiming indemnification, (ii)
the amount of any insurance proceeds received by such party in connection
therewith and (iii) any third party payments actually received by virtue of
indemnification or subrogation. The Sellers' total liability under this Article
IX hereof shall be limited to the Redemption Price. For the purposes of this
Article IX, the representations and warranties of the parties shall be deemed to
have been made at the execution of this Agreement and again at the Closing,
subject to any additional qualifications thereto that either the Company or
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the Sellers disclose to the Buyer but only if the Buyer Group was not obligated
as a result of such additional qualifications to consummate the transactions
contemplated herein at the Closing.
SECTION 9.4 INDEMNIFICATION PROCEDURES. If a claim is asserted
by a third party for which a party hereto is entitled to indemnification under
this Section 9 (as the "INDEMNITEE"), the indemnitee shall promptly give notice
(revealing the nature of the claim in sufficient detail and, if known, the
amount or approximate amount thereof), within a reasonable period not to exceed
60 days after receipt by the indemnitee of such claim to the other party (the
"INDEMNITOR") provided that the failure to give such notice shall not relieve
the indemnitor from liability it may have except to the extent the indemnitor is
actually prejudiced thereby. For this purpose, "reasonable period" shall mean
such period of time as will give the indemnitor reasonably sufficient time
(taking into account the date which the indemnitee has actual notice of such
claim) in which to respond to such claim in light of any time deadline of which
indemnitee is aware or upon reasonable inquiry should be aware. The indemnitor
will be entitled to take charge of the defense against such claim at the
indemnitor's cost and expense. Notwithstanding the indemnitor's assumption of
the defense or investigation of such claim, the indemnitee shall have the right
to employ separate legal counsel and to participate in the defense or
investigation of such claim, action or proceeding, and the indemnitor shall bear
the expense of such separate counsel, if (i) in the opinion of counsel to the
indemnitee, use of counsel of the indemnitor's choice could reasonably be
expected to give rise to a conflict of interest or (ii) the indemnitor shall
authorize the indemnitee to employ separate counsel at the indemnitor's expense.
The reasonable expenses, including reasonable attorney's fees, that may be
incurred by an indemnified party in enforcing the indemnity provided for in this
Article IX shall also be considered Damages and shall be payable if and when any
Damages are paid pursuant to this Article IX. In connection with the defense,
compromise or settlement of the claims by the indemnitor and its counsel, the
indemnitee shall cooperate reasonably, at the indemnitor's cost, to make
available to the indemnitor all necessary pertinent information and witnesses
under the indemnitee's control, and take such other steps as in the opinion of
counsel for the indemnitor are necessary or desirable to conduct such a defense,
compromise or settlement.
ARTICLE X
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MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
to any party hereunder shall be in writing and deemed given on the date of
receipt via (a) personal delivery, (b) facsimile transmission with confirmation,
(c) overnight courier, or (d) certified or registered mail, in each case, with
delivery fees prepaid, addressed to the following addresses (or at such other
address for a party as shall be specified by notice given hereunder).
If to Buyer, to:
JLF Acquisition LLC
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attn: Carl E. Nelson
Telecopy: (612) 332-2012
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jeffrey C. Hammes P.C.
John Schoenfeld, Esq.
Telecopy: (312) 861-2200
If to the Company, to:
J.L. French Automotive Castings, Inc.
3101 South Taylor Drive
Sheboygan, WI 53802
Attn: Chief Financial Officer
Telecopy: (920) 458-4861
If to any Sellers to the address set forth below such Seller's
name on Exhibit C attached hereto.
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with copies, in the case of notice to the Company or any Sellers,
to:
Windward Capital Partners, L.P.
Americas Tower, 42nd Floor
1177 Avenue of the Americas
New York, New York 10036
Attn: Anthony J. Almy
Telecopy: (212) 382-6536
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Howard L. Ellin, Esq.
Telecopy: (212) 735-2000
SECTION 10.2 CURRENCY; FOREIGN EXCHANGE. Unless otherwise
indicated, all dollars ($'s) specified in this Agreement shall mean United
States dollars. Where necessary, all foreign currency shall be converted to U.S.
dollar equivalents determined on the basis of the spot exchange rate published
in the Wall Street Journal on the business day last preceding the date of
determination.
SECTION 10.3 INTERPRETATION. When a reference is made to an
Article, Section or Schedule, such reference shall be to an Article, Section or
Schedule of or to this Agreement unless otherwise indicated. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "to the
knowledge of the Company" in this Agreement shall mean the actual knowledge of
the following employees of the Company:
(1) Mr. Charles M. Waldon, President and Chief Executive Officer
of the Company;
(2) Mr. Thomas C. Dinolfo, Chief Financial Officer of the Company;
(3) Mr. Donald W. Porritt, Director of Corporate Development of
the Company;
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(4) Mr. Paul A. Buckley, Managing Director, Morris Ashby Limited;
(5) Mr. Juan Manuel Orbea Soroa, General Manager, Fundiciones
Viuda de Ansola, S.A.
Notwithstanding anything to the contrary herein, the Sellers shall not be liable
to the any member of the Buyer Group and the members of the Buyer Group shall
not be entitled to claim that any representation or warranty of the Company or
the Sellers has been breached on account of (i) any fact, matter or circumstance
which any member of the Buyer Group was aware of on or before the date hereof or
(ii) any fact, matter or circumstance which any member of the Buyer Group
becomes aware of between the date of this Agreement and the Closing Date, if but
only if, in the case of clause (ii), the Buyer Group was not obligated to
consummate the Stock Purchase at the Closing.
SECTION 10.4 AMENDMENTS, MODIFICATION AND WAIVER.
(a) This Agreement, and the terms and provisions hereof, may
not be modified, waived or amended except by an instrument or instruments in
writing signed by the party against whom enforcement of any such modification or
amendment is sought (or, in the case of a waiver, by the intended beneficiary of
the waived term or provision); provided, however, that the Sellers hereby agree
that an amendment, waiver or modification may be enforced against all Sellers if
the Sellers' Representative have signed such amendment, waiver or modification
and such amendment, waiver or modification affects all Sellers in the same
manner.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.5 EXPENSES. Except as otherwise provided herein,
each party shall pay its own costs and expenses incurred in connection with this
Agreement, it being understood that all of the Sellers' and the Company's fees,
costs and expenses shall, to the extent not set forth on Exhibit A (as the same
may be modified from time to time) hereto, be paid by the Sellers.
Notwithstanding the foregoing, Buyer shall be responsible for paying all fees,
costs and expenses (i) relating to filings under the HSR Act and (ii) arising
under the Financing Commitment Letters. In the event the Closing occurs, the
Company shall be
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responsible for paying the fees, costs and expenses referred to in the preceding
sentence and the obligations set forth in Section 4.4 of the Buyer Disclosure
Schedule or otherwise allocated to the Buyer Group under this Agreement.
SECTION 10.6 SELLERS' REPRESENTATIVE. Each Seller and each
holder of Options hereby authorizes and directs Windward Capital Partners, L.P.,
a Delaware limited partnership (the "SELLERS' REPRESENTATIVE") to take such
action on behalf of such Seller, and to exercise such rights, power and
authority, as are authorized, delegated and granted to the Sellers'
Representative pursuant to this Agreement and to exercise such rights, power and
authority as are incidental thereto including calculation of the Adjusted
Purchase Price and the additions and deductions related thereto. Each Seller
agrees that the Sellers' Representative shall not be liable for any actions
taken or omitted to be taken under or in connection with this Agreement or the
transactions contemplated hereby, except for such actions taken or omitted to be
taken resulting from the Sellers' Representative's willful misconduct.
SECTION 10.7 SUCCESSORS AND ASSIGNS; BINDING EFFECT. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of the other
parties hereto, except by Buyer (i) for collateral securities purposes to the
lenders pursuant to the Financing and (ii) to an assignee who becomes a member
of the Buyer Group in accordance with the last sentence of this Section 10.7;
PROVIDED THAT at least one member of the Buyer Group shall be Onex LLC or an
affiliate thereof or Hidden Creek Industries or an affiliate thereof. Subject to
the preceding sentence, this Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Following the date hereof, but in
any event within seven business days hereof, members of the Buyer Group may
become parties to this Agreement by executing a counterpart signature page
hereto and making the type of representations set forth in Sections 4.1, 4.2,
4.3, 4.4 and 4.6 hereof to the Sellers with respect to such member of the Buyer
Group. Upon such execution, the Buyer Disclosure Schedule shall be modified to
reflect the number of Shares to be purchased by such member of the Buyer Group,
the class of such Shares and the aggregate purchase price for such Shares (the
"INVESTMENT AMOUNT"). Each member of the Buyer Group shall be severally liable
for the obligations of the Buyer and the Buyer Group pursuant to this Agreement
on a pro rata basis determined by dividing such member's Investment Amount by
the Purchase Price, but in no event shall such obligations exceed such member's
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Investment Amount. In connection with the foregoing, this Agreement shall be
amended so as to reflect the foregoing and any other changes that the Buyer and
the Sellers' Representative deem appropriate to reflect the foregoing.
Notwithstanding anything to the contrary set forth in this Agreement, after the
consummation of the Closing, no member of the Buyer Group shall be obligated to
make any payment with respect to, or otherwise perform, the obligations of the
Company hereunder.
SECTION 10.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof) as to all matters, including, but not limited to,
matters of validity, construction, effect, performance and remedies.
SECTION 10.9 JURISDICTION; FORUM. (a) By the execution and
delivery of this Agreement, each member of the Buyer Group, the Sellers and the
Company submit to the personal jurisdiction of any state or federal court in the
State of New York, County of New York in any suit or proceeding arising out of
or relating to this Agreement.
(b) To the extent that any member of the Buyer Group, any Seller
or the Company has or hereafter may acquire any immunity from jurisdiction of
any New York court from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such Buyer, such Seller or
the Company as the case may be, hereby irrevocably waives such immunity in
respect of its obligations with respect to this Agreement.
(c) The parties hereto agree that the appropriate and exclusive
forum for any disputes between any of the parties hereto arising out of this
Agreement or the transactions contemplated hereby shall be in any state or
federal court in the State of New York, County of New York. The parties hereto
further agree that the parties will not bring suit with respect to any disputes
arising out of this Agreement or the transactions contemplated hereby in any
court or jurisdiction other than the above specified courts; provided, however,
that the foregoing shall not limit the rights of the parties to obtain execution
of judgment in any other jurisdiction. The parties hereto further agree, to the
extent permitted by law, that final and unappealable judgment against a party in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United
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States by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and amount of such judgment.
SECTION 10.10 SEVERABILITY. If any term or other provision of
the Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provision of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein is not affected in any
manner materially adverse to any party hereto. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner.
SECTION 10.11 THIRD PARTY BENEFICIARIES. Nothing in this
Agreement, express or implied, is intended or shall be construed to create any
third party beneficiaries, except for the provisions of Sections 5.5 and 5.10
which may be enforced by the beneficiaries thereof.
SECTION 10.12 SCHEDULES.
(a) Disclosure of any fact or item in any Section of the Company
Disclosure Schedule or the Buyer Disclosure Schedule hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or section
whether or not an explicit cross-reference appears.
(b) Certain of the representations and warranties set forth in
this Agreement contemplate that there will be included in the Company Disclosure
Schedule or the Buyer Disclosure Schedule information that might be "material"
or have a "material adverse effect." The Company and Buyer may, at their option,
include in such schedules items that are not material or are not likely to have
a material adverse effect in order to avoid any misunderstanding, and any such
inclusion shall not be deemed to be an acknowledgment or representation that
such items are material or would have a material effect, to establish any
standard of materiality or material adverse effect on the Company, or to define
further the meaning of such terms for purposes of this Agreement.
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SECTION 10.13 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement, including any exhibits or schedules hereto constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements or understandings, both written
and oral, between the parties or any of them with respect to the subject matter
hereof. The only representations and warranties made by the parties hereto with
respect to the subject matter hereof are the representations and warranties
contained in or made pursuant to this Agreement.
SECTION 10.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be deemed an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 10.15 SPECIFIC PERFORMANCE. (a) Sellers acknowledge that
the Company's business is unique and recognize and affirm that in the event of a
breach of this Agreement by Sellers, money damages may be inadequate and Buyer
may have no adequate remedy at law. Accordingly, Sellers agree that Buyer shall
have the right, in addition to any other rights and remedies existing in its
favor, to enforce its rights and Sellers' obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief.
(b) Buyer acknowledges that the Company's business is unique
and recognizes and affirms that in the event of a breach of this Agreement by
Buyer, money damages may be inadequate and the Sellers may have no adequate
remedy at law. Accordingly, Buyer agrees that the Sellers and the Company shall
have the right, in addition to any other rights and remedies existing in their
favor, to enforce their rights and Buyer's obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief.
SECTION 10.16 COOPERATION AS TO FINANCIAL STATEMENTS. The Company
and Sellers shall reasonably cooperate with and assist, and cause its
independent accountants to cooperate with and assist, Buyer (at Buyer's sole
cost and expense) in Buyer's preparation of audited consolidated financial
statements for the Company in accordance with GAAP and in form (including the
relevant periods)
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meeting the requirements of Regulation S-X of the Securities Act of 1933, as
amended.
SECTION 10.17 TAX MATTERS.
(a) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
State Gains tax, New York City Transfer Tax and any similar tax imposed in other
states or subdivisions) ("TRANSFER TAXES"), shall be paid by the Company when
due, and the Company will, at its own expense prepare and file all necessary Tax
Returns and other documentation with respect to all such transfer Taxes and, if
required by applicable law; the Sellers will, and will cause their affiliates
to, join in the execution of any such Tax Returns and other documentation;
PROVIDED THAT each Seller will be responsible for all transfer Taxes imposed
upon such Seller in connection with the redemption of such Seller's Shares.
(b) FIRPTA CERTIFICATE. Each Seller (other than Windward/Merban)
will furnish Buyer prior to the Closing a certification pursuant to Section 1. 1
445-2(b)(2) of the Treasury Regulations that such Seller is not a foreign
person.
(c) All payments made to the Sellers pursuant to Section 1.4
hereof shall be treated as additional payments in exchange for such Sellers'
Shares and any cancellation of the Shares of the Buyer Group pursuant to Section
1.4 hereof shall be treated as an adjustment to the Purchase Price.
SECTION 10.18 TERMINATION OF CERTAIN AGREEMENTS. In connection
with the transactions contemplated in this Agreement, the Sellers hereby agree
to waive any preemptive rights arising as a result of the transactions
contemplated hereby and that the Stockholders Agreement shall terminate and be
of no further force and effect as of the Closing.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date and year first above written.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By:/s/ Charles M. Waldon
Name:
Title:
JLF ACQUISITION LLC
By: /s/ Carl E. Nelson
Name:
Title:
SHAREHOLDERS:
WINDWARD CAPITAL ASSOCIATES, L.P.
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
CHARLES M. WALDON
/S/ CHARLES M. WALDON
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WINDWARD/MERBAN, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
WINDWARD/MERCHANT, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
WINDWARD/NORTHWEST, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
62
<PAGE>
WINDWARD/METROPOLITAN, L.L.C.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
WINDWARD/PARK JLF, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
WINDWARD/PARK WACI, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
63
<PAGE>
WINDWARD/BADGER JLF, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
WINDWARD/BADGER WACI, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ Gary L. Swenson
Name:
Title:
CS FIRST BOSTON MERCHANT INVESTMENTS
1995/96, L.P.
By: Merchant Capital, Inc., its general
partner
By: /s/ Joseph F. Huber
Name:
Title:
64
<PAGE>
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 Purchase and Sale of Common Stock. ...............................2
SECTION 1.2 Redemption of Shares and Additional
Recapitalization Transaction...................................................2
SECTION 1.3 Closing...........................................................4
SECTION 1.4 Post-Closing Adjustment...........................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.1 Corporate Organization and Authority.............................11
SECTION 2.2 Capitalization...................................................12
SECTION 2.3 Subsidiaries.....................................................14
SECTION 2.4 Consents and Approvals; No Violations............................14
SECTION 2.5 Financial Statements.............................................16
SECTION 2.6 Absence of Material Adverse Changes, etc.........................16
SECTION 2.7 No Undisclosed Liabilities.......................................18
SECTION 2.8 Taxes............................................................18
SECTION 2.9 Employee Benefit Plans...........................................20
SECTION 2.10 Environmental Matters...........................................22
SECTION 2.11 Legal Proceedings, etc..........................................24
SECTION 2.12 Compliance with Applicable Law..................................24
SECTION 2.13 Certain Contracts and Arrangements..............................25
SECTION 2.14 Real Property...................................................25
SECTION 2.15 Labor Matters...................................................27
SECTION 2.16 Insurance.......................................................28
SECTION 2.17 Patents, Trademarks, Etc........................................28
SECTION 2.18 Certain Fees....................................................29
SECTION 2.19 Transactions with Affiliates....................................29
SECTION 2.20 Accounts Receivable; Inventories................................29
SECTION 2.21 Indebtedness....................................................30
SECTION 2.22 Issuance of Shares..............................................31
SECTION 2.23 Product Warranty and Liability..................................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.1 Authority and Related Matters....................................32
SECTION 3.2 Share Ownership..................................................32
SECTION 3.3 Consents and Approvals; No Violations............................33
SECTION 3.4 Brokers, Finders, etc............................................34
SECTION 3.5 Legal Proceedings................................................34
i
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER GROUP
SECTION 4.1 Corporate Organization and Authority.............................34
SECTION 4.2 Consents and Approvals; No Violations............................35
SECTION 4.3 Legal Proceedings, etc...........................................36
SECTION 4.4 Certain Fees.....................................................37
SECTION 4.5 Financing........................................................37
SECTION 4.6 Acquisition of Shares for Investment.............................38
SECTION 4.7 Solvency.........................................................38
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Business..........................................39
SECTION 5.2 Access to Information; Confidentiality...........................41
SECTION 5.3 No Shop..........................................................42
SECTION 5.4 Non-Solicitation of Employees; Non-Compete.......................42
SECTION 5.5 Director and Officer Liability; Indemnification..................43
SECTION 5.6 Reasonable Best Efforts..........................................46
SECTION 5.7 Governmental Authorizations......................................46
SECTION 5.8 Public Announcements.............................................47
SECTION 5.9 Stock Options....................................................48
SECTION 5.10 Employee Matters................................................48
SECTION 5.11 Repayment of Indebtedness.......................................50
SECTION 5.12 Preferred Stock.................................................51
SECTION 5.13 Shareholder Approval of Payments................................51
SECTION 5.14 Shareholders Agreement; Board of Directors;
Buyer's Further Assurances...........................................51
SECTION 5.15 Organizational Documents........................................52
SECTION 5.16 Financing.......................................................52
SECTION 5.17 Solvency Opinion................................................53
ARTICLE VI
CONDITIONS TO BUYER GROUP'S OBLIGATION TO CLOSE
SECTION 6.1 Representations and Warranties; Covenants........................53
SECTION 6.2 Filings; Consents; Waiting Periods...............................54
SECTION 6.3 No Injunction....................................................54
SECTION 6.4 Share Certificates...............................................54
SECTION 6.5 Pay-off Letters..................................................54
SECTION 6.6 Financing........................................................54
SECTION 6.7 Sellers' Opinion.................................................55
SECTION 6.8 Proceedings......................................................55
SECTION 6.9 Ancillary Agreements.............................................55
SECTION 6.10 Articles of Incorporation.......................................55
ii
<PAGE>
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
SECTION 7.1 Representations and Warranties; Covenants........................56
SECTION 7.2 Ancillary Agreements.............................................56
SECTION 7.3 Filings; Consents; Waiting Periods...............................56
SECTION 7.4 No Injunction....................................................56
SECTION 7.5 Purchase Price and Financing.....................................56
SECTION 7.6 Proceedings......................................................57
SECTION 7.7 Articles of Incorporation........................................57
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination......................................................57
SECTION 8.2 Procedure and Effect of Termination..............................58
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Survival of Representations and Warranties.......................58
SECTION 9.2 Indemnification by the Sellers...................................58
SECTION 9.3 Limitation on Indemnification....................................59
SECTION 9.4 Indemnification Procedures.......................................59
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices.........................................................60
SECTION 10.2 Currency; Foreign Exchange......................................62
SECTION 10.3 Interpretation..................................................62
SECTION 10.4 Amendments, Modification and Waiver.............................63
SECTION 10.5 Expenses........................................................63
SECTION 10.6 Sellers' Representative.........................................64
SECTION 10.7 Successors and Assigns; Binding
Effect........................................................64
SECTION 10.8 Governing Law...................................................65
SECTION 10.9 Jurisdiction; Forum.............................................65
SECTION 10.10 Severability...................................................66
SECTION 10.11 Third Party Beneficiaries......................................66
SECTION 10.12 Schedules......................................................66
SECTION 10.13 Entire Agreement...............................................67
SECTION 10.14 Counterparts; Effectiveness....................................67
SECTION 10.15 Specific Performance...........................................67
SECTION 10.16 Cooperation as to Financial Statements.........................68
iii
<PAGE>
SECTION 10.17 Tax Matters....................................................68
SECTION 10.18 Termination of Certain Agreements..............................69
iv
<PAGE>
Index of Defined Terms
Actual Closing Cash............................................................8
Adjusted Cash Payment Per Share................................................6
Affected Employee ............................................................48
Affiliated Group ............................................................20
Aggregate Option Exercise Price................................................3
Agreement......................................................................1
Amended and Restated Subordinated Note Agreement..............................13
Assumed Debt..................................................................50
Balance Sheet.................................................................18
Buyer..........................................................................1
Buyer Disclosure Schedule.....................................................35
Buyer Group....................................................................1
Buyer's Accountants............................................................6
Buyer/Company Indemnified Parties.............................................58
Cash Payment Per Share.........................................................3
Charles Waldon Shares..........................................................2
Charter Amendment..............................................................2
Class A Common Stock..........................................................12
Class B Common Stock..........................................................12
Class C Common Stock..........................................................12
Class D Common Stock..........................................................12
Closing........................................................................4
Closing Date...................................................................4
Closing Working Capital........................................................8
Code..........................................................................20
Company........................................................................1
Company Board.................................................................12
Company Disclosure Schedule....................................................2
Company Financial Statements..................................................16
Company Indemnitees...........................................................44
Company Notes.................................................................13
Company Plans.................................................................21
Company Stockholders' Agreement...............................................13
Confidentiality Agreement.....................................................41
Costs.........................................................................44
Credit Agreement..............................................................38
CS First Boston................................................................1
Current Assets.................................................................7
Current Liabilities............................................................7
Damages.......................................................................59
Debt Amount....................................................................3
Encumbrances..................................................................14
Environmental Claim...........................................................22
Environmental Laws............................................................22
ERISA.........................................................................21
v
<PAGE>
Escrow Agreement...............................................................9
Estimated Closing Cash.........................................................4
Fees and Expenses..............................................................4
Final Statement................................................................8
Financing.....................................................................38
Financing Commitment Letter...................................................37
Ford Tooling Receivable........................................................7
Fully Diluted Shares...........................................................3
GAAP..........................................................................16
Governmental Authority........................................................15
Hazardous Materials...........................................................22
HSR Act.......................................................................15
Indebtedness..................................................................30
Indemnifiable Claim...........................................................44
indemnitee....................................................................59
indemnitor....................................................................59
Indemnity Agreement...........................................................44
Independent Accounting Firm....................................................7
Insurance Policies............................................................28
Intellectual Property Rights..................................................28
Investment Amount.............................................................64
Leased Real Property..........................................................26
Leases........................................................................26
Lien..........................................................................15
Material Contracts............................................................25
Maximum Amount................................................................45
Options.......................................................................13
Owned Real Property...........................................................26
Permits.......................................................................24
Permitted Liens...............................................................25
Post-Closing Adjustment........................................................6
Preferred Stock...............................................................13
Preferred Stock Holders.......................................................51
Preferred Stock Redemption Amount.............................................51
Products......................................................................43
Purchase Price.................................................................2
Real Property.................................................................26
Recapitalization...............................................................2
Redemption Percentage..........................................................9
Redemption Price...............................................................3
Release.......................................................................22
Representatives...............................................................41
Sellers........................................................................1
Sellers Disclosure Schedule...................................................32
Sellers' Representative.......................................................64
Senior Debt Holders...........................................................50
Senior Debt Repayment Amount..................................................50
vi
<PAGE>
Series A Preferred Stock......................................................13
Series B Preferred Stock......................................................13
Shareholders Agreement........................................................51
Shares........................................................................12
Solvent.......................................................................38
Statement......................................................................6
Subordinated Debt Holders.....................................................50
Subordinated Debt Repayment Amount............................................50
Subsidiary....................................................................14
Tax Return....................................................................20
Taxes.........................................................................20
Threshold Amount..............................................................59
Transfer Taxes................................................................68
Windward Capital...............................................................1
Windward/Badger JLF............................................................1
Windward/Badger WACI...........................................................1
Windward/Merban................................................................1
Windward/Merchant..............................................................1
Windward/Metropolitan..........................................................1
Windward/Northwest.............................................................1
Windward/Park JLF..............................................................1
Windward/Park WACI.............................................................1
Working Capital................................................................7
Working Capital Escrow Agent...................................................9
Working Capital Escrow Fund....................................................9
vii
<PAGE>
<PAGE>
Exhibit 2.2
AMENDMENT NO. 1 TO
RECAPITALIZATION AGREEMENT
This AMENDMENT NO. 1 TO RECAPITALIZATION AGREEMENT (this "AMENDMENT"),dated
April 21, 1999, is by and among J. L. French Automotive Castings, Inc. (the
"COMPANY"), JLF Acquisition LLC (the "Buyer") and Windward Capital Partners,L.P.
( "the SELLERS' REPRESENTATIVE" ) and amends that certain Recapitalization
Agreement (the "AGREEMENT"), dated as of March 29, 1999, by and among the
Company,the Buyer and the Stockholders listed on the signature page thereto.
WHEREAS, the aggregate equity investment amount to be made by the Buyer
and its co-investors, as set forth on Section 1.1 of the Buyer Disclosure
Schedule, has increased from $152.5 million to $156.0 million; and
WHEREAS, the Company, the Buyer and the Sellers' Representative wish to
amend the Agreement to reflect the foregoing as set forth herein.
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. AMENDMENT. The Agreement is hereby amended by:
(a) replacing the amount of "$155,000,000" as it appears in
Section 1.1 of the Agreement with "$158,500,000";
(b) replacing the percentage "88.5714%" as it appears in
Section 1.1 of the Agreement with "88.7955%"; and
(c) replacing the percentage "11.42857%" as it appears in
Section 1.2(a) of the Agreement with "11.2045%".
2. APPLICABLE LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
3. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument.
This Amendment shall become effective upon the execution of a
<PAGE>
counterpart hereof by each of the parties hereto, and written or telephonic
notification of such execution and authorization of delivery thereof has been
received by each party hereto.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Amendment to be
executed by their respective officers hereunto duly authorized as of the day and
year first written above.
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: /s/ Thomas C. Dinolfo
Name:
Title:
JLF ACQUISITION LLC
By: /s/ Carl E. Nelson
Name:
Title:
WINDWARD CAPITAL PARTNERS, L.P.,
As Sellers' Representative
By: Windward Capital Associates, Inc.,
Its General Partner
By: /s/ Gary L. Swenson
Name:
Title:
<PAGE>
Exhibit 3.1
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "WINDWARD AUTOMOTIVE COMPONENTS INTERNATIONAL, INC.", CHANGING
ITS NAME FROM "WINDWARD AUTOMOTIVE COMPONENTS INTERNATIONAL, INC." TO "J. L
FRENCH AUTOMOTIVE CASTINGS, INC.", FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF
MARCH, A.D. 1998, AT 11:15 O'CLOCK A.M.
/s/ Edward Freel
--------------------------------
EDWARD FREEL, SECRETARY OF STATE
2819248 8100 AUTHENTICATION: 9765829
991208568 DATE: 05-25-99
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WINDWARD AUTOMOTIVE COMPONENTS INTERNATIONAL, INC.
WINDWARD AUTOMOTIVE COMPONENTS INTERNATIONAL, INC., a Delaware
corporation (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is WINDWARD AUTOMOTIVE COMPONENTS
INTERNATIONAL, INC. The original Certificate of Incorpora tion of the
Corporation was filed with the Secretary of State of the State of Delaware on
November 10, 1997 under the name Windward Automotive Components International,
Inc. and was amended and restated on January 12,1998.
2. This Amended and Restated Certificate of Incorporation of
WINDWARD AUTOMOTIVE COMPONENTS INTERNATIONAL, INC. further amends and restates
the provisions of the Amended and Restated Certificate of Incorporation of the
Corporation and was duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware and by unanimous written
consent of the Stockholders in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
3. The text of the Amended and Restated Certificate of
Incorporation is to read in its entirety as follows:
FIRST: The name of the corporation is J. L. FRENCH AUTOMOTIVE
CASTINGS, INC.
SECOND: The registered office of the Corporation in the State of
Delaware is located at: 1209 Orange Street, in the City of Wilmington, County of
New Castle. The registered agent of the Corporation at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL").
FOURTH: The following provisions are inserted regarding the capital
stock of the Corporation:
1
<PAGE>
A. AUTHORIZED SHARES. The total number of shares which the
Corporation is authorized to issue is 453,000 shares. 450,000 shares shall be
designated Common Stock, par value $0.000 1 per share (the "COMMON STOCK"), of
which 300,000 shares shall be designated Class A Common Stock (the "CLASS A
COMMON STOCK"), 75,000 shares shall be designated Class B Common Stock (the
"CLASS B COMMON STOCK"), 50,000 shares shall be designated Class C Common Stock
(the "CLASS C COMMON STOCK") and 25,000 shares shall be designated Class D
Common Stock (the "CLASS D COMMON STOCK"). 3,000 shall be designated Preferred
Stock, par value $.0001 per share (the "Preferred Stock"), of which 1,500 shares
shall be designated Series A Convertible Preferred Stock (the "SERIES A
PREFERRED STOCK"), and 1,500 shares shall be designated Series B Redeemable
Preferred Stock (the "Series B Preferred Stock").
The terms, limitations and relative rights and preferences of the
classes and certain series of Common Stock and Preferred Stock of the
Corporation are as hereinafter set forth.
B. POWERS, PREFERENCES AND RIGHTS OF THE COMMON STOCK. The powers,
preferences and rights of the Class A Common Stock, the Class B Common Stock,
the Class C Common Stock and the Class D Common Stock and the qualifications,
limitations or restrictions thereof are as follows:
1. VOTING.
(a) CLASS A COMMON STOCK. Each share of Class A
Common Stock shall entitle the holder thereof to one (1) vote.
(b) CLASS B COMMON STOCK. Each share of Class B
Common Stock shall entitle the holder thereof to one (1) vote.
(c) CLASS C COMMON STOCK. The shares of Class C
Common Stock shall be non-voting shares except to the extent that a class vote
is required under the DGCL and except that the consent of the holders of at
least a majority of the shares of Class C Common Stock then outstanding shall be
necessary to permit, effect or validate (x) the issuance of any series of
capital stock of the Corporation, other than the Class A Common Stock, the Class
B Common Stock, the Class C Common Stock, the Class D Common Stock, the Series A
Preferred Stock or the Series B Preferred Stock which is on a parity with or
senior as to liquidation to the Class C Common Stock; or (y) the repeal,
amendment or other change in this Amended and Restated Certificate of
Incorporation in a manner which would increase or decrease the aggregate number
of authorized shares of Class C Common Stock, increase or decrease the par value
2
<PAGE>
per share of the Class C Common Stock, or alter or change the powers,
preferences or rights of the Class C Common Stock in any adverse respect.
(d) CLASS D COMMON STOCK. Each share of Class D
Common Stock shall entitle the holder thereof to ten (10) votes.
2. CONVERSION OF SHARES.
(a) CONVERSION OF CLASS B COMMON STOCK.
(i) Except as provided in Section 13.2(b) of this
Article FOURTH, upon the TRANSFER of any shares of Class B Common Stock
to any holder who is subject to, or whose Affiliates (as defined in
Regulation Y of the Board of Governors of the Federal Reserve System (12
C.F.R. 225) or any successor to such regulation ("REGULATION T") are
subject to the limitation of the Rank Holding Company Act of 1956, as
amended, or the International Banking Act of 1978, as amended, (together,
the "BANKING REGULATIONS") (such holder shall be hereinafter referred to
as a "REGULATED HOLDER"), such Regulated Holder of the Class B Common
Stock so transferred shall have the right, but not the obligation, to
convert such shares of Class B Common Stock to shares of Class C Common
Stock on a one share for one share basis by providing written notice to
the Corporation (the "CONVERSION TO NON-VOTING") and each such conversion
shall be deemed to have been effected as of the close of business on the
date on which such notice has been received.
(ii) Upon the Conversion to Non-Voting of the shares of
Class B Common Stock pursuant to Section B.2 (a)(i) of this Article
FOURTH, (such number of shares so converted are hereinafter referred to
as the "Conversion Number") a number of shares of Class B Common Stock,
equal to the lesser of (x) the number of outstanding shares of Class B
Common Stock held by persons who are not Regulated Holders or (y) the
quotient obtained by dividing the Conversion Number by 9 (nine), shall be
converted into shares of Class D Common Stock as described in the
following sentences. The holder of the shares subject to the Conversion
to Non-Voting shall specify in writing to the Corporation the names (and
amounts) of any affiliate of such holder (which designated affiliate is
permitted by the Banking Regulations to own such shares of Class D Common
Stock) whose shares of Class B Common Stock are to be converted into
Class D Common Stock pursuant to this clause (ii) which specification
shall be approved by each holder of Class B Common Stock specified
therein; provided that
3
<PAGE>
if such specification is not made or approved, the shares of Class B
Common Stock to be converted into Class D Common Stock pursuant to this
Section B.2(a)(ii) shall be allocated among all of the holders of Class B
Common Stock, other than to any holder of Class B Common Stock who is a
Regulated Holder and would be in violation of the Banking Regulations,
pro-rata based on their relative ownership of Class B Common Stock.
(b) CONVERSION OF CLASS C COMMON STOCK. In connection with the
occurrence (or the expected occurrence, as described herein) of any of the
following events (each such event shall be hereinafter referred to as a
"CONVERSION EVENT"):
(i) any registered underwritten public offering of
common equity securities of the Corporation; or
(ii) any sale of securities of the Corporation to a
person or group of related persons (such sale being within the meaning of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) if,
after such sale, such person or group of persons in the aggregate would
own or control securities of the Corporation (excluding any shares of
Class C Common Stock being converted and disposed of in connection with
such Conversion Event) which possess in the aggregate, the ordinary
voting power to elect a majority of the Corporation's directors; or
(iii) any sale of securities of the Corporation to a
person or group of persons(such sale being within the meaning of the
Exchange Act) if, after such sale, such person or group of persons would
not in the aggregate, own, control or have the right to acquire more than
two percent (2%) of the outstanding securities of any class of voting
securities of the Corporation; or
(iv) a merger, consolidation or similar transaction
involving the Corporation if, after such transaction, a person or group
of persons in the aggregate would own or control securities of the
Corporation which possess in the aggregate the ordinary voting power to
elect a majority of the Corporation's directors (provided that the
transaction has been approved by the Board of Directors of the
Corporation or a committee thereof and by the holders of a majority of
the Common Stock then outstanding (excluding all shares of Class C Common
Stock), provided, further, that if such transaction is approved in
accordance with the provisions of this Section B.2(b)(iv) of this
4
<PAGE>
Article FOURTH, then the holders of the Class C Common Stock acknowledge
that such transaction will not alter or change the powers, preferences or
rights of Class C Common Stock in any adverse manner);
each holder of shares of Class C Common Stock shall be entitled at any time and
from time to time to convert into an equal number of shares of Class A Common
Stock any of such holder's Class C Common Stock which are being (or are expected
to be) distributed, disposed of or sold in connection with such Conversion
Event. Each holder of shares of Class C Common Stock shall be entitled to
convert its shares of Class C Common Stock in connection with any Conversion
Event if such holder reasonably believes that such Conversion Event shall be
consummated. A written request for conversion from any holder of Class C Common
Stock to the Corporation stating such holder's reasonable belief that a
Conversion Event shall occur shall be a conclusive determination thereof and
shall obligate the Corporation to effect such conversion in a timely manner so
as to enable each such holder to participate in such Conversion Event. If any
shares of Class C Common Stack are converted into shares of Class A Common Stock
in connection with a Conversion Event and such shares of Class A Common Stock
are not actually distributed, disposed of or sold pursuant to such Conversion
Event, such shares of Class A Common Stock shall be promptly converted back into
the same number of shares of Class C Common Stock. To the extent that the
percentage of Class A Common Stock or Class B Common Stock held by a Regulated
Holder is reduced solely as a result of the issuance of additional capital stock
of the Corporation, any shares of Class C Common Stock held by such Regulated
Holder after giving effect to such issuance may be converted into shares of
Class A Common Stock or Class B Common Stock, on a one share for one share
basis, provided that the resulting percentage of Class A Common Stock or Class B
Common Stock, respectively, held by such Regulated Holder after such issuance
and conversion does not exceed the percentage of Class A Common Stock or Class B
Common Stock, respectively, held by such Regulated Holder prior to such issuance
and conversion. In addition, if, due to a change of law or regulation, a holder
of Class C Common Stock is no longer deemed to be a Regulated Holder, any shares
of Class C Common Stock held by such holder may be converted into shares of
Class A Common Stock or Class B Common Stock on a one share for one share basis.
(c) CONVERSION OF CLASS D COMMON STOCK. One-ninth of an outstanding
share of Class D Common Stock shall automatically, without any further act or
deed on the part of the Corporation or any other person, be converted into one
ninth of a share of Class A Common Stock or Class B Common Stock respectively,
on a one share for one share basis, immediately upon, and concurrently with, the
conversion of each share of Class C Common
5
<PAGE>
Stock into a share of Class A Common Stock, pursuant to Section B.2(b) of this
Article FOURTH or in accordance with the last sentence thereof, into Class A
Common Stock or Class B Common Stock, as the case may be. If, however, any
shares or fraction of a share of Class A Common Stock are converted back into
the same number of shares or fraction of a share of Class C Stock because such
shares or fraction of a share of Class A Common Stock were not actually
distributed, disposed of or sold pursuant to a Conversion Event as provided in
Section B.2(b) of this Article FOURTH, then any shares or fraction of a share of
Class D Common Stock which converted into shares or fraction of a share of Class
A Common Stock pursuant to this Section B.2(c) shall be promptly converted back
into the same number of shares or fraction of a share of Class D Common Stock.
Unless otherwise specified in a writing delivered by the holder of the shares or
fraction of a share of Class C Common Stock being converted pursuant to Section
B.2(b) of this Article FOURTH, the number of shares or fraction of a share of
Class D Common Stock of each holder of Class D Common Stock which shall be
converted into a share or fraction of a share of Class A Common Stock or Class B
Common Stock pursuant to this Section B.2(c) shall be determined by multiplying
the aggregate number of shares or fractions of a share of Class D Common Stock
to be converted pursuant to this Section B.2(c) times a fraction, the numerator
of which is the number of shares of Class D Common Stock held by such holder,
and the denominator of which is the total number of shares of Class D Common
Stock outstanding. In addition, shares of Class D Common Stock may be converted
into shares of Class A Common Stock, at the option of the holder thereof, at any
time or from time to time, on a one share for one share basis.
(d) CONVERSION OF CLASS B COMMON STOCK. Shares of Class B Common
Stock may be converted into shares of Class A Common Stock, at the option of the
holder thereof, at any time or from time to time, on a one share for one share
basis.
(e) CONVERSION PROCEDURE ISSUANCE OF CERTIFICATES
(i) Unless otherwise provided for in connection with a
Conversion Event, each conversion of shares of Class C Common Stock into
shares of Class A Common Stock or Class B Common Stock pursuant to
Section B.2(b) and each conversion of Class B Common Stock into shares of
Class A Common Stock pursuant to B.2(d) shall be effected by the
surrender of the certificates representing the shares to be converted at
the principal office of the Corporation (or such other office or agency
of the Corporation as the Corporation may designate by notice in writing
to the holders of the Class C Common Stock and Class B Common Stock) at
any time during normal business hours, together
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with a written notice by the holder of such shares of Class C Common
Stock or Class B Common Stock stating that such holder desires to convert
such shares. Such notice shall also state the name or names (with
addresses) and denominations in which the certificate or certificates for
such shares of Class A Common Stock or Class B Common Stock are to be
issued and shall include instructions for reasonable delivery thereof.
Each conversion of Class B Common Stock to Class A Common Stock and,
unless otherwise provided for in connection with a Conversion Event, each
conversion of Class C Common Stock to Class A Common Stock or Class B
Common Stock shall be deemed to have been effected as of the close of
business on the date on which such certificates representing such Class B
Common Stock or Class C Common Stock have been surrendered and such
notice has been received. At such time, the rights of the holder of the
surrendered shares of Class B Common Stock or Class C Common Stock as
such holder shall cease, and the person in whose name the certificates
for the shares of Class A Common Stock or Class B Common Stock will be
issued upon such conversion shall be deemed to have become the holder of
record of the shares of Class A Common Stock or Class B Common Stock
represented thereby. Promptly after the surrender of the certificates and
the receipt of written notice, the Corporation shall issue and deliver in
accordance with the surrendering holder's instructions, the certificates
for the shares of Class A Common Stock or Class B Common Stock issuable
upon such conversion, and certificates representing any surrendered
shares of Class B Common Stock or Class C Common Stock which were
delivered to the Corporation in connection with such conversion but which
were not requested to be converted and, therefore, were not converted.
(ii) Each conversion of shares of Class B Common Stock
into shares of Class C Common Stock or Class D Common Stock pursuant to
Section B.2(a) of this Article FOURTH shall be effected by the surrender
of the certificates representing the shares of Class B Common Stock to be
converted at the principal office of the Corporation (or such other
office or agency of the Corporation as the Corporation may designate by
notice in writing to the holders of the Class B Common Stock) at any time
during normal business hours, together, in the case of the conversion of
Class B Common Stock into Class C Common Stock pursuant to Section
B.2(a)(i), with a written notice by the holder of such shares of Class B
Common Stock stating that such holder desires to convert such shares;
PROVIDED, that the conversion of shares of Common Stock from one class to
another pursuant to Section B.2(a) of this Article FOURTH shall be deemed
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effective as provided in Section B.2(a)(i) of this Article FOURTH whether
or not the certificates representing such shares indicate the proper
class designation.
(iii) Each holder of any shares of Class D Common Stock
which are automatically converted into shares of Class A Common Stock
pursuant to Section B.2(c) of this Article FOURTH shall tender
certificates representing such shares to the Corporation promptly for
reissuance with the post-conversion class designation; PROVIDED, that the
conversion of Class D Common Stock into Class A Common Stock pursuant to
Section B.2(c) of this Article FOURTH shall occur automatically and be
effective whether or not the certificates, representing such shares
indicate the proper class designation.
(iv) The issuance of certificates for any class of
Common Stock upon conversion from any other class of Common Stock shall
be made without charge to the holders of such Common Stock for any
documentary, stamp or similar issue or transfer tax due on the issue of
Common Stock upon the conversion. The holder, however, shall pay to the
Corporation the amount of any tax which is due (or shall establish to the
satisfaction of the Corporation the payment thereof or that no such
payment is due) if the shares are to be issued in the name other than the
name of such holder.
(v) The Corporation shall reserve and at all times
shall have reserved out of its authorized but unissued Common Stock
solely for the purpose of issuance upon the conversion of any shares of
Common Stock in accordance with this Section B.2, such number of shares
of Class A Common Stock, Class B Common Stock, Class C Common Stock and
Class D Common Stock respectively, as may be issuable upon such
conversion. All shares of Common Stock issuable upon any conversion
pursuant to this Section B.2 shall, when issued, constitute duly and
validly issued, fully paid and nonassessable shares of Common Stock. The
Corporation shall use its reasonable best effort to assure that all such
shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock of the
relevant class may be listed (except for official notice of issuance
which shall be immediately transmitted by the Corporation upon issuance).
(vi) The Corporation shall not close its books against
the transfer of Common Stock in any manner which would interfere
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with the timely conversion of any Common Stock pursuant to this Section
B.2. The Corporation shall assist and cooperate with any holder of shares
of Common Stock required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of
Common Stock hereunder (including, without limitation, making any filings
required to be made by the Corporation).
3. DIVIDENDS. Subject to the rights of the holders of
Preferred Stock or any other class or series of stock having a preference as to
dividends over the Common Stock then outstanding, the holders of Common Stock
will be entitled pursuant to receive, to the extent permitted by law, and to
share equally and ratably, share for share, to the exclusion of the holders of
any and all series of Preferred Stock, such dividends as may be declared from
time to time by the Board of Directors. No dividends shall be paid on the Class
A Common Stock, the Class B Common Stock, the Class C Common Stock or the Class
D Common Stock, whether in cash, property or shares of stock of the Corporation,
unless the same dividend shall be payable on each share of Class A Common Stock,
Class B Common Stock, Class C Common Stock and Class D Common Stock; PROVIDED
that if dividends so declared are payable in shares of Common Stock, dividends
will be declared which are payable at the same rate on all series of Common
Stock, and the dividends on the Class A Common Stock will be paid in Class A
Common Stock, the dividends on the Class B Common Stock will be paid in Class B
Common Stock, the Dividends on the Class C Common Stock will be paid in Class C
Common Stock and the Dividends on the Class D Common Stock will be paid in Class
D Common Stock.
4. OTHER POWERS, PREFERENCES AND RIGHTS.
(a) The Class A Common Stock, the Class B Common
Stock, the Class C Common Stock and the Class D Common Stock are subject to all
the powers, preferences and rights of the Preferred Stock as may be stated in
this Amended and Restated Certificate of Incorporation of the Corporation.
(b) Except as otherwise required by law or expressly
provided for in this Amended and Restated Certificate of Incorporation, the
powers, preferences and rights of the Class A Common Stock, the Class B Common
Stock, the Class C Common Stock, and the Class D Common Stock and the
qualifications, limitations or restrictions thereof, shall in all respects be
identical.
5. STOCK ADJUSTMENTS. The Corporation shall not be a party to
or effect any merger, consolidation, reorganization, reclassification or
recapitalization pursuant to which any Regulated Holder would be required to
receive, or which would result in such Regulated Holder owning or controlling
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any of the following if, and to the extent, it would constitute a violation cf
the Banking Regulations: (a) any voting securities which would cause such holder
to hold more than 4.999% (or 24.999% in the case of Windward/Merchant, L.P.
either alone or in the aggregate with Windward/Merban, L.P. and CS First Boston
Merchant Investments 1995/96, L.P.) of the outstanding shares of any Class of
voting securities, (b) any securities convertible into voting securities which
if such conversion took place would cause such holder to hold more than 4.999%
(or 24 999% in the case of Windward/Merchant, L.P. either alone or in the
aggregate with Windward/Merban, L.P. and CS First Boston Merchant Investments
1995/96, L.P.) of the outstanding shares of any Class of voting securities other
than securities which are specifically provided to be convertible only in the
event that such conversion may occur without any violation of Regulation Y or
(c) with Windward/Merchant L.P., Windward/Merban, L.P. and CS First Boston
Merchant Investments 1995/96, L.P. in the aggregate more than 24.999% of the
total outstanding shares of Common Stock. The term "Class" shall have the
meaning determined by reference to Regulation Y and all authoritative
interpretations of Regulation Y. In the event of any merger, consolidation,
reorganization, reclassification or recapitalization, effective provision shall
be made in the certificate of incorporation of the resulting or surviving
corporation or otherwise for the protection of the conversion rights of the
Class A Common Stock, Class B Common Stock, Class C Common Stock and Class D
Common Stock that shall be applicable, as nearly as reasonably may be, to any
such other shares of stock and other securities and property deliverable upon
conversion of Class A Common Stock, Class B Common Stock, Class C Common Stock
or Class D Common Stock, respectively. In case securities or property other than
Class A Common Stock, Class B Common Stock, Class C Common Stock or Class D
Common Stock shall be issuable or deliverable upon conversion as aforesaid, then
all references in this Section B.5 shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
Subject to the foregoing, the Corporation will not be a party to or effect any
merger, consolidation, reorganization, reclassification or recapitalization
which the holders of any class of Common Stock or any Regulated Holder of shares
of any class of Common Stock is treated adversely relative to the other holders
of Common Stock.
6. LIQUIDATION. In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or otherwise,
after payment shall have been made to the holders of any Preferred Stock, the
holders of Class A Common Stock, Class B Common Stock, Class C Common Stock and
Class D Common Stock shall be entitled to share ratably according to the number
of shares of Class A Common Stock, Class B Common Stock, Class C Common Stock
and Class D Common Stock held by them in the remaining assets of the Corporation
available for distribution to its stockholders.
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7. DESIGNATION OF ADDITIONAL SHARES OF CLASS A COMMON STOCK,
CLASS B COMMON STOCK, CLASS C COMMON STOCK AND CLASS D COMMON STOCK.
(a) The Board of Directors of the Corporation is
expressly authorized at any time, and from time to time, to provide for the
issuance of Class A Common Stock, Class B Common Stock, Class C Common Stock or
Class D Common Stock, at any time, and from time to time, from shares of Common
Stock not previously designated as to class as shall be stated and expressed in
the resolution or resolutions providing for the issue thereof adopted by the
Board of Directors.
(b) Each share of Common Stock is issued by the
Corporation, if reacquired by the Corporation (whether by repurchase or other
means, including conversion by the holder thereof), shall, except to the extent
prohibited by the DGCL, upon such reacquisition resume the status of authorized
and unissued shares of Common Stock, undesignated as to class and available for
designation and issuance by the Corporation in accordance with paragraph (a) of
this Section B.7.
C. POWERS, PREFERENCES AND RIGHTS OF THE SERIES A PREFERRED STOCK.
The powers, preferences and rights of the Series A Preferred Stock, and the
qualifications, limitations or restrictions thereof, are as follows:
1. RANK. The Series A Preferred Stock shall, with respect to
dividend rights and rights of liquidation, winding up and dissolution, rank (i)
on a party with the Series B Preferred Stock and (ii) senior to all other equity
securities of the Corporation, including all classes of the Corporation's Common
Stock and all subsequently issued preferred stock of the Corporation (all of
such equity securities of the Corporation to which the Series A Preferred Stock
and the Series B Preferred Stock rank senior, including, without limitation, the
Common Stock, are collectively referred to herein as the "JUNIOR SECURITIES").
2. DIVIDENDS.
(a) The holders of shares of Series A Preferred Stock
will be entitled to receive dividends at the per share rate of $700.00 per annum
per share. Such dividends shall be cumulative from the date commencing on the
day after the last Dividend Payment Date (as defined below) with respect to the
Series A Preferred Stock of French Holdings, Inc. on which dividends were paid
prior to the effective time (the "Effective Time") of the merger between French
Acquisition Corp. and French Holdings, Inc. (the "Last Dividend Payment Date"),
and shall be payable, when, as and if declared by the Board of Directors out of
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funds of the Corporation legally available therefor, in cash, at the per share
rate of $700.00 per annum, or $175 .00 per quarter for each of the quarterly
periods ending on the last day of March, June, September and December of each
year (each a "Dividend Payment Date"), and no more, payable in arrears on each
succeeding April 1, July 1, October I and January 1, respectively; PROVIDED
that: (i) if any such payment date is not a Business Day then such dividend
shall be payable on the next Business Day, and (ii) accumulated and unpaid
dividends for any prior quarterly period may be paid at any time. The term
"BUSINESS DAY" whenever used herein with reference to the Preferred Stock means
a day other than a Saturday, Sunday or day on which banking institutions in New
York or Wisconsin are authorized or required to remain closed. Such dividends
shall accrue and be cumulative from the Last Dividend Payment Date, whether or
not there are funds legally available for the payment of dividends on any
Dividend Payment Date. Each such dividend shall be paid to the holders of record
of the shares of Series A Preferred Stock as they appear on the share register
of the Corporation on such record date, not more than 60 days nor less than 10
days preceding the Dividend Payment Date, as shall be fixed by the Board of
Directors or a duly authorized committee thereof.
(b) If dividends are not paid in full, or declared in
full and sums set apart for the payment thereof, upon the shares of Series A
Preferred Stock and Series B Preferred Stock, all dividends declared upon shares
of Series A Preferred Stock and shares of Series B Preferred Stock shall be paid
or declared pro rata so that in all cases the amount of dividends paid or
declared per share on the Series A Preferred Stock and the Series B Preferred
Stock shall bear to each other the same ratio that unpaid accumulated dividends
per share, including dividends accrued or in arrears, if any, on the shares of
Series A Preferred Stock and the shares of Series B Preferred Stock bear to each
other. Unless and until full cumulative dividends on the shares of Series A
Preferred Stock in respect of all past quarterly dividend periods have been
paid, and the full amount of dividends on the shares of Series A Preferred Stock
in respect of the then current quarterly dividend period shall have been or are
contemporaneously declared in full and sums set aside for the payment thereof,
(i) no dividends shall be paid or declared and set aside for payment or other
distribution made upon any of the Junior Securities, other than in shares of, or
warrants or rights to acquire, Junior Securities; and (ii) no shares of Junior
Securities or Series B Preferred Stock shall be redeemed, retired, purchased or
otherwise acquired for any consideration (or any payment made to or available
for a sinking fund for the redemption of any such shares) by the Corporation or
any subsidiary of the Corporation (except by conversion into or exchange for
shares of Junior Securities or pursuant to a Management Repurchase Note
delivered in accordance with the provisions of the Stockholders Agreement or an
Outside Director/Employee Stockholder Agreement). Holders of shares of Series A
Preferred Stock shall not be entitled to
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any dividends, whether payable in cash, property or shares of capital stock, in
excess of full accrued and cumulative dividends as herein provided. No interest
or sum of Money in lieu of interest shall be payable in respect of any dividend
payment or payments on the shares of Series A Preferred Stock, that may be in
arrears.
The terms "accrued dividends," "dividends accrued" and "dividends
arrears," whenever used herein with reference to shares of Preferred Stock shall
be deemed to mean an amount which shall be equal to dividends thereon at the
annual dividend rates per share for the respective series from the date or dates
on which such dividends commence to accrue to the end of the then current
quarterly dividend period for such Preferred Stock (or, in the case of
redemption, to the date of redemption), whether or not earned or declared and
whether or not assets for the Corporation are legally available therefor, less
the amount of all such dividends paid, or declared in full and sums set aside
for the payment thereof, upon such shares of Preferred Stock.
(c) Dividends payable on the shares of Series A
Preferred Stock for any period less than a full quarterly dividend period shall
be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in the period for which payable.
3. OPTIONAL REDEMPTION AND MANDATORY REDEMPTION.
(a) The shares of Series A Preferred Stock are
redeemable in cash at the option of the Corporation by resolution of its Board
of Directors, in whole or from time to time in part:
(i) at any time upon giving notice as provided in
Section C.3(e) of this Article FOURTH, provided that the holders of a
majority of the outstanding shares of Series A Preferred Stock consent to
such redemption, at a redemption price equal to the sum of (A) $10,000
for each share of Series A Preferred Stock called for redemption plus (B)
all dividends accrued and unpaid on the shares of Series A Preferred
Stock up to the date fixed for redemption, (such price, plus such
dividends accrued and unpaid, shall be hereinafter referred to as the
"SERIES A PREFERRED REDEMPTION PRICE"); or
(ii) at any time on or after April 2, 2001 at the
Series A Preferred Redemption Price, upon giving notice as provided in
Section C.3(e) of this Article FOURTH.
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(b) To the extent any shares of Series A Preferred
Stock have not been redeemed pursuant to Section C.3(a) of this Article FOURTH
by April 2,2006 (the "SERIES A PREFERRED MANDATORY REDEMPTION DATE"), the
Corporation shall, on the Series A Preferred Mandatory Redemption Date, redeem
all shares of Series A Preferred Stock then outstanding at the Series A
Preferred Redemption Price. The Series A Preferred Redemption Price shall be
payable in cash.
(c) If, for any reason, the Corporation shall fail to
discharge its mandatory redemption obligations pursuant to Section C.3(b) of
this Article FOURTH, such purchase obligations shall be discharged as soon as
the Corporation is able to discharge such obligations. If and so long as any
mandatory redemption obligations with respect to the shares of the Series A
Preferred Stock shall not be fully discharged, the Corporation shall not,
directly or indirectly:
(i) declare or pay any dividend on any Junior
Securities or make any payment on account of, or set apart money for, a
sinking or other analogous fund for the purchase, redemption or other
retirement of, or purchase, redeem or retire, any Junior Securities, make
any distribution in respect of Junior Securities, either directly or
indirectly and whether in cash or property or in obligations or shares of
the Corporation (other than in Junior Securities); or
(ii) purchase or redeem (except in either case for
consideration payable in Junior Securities) any Junior Securities then
outstanding.
Dividends shall continue to accrue on a cumulative basis with
respect to any shares of Series A Preferred Stock subject to a mandatory
redemption obligation that has not been discharged by the Corporation pursuant
to Section C.3(b) of this Article FOURTH.
(d) If less than all of the outstanding shares of
Series A Preferred Stock are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors, and the shares to be redeemed
shall be determined pro rata or by lot or in such other manner and subject to
such regulations as the Board of Directors in its sole discretion shall
prescribe.
(e) At least 10 days but not more than 60 days prior to
the date fixed for any optional redemption of shares of Series A Preferred Stock
pursuant to Section C.3(a) of this Article FOURTH or the Series A Preferred
Mandatory Redemption Date (such date for optional redemption together with the
Series A Preferred Mandatory Redemption Date shall be hereinafter referred to as
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the "SERIES A PREFERRED REDEMPTION DATE"), a written notice shall be mailed to
each holder of record of shares of Series A Preferred Stock to be redeemed in a
postage prepaid envelope addressed to such holder at such holder's post office
address as shown on the records of the Corporation, notifying such holder of the
Series A Preferred Mandatory Redemption Date or the election of the Corporation
to redeem such shares, stating the date fixed for redemption thereof, specifying
the Series A Preferred Redemption Price and the then effective conversion rate,
and calling upon such holder to surrender to the Corporation on the Series A
Preferred Redemption Date at the place designated in such notice and the
certificate or certificates representing the number of shares specified in such
notice of redemption. On or after the Series A Preferred Redemption Date, each
holder of shares of Series A Preferred Stock to be redeemed shall surrender the
certificate or certificates for such shares to the Corporation at the place
designated in such notice, and against such surrender the Series A Preferred
Redemption Price of such shares shall be paid to or on the order of the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled. In case less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(f) If a notice of redemption has been given pursuant
to Section C.3(e) of this Article FOURTH and any holder of shares of Series A
Preferred Stock shall, prior to the close of business on the last Business Day
preceding the Series A Preferred Redemption Date, give written notice to the
Corporation pursuant to Section C.6 of this Article FOURTH of the conversion of
any or all of the shares to be redeemed held by such holder (accompanied by a
certificate or certificates for such shares, a duly executed notice of election
to convert and instruments of transfer and such taxes, stamps, funds or other
evidence of payment, as required by Section C.6 of this Article FOURTH), then
such redemption shall not become effective as to such shares to be converted,
such conversion shall become effective as provided in Section C.6 of this
Article FOURTH and any monies deposited or set aside by the Corporation for the
redemption of such shares of converted Series A Preferred Stock shall revert to
the general funds of the Corporation.
(g) From and after the Series A Preferred Redemption
Date (unless default shall be made by the Corporation in payment in full of the
Series A Preferred Redemption Price), all dividends on the shares of Series A
Preferred Stock designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the Corporation, except
the right to receive the Series A Preferred Redemption Price of such shares
(including all accrued and unpaid dividends up to the Series A Preferred
Redemption Date) upon the surrender of certificates representing the same, shall
cease and terminate
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and such shares shall not thereafter be transferred (except with the consent of
the Corporation) on the books of the Corporation and shall not be deemed to be
outstanding for any purpose whatsoever.
(h) Shares of Series A Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section C.3 or
surrendered to the Corporation upon conversion shall thereupon be retired and
may not be reissued.
4. VOTING RIGHTS. Except as otherwise provided in Section C.7
of this Article FOURTH or as required under the DGCL, the holders of shares of
Series A Preferred Stock shall not be entitled to vote on any matter submitted
to a vote of stockholders of the Corporation. Any vote expressly required by
Section C.7 of this Article FOURTH or by the DGCL may be given in person or by
proxy, either in writing without a meeting or by vote at any meeting called for
such purpose.
5. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or otherwise,
the holders of shares of Series A Preferred Stock shall be entitled to receive,
out of the assets of the Corporation available for distribution to its
stockholders, in cash, the amount of $10,000 for each share of Series A
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
each such share up to the date fixed for distribution, before any distribution
shall be made to the holders of shares of Junior Securities. If upon any
liquidation, dissolution or winding up of the Corporation, the assets
distributable among the holders of shares of Series A Preferred Stock and the
shares of Series B Preferred Stock are insufficient to permit the payment in
full to the holders of all such shares of all preferential amounts payable to
such holders, then the entire assets of the Corporation so distributable shall
be distributed ratably among the holders of the shares of Series A Preferred
Stock and the shares of Series B Preferred Stock in proportion to the respective
amounts that would be payable per share if such assets were sufficient to permit
payment in full.
(b) The holder of any shares of Series A Preferred
Stock shall not be entitled to receive any payment owed for such shares under
this Section C.5 until such holder shall cause to be delivered to the
Corporation (i) the certificate(s) such shares and (ii) transfer instrument(s)
satisfactory to the Corporation and sufficient to surrender such shares to the
Corporation free of any adverse interest.
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(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of Series A Preferred Stock such
holders shall not be entitled to any other or further participation in the
distribution of the assets of the Corporation.
6. CONVERSION.
(a) OPTIONAL CONVERSION. Each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share into: (i) 2.26372 fully paid
and nonassessable shares of Class A Common Stock, or, if such share of Series A
Preferred Stock is held by a Regulated Holder, 2.26372 fully paid and
nonassessable shares of Class 13 Common Stock, as the case may be (in each case,
the "Common Stock Conversion Shares"), and (ii) one fully paid and nonassessable
share of Series B Preferred Stock (the "Series B Conversion Shares"). However,
the Common Stock Conversion Shares and the Series B Conversion Shares shall be
subject to adjustment from time to time in accordance with Section C.6(d) of
this Article FOURTH.
(b) AUTOMATIC CONVERSION. Each share of Series A
Preferred Stock shall automatically convert into shares of fully paid and
nonassessable Class A Common Stock or Class B Common Stock, as applicable,
and Series B Preferred Stock, without any further action required on the part
of the holder thereof, either:
(i) immediately prior to the closing of the
Corporation's initial underwritten public offering pursuant to a
Registration Statement filed with and declared effective by the
Securities Exchange Commission under the Securities Act of 1933 (the
"Securities Act"), which is an IPO Event; or
(ii) any consolidation or merger to which the
Corporation is a party other than a merger in which the Corporation is
the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or Series A Preferred Stock; or(
(iii) any sale or conveyance of all or substantially
all of the property or business of the Corporation as an entirety
(including, in the case of any of the foregoing events, any statutory
exchange of securities with another corporation.
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The number of shares of Class A Common Stock or Class B Common
Stock, as applicable, issuable upon such automatic conversion of a share of
Series A Preferred Stock shall be equal to the Common Stock Conversion Shares as
in effect at such time and the number of shares of Series B Preferred Stock
shall be equal to the Series B Conversion Shares as in effect at such time.
(c) MECHANICS OF CONVERSION. Before any holder of
Series A Preferred Stock shall be entitled to convert the same into shares of
Class A Common Stock or Class B Common Stock, as applicable, and Series B
Preferred Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for Series A Preferred Stock and shall give written notice by mail,
postage prepaid, to the Corporation at its principal corporate off ice of the
election to convert the same, and shall state therein the name or names in which
the certificate or certificates for shares of Class A Common Stock or Class B
Common Stock, as applicable, and Series B Preferred Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series A Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificate for the number of shares of Class A
Common Stock or Class B Common Stock, as the case may be, and Series B Preferred
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Class A
Common Stock or Class B Common Stock, as applicable, and Series B Preferred
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Class A Common Stock or Class B
Common Stock, as applicable, and Series B Preferred Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act, the conversion may, at the option of
any holder tendering Series A Preferred Stock for conversion, be conditioned
upon the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person converting such Series A Preferred Stock
shall not be deemed to have converted such Series A Preferred Stock until
immediately prior to the closing of such sale of securities and the person(s)
entitled to receive the Class A Common Stock or Class B Common Stock, as
applicable, and Series B Preferred Stock issuable upon such conversion of Series
A Preferred Stock shall not be deemed to be record holders of such Class A
Common Stock or Class B Common Stock and Series B Preferred Stock until
immediately prior to the closing of such sale of securities. No payment or
adjustment shall be made on conversion for any dividends payable on the Class A
Common Stock or Class B Common Stock, as the case may be, delivered on
conversion. Effective as of any conversion, the Corporation shall be
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excused from paying any dividends on the shares converted, except for any
dividends accrued and unpaid through the day of conversion.
(d) ANTIDILUTION PROVISIONS. The Common Stock
Conversion Shares and the Series B Conversion Shares shall be subject to
adjustment from time to time as follows:
(i) STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK
SPLITS; RECLASSIFICATIONS. In case the Corporation shall (A) pay a
dividend or make any other distribution with respect to its Class A
Common Stock or Class B Common Stock in shares of its capital stock, (B)
subdivide its outstanding Class A Common Stock or Class B Common Stock,
(C) combine its outstanding Class A Common Stock or Class B Common Stock
into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Class A Common Stock or Class B Common
Stock (including any such reclassification in connection with a merger
consolidation or other business combination in which the Corporation is
the continuing corporation) then the Common Stock Conversion Shares
issuable upon conversion of a share of Series A Preferred Stock
immediately prior to the record date for such dividend or distribution or
the effective date of such subdivision or combination shall be adjusted
so that the holder of a share of Series A Preferred Stock shall
thereafter be entitled to receive the kind and number of shares of Class
A Common Stock or Class B Common Stock, as applicable, or other
securities of the Corporation that shareholder would have owned or have
been entitled to receive after the happening of any of the events
described above, had such share of Series A Preferred Stock been
converted immediately prior to the happening of such event or any record
date with respect thereto. An adjustment made pursuant to this Section
C.6 (d)(i) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(ii) RIGHTS; OPTIONS; WARRANTS.
(A) In case the Corporation shall issue rights,
options, warrants or convertible or exchangeable securities (other than a
convertible or exchangeable security subject to Section C.6(d)(i) of this
Article FOURTH) to all holders of its Common Stock, entitling them to
subscribe for or purchase shares of Common Stock at a price per share of
Common Stock that is lower (at the close of business on the Business Day
immediately prior to the record date for such issuance) than the Current
Market Value per share of Class A Common Stock or
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Class B Common Stock, as applicable, then the Common Stock Conversion
Shares thereafter issuable upon the conversion of a share of Series A
Preferred Stock shall be determined by multiplying the Common Stock
Conversion Shares theretofore issuable upon the conversion of a share of
Series A Preferred Stock by a fraction, of which the numerator shall be
the number of shares of Common Stock Outstanding on a Fully Diluted Basis
on the date of issuance of such rights, options, warrants or convertible
or exchangeable securities, plus the number of additional shares of
Common Stock to be issued upon exercise, conversion or exchange of such
rights, options, warrants or convertible or exchangeable securities and
of which the denominator shall be the number of shares of Common Stock
Outstanding on a Fully Diluted Basis on the date of issuance of such
rights, options, warrants or convertible or exchangeable securities, plus
the number of shares of Common Stock which the aggregate consideration to
be received by the Corporation in connection with such issuance would
purchase at the then Current Market Value per share of Class A Common
Stock or Class B Common Stock, as applicable.
(B) For purposes of this Section C.6(d)(ii), the
consideration received by the Corporation in connection with the issuance
of rights, options, warrants or convertible or exchangeable securities
shall be deemed to be the consideration received by the Corporation for
such rights, options, warrants or convertible or exchangeable securities,
plus the consideration or premiums stated in such rights, options,
warrants or convertible or exchangeable securities to be paid for the
shares of Common Stock covered thereby.
(C) Any adjustment pursuant to this Section C.6(d)(ii)
shall be made whenever any such rights, options, warrants or convertible
or exchangeable securities are issued, but shall also become effective
retroactively in respect of conversions made between the record dates for
the determination of stockholders entitled to receive such rights,
options, warrants or convertible or exchangeable securities and the date
such rights, options, warrants or convertible or exchangeable securities
are issued.
(D) For purposes of adjustments under this Section
C.6(d)(ii), if the Corporation shall issue rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe
for or purchase shares of Common Stock for a consideration consisting, in
whole or in part, of property other than cash or its equivalent, then in
determining the "price per share of Class A Common Stock or Class B
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Common Stock" and the "consideration" receivable by or payable to the
Corporation for purposes of the first sentence of this Section
C.6(d)(ii), the Board of Directors of the Corporation shall determine, in
good faith, the fair value of such property. In case the Corporation
shall issue rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock, together with one or more other securities as part of a
unit at a price per unit, then in determining the "price per share of
Class A Common Stock or Class B Common Stock", as applicable, and the
"consideration" receivable by or payable to the Corporation for purposes
of the first sentence of this Section C.6(d)(ii), the Board of Directors
of the Corporation shall determine, in good faith., the fair value of the
right, options, warrants or convertible or exchangeable securities then
being sold as pan of such unit.
(iii) ISSUANCE OF COMMON STOCK AT LOWER VALUES.
(A) In case the Corporation shall, in a transaction in
which Section C.6(d)(ii) of this Article FOURTH is inapplicable, issue or
sell shares of Common Stock or rights, options (other than options issued
pursuant to the J. L. French Automotive Castings, Inc. 1998 Performance
Stock Option Plan, the J. L. French Automotive Castings, Inc. 1998 Stock
Option Plan and any other option plan adopted by the Board of Directors
after the date hereof for employees), warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock at a price per share of Common Stock that is lower
than the then Current Market Value per share of the Class A Common Stock
or Class B Common Stock, as the case may be, in effect immediately prior
to such sale or issuance, then the Common Stock Conversion Shares
thereafter issuable upon the conversion of a share of Series A Preferred
Stock shall be determined by multiplying the Common Stock Conversion
Shares theretofore issuable upon the conversion of a share of Series A
Preferred Stock by a fraction, of which the numerator shall be the number
of shares of Common Stock Outstanding on a Fully Diluted Basis on the
date of issuance of such shares of Common Stock or rights, options,
warrants or convertible or exchangeable securities, plus the number of
additional shares of Common Stock offered for subscription or purchase or
to be issued upon exercise, conversion or exchange of such rights,
options, warrants or convertible or exchangeable securities and of which
the denominator shall be the number of shares of Common Stock Outstanding
on a Fully Diluted Basis on the date of issuance of such shares of Common
Stock or rights, options, warrants or convertible or
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exchangeable securities, plus the number of shares of Common Stock which
the aggregate consideration to be received by the Corporation in
connection with such issuance would purchase at the then Current Market
Value per share of Class A Common Stock or Class B Common Stock, as
applicable.
(B) For purposes of such adjustments under this Section
C.6(d)(ii), the shares of Common Stock which the holder of any such
rights, options, warrant or convertible or exchangeable securities shall
be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of the sale and issuance of the rights,
warrants or convertible or exchangeable securities and the consideration
received by the Corporation therefor shall be deemed to be the
consideration received by the Corporation for such rights, options,
warrants or convertible or exchangeable securities, plus the
consideration or premiums stated in such rights, options, warrants or
convertible or exchangeable securities to be paid for the shares of
Common Stock covered thereby.
(C) In case the Corporation shall issue and sell shares
of Common Stock or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock for a consideration consisting, in whole or in
part, of property other than cash or its equivalent, then in determining
the "price per share of Class A Common Stock or Class B Common Stock", as
applicable, and the "consideration" receivable by or payable to the
Corporation for purposes of the first sentence, of this Section
C.6(d)(iii), the Board of Directors of the Corporation shall determine,
in good faith, the fair value of such property. In case the Corporation
shall issue and sell rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock, together with one or more other securities as
part of a unit at a price per unit, then in determining the "price per
share of Class A Common Stock or Class B Common Stock", as applicable,
and the "consideration" receivable by or payable to the Corporation for
purposes of the first sentence of this Section C.6(d)(iii), the Board of
Directors of the Corporation shall determine, in good faith, the fair
value of the rights, options, warrants or convertible or exchangeable
securities then being sold as part of such unit.
(iv) DISTRIBUTIONS OF CASH, DEBT ASSETS, SUBSCRIPTION
RIGHTS OR CONVERTIBLE SECURITIES.
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(A) In case the Corporation shall fix a record date for
the making of a distribution to all holders of shares of its Common Stock
of cash, evidences of indebtedness of the Corporation, assets or
securities (excluding those referred to in Section C.6(d)(ii) of this
Article FOURTH and excluding cash dividends which are not Extraordinary
Dividends) (any such cash, evidences of indebtedness, assets or
securities, the "Assets or Securities"), then, at the election of the
Corporation, either (I) the Common Stock Conversion Shares theretofore
issuable after such record date upon conversion of a share of Series A
Preferred Stock shall be adjusted by multiplying the Common Stock
Conversion Shares theretofore issuable upon the conversion of a share of
Series A Preferred Stock immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Market Value
per share of Class A Common Stock or Class B Common Stock, as applicable,
at the close of business on the Business Day immediately prior to the
record date for such distribution and the denominator of which shall be
the then Current Market Value per share of Class A Common Stock or Class
B Common Stock, as applicable, at the close of business on the Business
Day immediately prior to the record date for such distribution less an
amount equal to the then fair value (as determined by the Board of
Directors of the Corporation acting in good faith) of the Assets or
Securities applicable to one share of Class A Common Stock or Class B
Common Stock, as applicable, or (II) adequate provision shall be made so
that in the event of a conversion of a share of Series A Preferred Stock
the Holder of the Series A Preferred Stock shall have the right to
receive, in addition to Common Stock Conversion Shares, at the election
of the Corporation, either (A) the Assets or Securities to which such
holder would have been entitled as a holder of Class A Common Stock or
Class B Common Stock, as applicable, if such holder had converted such
holder's share of Series A Preferred Stock immediately prior to the
record date for such distribution or (B) the cash equivalent of such
Assets or Securities.
(B) If the Corporation elects to adjust the number of
Common Stock Conversion Shares issuable upon the conversion of a share of
Series A Preferred Stock pursuant to Section C.6(d)(iv)(A)(I) of this
Article FOURTH, such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution; PROVIDED that the
Corporation shall deliver to any holder that converts a share of Series A
Preferred Stock after any such record date, but prior to the related
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distribution, a due bill or other appropriate instrument evidencing such
holder's right to receive such distribution upon its occurrence.
(C) Notwithstanding the foregoing, the Corporation
shall not elect the adjustment provided for in Section C.6(d)(iv)(A)(I)
of this Article FOURTH if the then fair value (as determined by the Board
of Directors of the Corporation acting in good faith) of the Assets or
Securities applicable to one share of Common Stock is equal to or greater
than the then Current Market Value per share of Class A Common Stock or
Class B Common Stock, as applicable, at the close of business on the
Business Day immediately prior to the record date for such distribution.
(v) EXPIRATION OF RIGHTS, OPTIONS AND CONVERSION
PRIVILEGES. Upon the expiration of any rights, options, warrants or
conversion or exchange privileges that have previously resulted in an
adjustment hereunder, if any thereof shall not have been exercised, the
Common Stock Conversion Shares issuable upon the conversion of a share of
Series A Preferred Stock shall, upon such expiration, be readjusted and
shall thereafter, upon any future conversion, be such as they would have
been had they been originally adjusted (or had the original adjustment
not been required, as the case maybe) as if (A) the only shares of Common
Stock so issued were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such rights, options, warrants or conversion
or exchange rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Corporation
upon such exercise plus the consideration, if any, actually received by
the Corporation for issuance, sale or grant of all such rights, options,
warrants or conversion or exchange rights whether or not exercised;
PROVIDED that no such readjustment shall have the effect of decreasing
the Common Stock Conversion Shares by a number, in excess of the number
of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion or exchange rights.
(vi) NO ADJUSTMENT FOR ORDINARY DIVIDENDS. Except as
otherwise provided in this Section C.6(d), no adjustment in respect of
any ordinary dividends declared and paid on Common Stock, or on any other
capital stock of the Corporation, shall be made to the Common Stock
Conversion Shares.
(vii) DE MINIMIS ADJUSTMENTS. Except as provided in
Section C.6(d)(iii) of this Article FOURTH with reference to
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adjustments required by such Section C.6(d)(iii) of this Article FOURTH,
no adjustment in the shares of Common Stock Conversion Shares issuable
hereunder shall be required unless cumulative adjustments would require
an increase or decrease of at least one percent (1%) in the number of
shares of Class A Common Stock or Class B Common Stock, as applicable,
issuable upon the conversion of a share of Series A Preferred Stock;
PROVIDED that any adjustments which by reason of this Section C.6(d)(vii)
are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made and
rounded to the nearest one-thousandth of a share (with calculations of
five ten-thousandth and above rounded up, and calculations less than five
ten-thousandth rounded down).
(viii) OTHER ADJUSTMENTS. In the event that at any
time, as a result of an adjustment made pursuant to this Section C.6(d),
the registered holders of the Series A Preferred Stock shall become
entitled to receive any securities of the Corporation other than shares
of Class A Common Stock or Class B Common Stock, as applicable,
thereafter the number of such other securities so receivable upon the
conversion of a share of Series A Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of
Class A Common Stock or Class B Common Stock, as applicable, contained in
this Section C.6(d).
(ix) OTHER DILUTIVE EVENTS. In case any event shall
occur as to which the other provisions of this Section C.6(d) are not
strictly applicable but the failure to make any adjustment would not
fairly protect the conversion rights of the Series A Preferred Stock in
accordance with the essential intent and principles of this Section
C.6(d), then, in each such case, the Corporation shall appoint a firm of
independent certified public accountants of recognized national standing
(which may be the regular auditors of the Corporation),which shall give
their opinion upon the adjustment, if any, on a basis consis tent with
the essential intent and principles established in this Section C.6(d),
necessary to preserve, without dilution, the conversion rights of this
Section C.6(d). Upon receipt of such opinion, the Corporation will
promptly mail a copy thereof to each record holder of Series A Preferred
Stock and shall make the adjustments described therein.
(e) NO IMPAIRMENT. Corporation will not, by amendment
of its Amended and Restated Certificate of Incorporation or through any
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reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section C.6 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of Series A Preferred Stock against impairment.
(f) FRACTIONAL SHARES, CERTIFICATES AS TO ADJUSTMENTS.
Prior to an IPO Event, fractional shares of Class A Common Stock or Class B
Common Stock, as applicable, and Series B Preferred Stock may be issued upon
conversion of shares of Series A Preferred Stock. After an IPO Event, no
fractional shares shall be issued upon conversion of shares of Series A
Preferred Stock. After an IPO Event, if one or more shares of Series A Preferred
Stock shall be presented for conversion at the same time by the same
stockholder, the number of full shares of Class A Common Stock or Class B Common
Stock, as applicable, and Series B Preferred Stock which shall be issuable upon
the conversion thereof shall be computed on the basis of the aggregate number of
shares of Class A Common Stock or Class B Common Stock, as applicable, and
Series B Preferred Stock to be issued upon conversion of the Series A Preferred
Stock so presented. If any fraction of shares of Class A Common Stock or Class B
Common Stock, as applicable, or Series B Preferred Stock would, except for the
provisions of this Section C.6(f), be issuable on the conversion of shares of
Series A Preferred Stock, the Corporation shall pay an amount in cash equal to
the Current Market Value of one share of the Class A Common Stock or Class B
Common Stock, as applicable, or one share of Series B Preferred Stock, as the
case may be, on the Business Day immediately preceding the date the share of
Series A Preferred Stock is presented for conversion multiplied by such
fraction. Upon the occurrence of each adjustment or readjustment of the Common
Stock Conversion Shares pursuant to this Section C.6, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of shares of Series A Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
A Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Common Stock Conversion Shares and Preferred Stock Conversion Shares at the time
in effect, and (iii) the number of shares of Class A Common Stock or Class B
Common Stock, as applicable, and Series B Preferred Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of shares of Series A Preferred Stock.
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(g) NOTICES OF RECORD DATE. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether or not a regular cash dividend and whether or not
out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holder
of any class or series of its stock any additional shares of stock of any
class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in
the Common Stock;
(iv) to merge or consolidate with or into any other
corporation or other entity or person, or sell, lease or convey all or
substantially all its property or business, or to liquidate, dissolve or
wind up; or
(v) any firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale of Class A Common Stock for the account of
the Corporation;
then, in connection with each such event, the Corporation shall send to the
holder of Series A Preferred Stock:
(A) at least twenty days' prior written notice of the
date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of
Common Stock shall be entitled thereto) or for determining rights to vote
in respect of the matters referred to in (iii) and (iv) above; and
(B) in the case of the matters referred to in (iii),
(iv) and (v) above, at least twenty days' prior written notice of the
date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon the
occurrence of such event).
Each written notice shall be delivered personally or given by
United States mail, return receipt requested, postage prepaid, addressed to the
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holders of Series A Preferred Stock at the address for each such holder as shown
on the books of the Corporation.
(h) TRANSFER TAXES. If a holder converts shares of
Series A Preferred Stock, the Corporation shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of Class A Common Stock or Class
B Common Stock, as applicable, and Series B Preferred Stock upon the conversion.
The holder, however, shall pay to the Corporation the amount of any tax which is
due (or shall establish to the satisfaction of the Corporation the payment
thereof or that no such payment is due) if the shares are to be issued in a name
other than the name of such holder.
(i) RESERVATION OF SHARES. The Corporation shall
reserve and shall at all times have reserved out of its authorized but unissued
shares of Class A Common Stock, Class D Common Stock and Series B Preferred
Stock, solely for the purpose of effecting the conversion of Series A Preferred
Stock, enough shares of Class A Common Stock, Class B Common Stock and Series B
Preferred Stock to permit the conversion of the then outstanding shares of
Series A Preferred Stock. All shares of Class A Common Stock or Class B Common
Stock, as applicable, and Series B Preferred Stock which may be issued upon
conversion of shares of Series A Preferred Stock shall be validly issued, fully
paid and nonassessable. The Corporation shall from time to time, in accordance
with the laws of the State of Delaware, increase the authorized number of shares
of Class A Common Stock, Class B Common Stock or Series B Preferred Stock if at
any time the number of shares of Class A Common Stock, Class B Common Stock or
Series B Preferred Stock, as the case may be, authorized but not outstanding
shall not be sufficient to permit conversion of all then-outstanding shares of
Series A Preferred Stock. In order that the Corporation may issue shares of
Class A Common Stock or Class B Common Stock, as applicable, and Series B
Preferred Stock upon conversion of shares of Series A Preferred Stock, the
Corporation shall use its reasonable best effort to assure that all such shares
of Class A Common Stock, Class B Common Stock and Series B Preferred Stock may
be so issued without violation of any applicable law or governmental regulations
or any requirements of any domestic securities exchange upon which shares of
Common Stock or Preferred Stock of the relevant series may be listed (except for
official notice of issuance which shall be immediately transmitted by the
corporation upon issuance).
(j) In the event that as a result of an adjustment made
pursuant to Section C.6(c)(viii) of this Article FOURTH, the holder of any
shares of Series A Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of capital stock of the Corporation other
than shares of Class A Common Stock or Class B Common Stock, thereafter the
number of
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such other shares so receivable upon conversion of any shares of Series A
Preferred Stock shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Class A Common Stock and Class B Common Stock contained in this Section C.6.
(k) In the event that there are any stock dividends,
stock splits, reverse stock splits, reclassifications or similar transactions to
the Series B Preferred Stock, the Series B Conversion Shares shall be
appropriately adjusted to reflect such stock dividend, stock split, reverse
stock split reclassification or similar transaction.
7. LIMITATIONS. In addition to any other rights provided by
applicable law, so long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote, or the
written consent as provided by law, of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting separately as a class,
(a) create, authorize or issue any class or series of
Preferred Stock or any other class of capital stock ranking either as to payment
of dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the Corporation on a parity with, or having preference or
priority over, the Series A Preferred Stock (other than the Series B Preferred
Stock), or
(b) change the powers, preferences or rights with
respect to the Series A Preferred Stock so as to affect the Series A Preferred
Stock adversely; PROVIDED, HOWEVER, any vote which would adversely affect the
amount or timing of the payment of dividends on the Series A Preferred Stock,
the amount or timing of the payment of the Series A Redemption Price, any
amounts paid pursuant to Section C.5 of this Article FOURTH, the computation of
the Series A Conversion Shares or the computation of the Series B Conversion
Shares would require the affirmative vote of the holders of all of the
outstanding shares of Series A Preferred Stock; and PROVIDED, FURTHER, (except
as otherwise required by applicable law) nothing herein contained shall require
such a vote or consent in connection with (i) any increase in the total number
of authorized shares of Common Stock, or (ii) the authorization or increase of
any class or series of shares ranking, as to dividends and in liquidation,
dissolution or winding up of the affairs of the Corporation, junior to the
Series A Preferred Stock; PROVIDED that no such vote or written consent of the
holders of the shares of Series A Preferred Stock shall be required if, at or
prior to the time when the issuance of any such shares ranking on
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a parity with, or having preference or priority over, the Series A Preferred
Stock is to be made or any such change is to take effect, as the case may be,
provision is made for the redemption of all the then outstanding shares of
Series A Preferred Stock.
8. DIVIDEND RECEIVED DEDUCTION. For federal income tax
purposes, the Corporation shall report distributions on the Series A Preferred
Stock as dividends, to the extent of the Corporation's current and accumulated
earnings and profits (as determined for federal income tax purposes). In
addition, the Corporation covenants not to take any action voluntarily which
could reasonably be expected to cause dividends on the Series A Preferred Stock
to fail to be eligible for the dividend received deduction pursuant to Section
243 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code").
9. CERTAIN DEFINITIONS. The following terms shall have the
meanings ascribed to them below:
"BUSINESS DAY" means any day other than a Saturday or a Sunday or a
day on which commercial banking institutions in New York or Wisconsin are
authorized or required by law to remain closed. Any reference to "days" (unless
Business Days are specified) shall mean calendar days.
"CURRENT MARKET VALUE" means on any date specified herein, the
amount per share of the Class A Common Stock or Class B Common Stock, as
applicable, equal to (a) the last sale price of such Class A Common Stock or
Class B Common Stock, regular way, on such date or, if no such sale takes place
on such date, the average of the closing bid and asked prices thereof on such
date, in each case as officially reported on the principal national securities
exchange on which such Class A Common Stock or Class B Common Stock, as
applicable, is then listed or admitted to trading or (b) if such Class A Common
Stock or Class B Common Stock, as applicable, is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security by the NASD, the last trading price of the Common Stock
on such date, or (c) if there shall have been no trading on such date or if the
Class A Common Stock or B Common Stock, as applicable, is not so designated, the
average of the closing bid and asked price of the Class A Common Stock or Class
B Common Stock as applicable, on such date as shown by the NASD automated
quotation system, or (d) if such Class A Common Stock or Class B Common Stock,
as applicable, is not then listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the Fair Market Value (as
defined in the Stockholders Agreement). Any determination made in good faith by
the Corporation's Board of Directors as to the Current Market Value of the Class
A Common Stock or Class E Common Stock shall be binding on the Corporation and
all Holders.
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"OUTSIDE DIRECTOR/EMPLOYEE STOCKHOLDER AGREEMENT" has the meaning
specified in the Stockholders Agreement.
"EXTRAORDINARY DIVIDEND" means any dividend or other distribution
of cash or other property (other than Common Stock) made with respect to Common
Stock which the Board of Directors declare generally to be other than an
ordinary dividend.
"IPO EVENT" has the meaning specified in the Stockholders
Agreement.
"MANAGEMENT REPURCHASE NOTE" has the meaning specified in the
Stockholders Agreement.
"NASD" means The National Association of Securities Dealers.
"OUTSTANDING ON A FULLY DILUTED BASIS" means an amount equal to the
total outstanding number of shares of Common Stock assuming the conversion or
exchange of all outstanding shares of securities convertible or exchangeable
into Common Stock of the Corporation and the exercise of all warrants, options
and other rights (including, without limitation, employee stock options (other
than options issued pursuant to the J. L. French Automotive Castings, Inc. 1998
Performance Stock Option Plan)) to purchase shares of Common Stock of the
Corporation.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated
Stockholders Agreement, dated as of March 16, 1998, among the Corporation,
Windward Capital Associates, LP. ("Windward"), Windward/Park WACI, L.L.C.,
Windward/Park JLF LLC, Windward/Merchant, L.P., Windward/Merban, L.P.,
Windward/Northwest, L.P, Windward/Badger WACI, L.L.C., Windward/Badger JLF LLC,
CS First Boston Merchant Investments 1995/96, L.P., Charles M. WaIdon and such
other persons or entities who or which become parties to such Stockholders
Agreement pursuant to the terms thereof, as such agreement may be amended,
supplemented or otherwise modified from time to time after the date hereof.
"WINDWARD GROUP" has the meaning specified in the Stockholders
Agreement.
D. POWERS, PREFERENCES AND RIGHTS OF THE SERIES B PREFERRED STOCK.
No shares of Series B Preferred Stock shall be issued except pursuant to the
conversion of the Series A Preferred Stock. The powers, preferences and rights
of the Series B Preferred Stock, and the qualifications, limitations, or
restrictions thereof, are as follows:
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1. RANK. The Series B Preferred Stock shall, with respect to
dividend rights and rights of liquidation, winding up and dissolution, rank (i)
on a parity with the Series A Preferred Stock and (ii) senior to any of the
Junior Securities.
2. DIVIDENDS.
(a) The holders of shares of Series B Preferred Stock
will be entitled to receive, when, as and if declared by the Board of Directors
out of funds of the Corporation legally available therefor, cumulative cash
dividends at the per share rate of $700 per annum, or $175 per quarter for each
of the quarterly periods ending on the last day of March, June, September and
December of each year, and no more, payable in arrears on each succeeding April
1, July 1, October 1 and January 1, respectively, commencing on the first
dividend payment date after the date of original issue; PROVIDED that: (i) if
any such payment date is not a Business Day then such dividend shall be payable
on the next Business Day, and (ii) accumulated and unpaid dividends for any
prior quarterly period may be paid at any time. Such dividends shall accrue and
be cumulative from the date of original issue of each share of Series B
Preferred Stock, whether or not there are funds legally available for the
payment of dividends on any payment date. Each such dividend shall be paid to
the holders of record of the shares of Series B Preferred Stock as they appear
on the share register of the Corporation on such record date, not more than 60
days nor less than 10 days preceding the dividend payment date, as shall be
fixed by the Board of Directors or a duly authorized committee thereof.
(b) If dividends are not paid in full, or declared in
full and sums set apart for the payment thereof, upon the shares of Series B
Preferred Stock and Series A Preferred Stock, all dividends declared upon shares
of Series B Preferred Stock and shares of Series A Preferred Stock shall be paid
or declared pro rata so that in all cases the amount of dividends paid or
declared per share on the Series B Preferred Stock and the Series A Preferred
Stock shall bear to each other the same ratio that unpaid accumulated dividends
per share, including dividends, accrued or in arrears, if any, on the shares of
Series B Preferred Stock and the shares of Series A Preferred Stock bear to each
other. Unless and until full cumulative dividends on the shares of Series B
Preferred Stock in respect of all past quarterly dividend periods have been
paid, and the full amount of dividends on the shares of Series B Preferred Stock
in respect of the then current quarterly dividend period shall have been or are
contemporaneously declared in full and sums set aside for the payment thereof,
(i) no dividends shall be paid or declared and set aside for payment or other
distribution made upon any of the Junior Securities, other than in shares of, or
warrants or rights to acquire, Junior
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Securities; and (ii) no shares of Junior Securities or shares of Series A
Preferred Stock shall be redeemed, retired, purchased or otherwise acquired for
any consideration (or any payment made to or available for a sinking fund for
the redemption of any such shares) by the Corporation or any subsidiary of the
Corporation (except by conversion into or exchange for shares of Junior
Securities or pursuant to a Management Repurchase Note delivered in accordance
with the provisions of the Stockholders Agreement or an Outside
Director/Employee Stockholder Agreement). Holders of shares of Series B
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or shares of capital stock, in excess of full accrued and cumulative
dividends as herein provided. No interest or sum of money in lieu of interest
shall be payable in respect of any dividend payment or payments on the shares of
series B Preferred Stock that may be in arrears.
(c) Dividends payable on the shares of Series B
Preferred Stock for any period less than a full quarterly dividend period shall
be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in the period for which payable.
3. OPTIONAL REDEMPTION AND MANDATORY REDEMPTION.
(a) The shares of Series B Preferred Stock are
redeemable at the option of the Corporation by resolution of its Board of
Directors, in whole or from time to time in part, at any time upon giving notice
as provided in Section D.3(f) of this Article FOURTH at a redemption price in
cash equal to the sum of (A) $10,000 for each share of Series B Preferred Stock
called for redemption plus (B) all dividends accrued and unpaid thereon up to
the date fixed for redemption, (such price, plus such dividends accrued and
unpaid, shall be hereinafter referred to as the"Series B Preferred Redemption
Price").
(b) The shares of Series B Preferred Stock shall be
redeemed in cash at the Series B Preferred Redemption Price if any of the
following events shall occur (such events shall be hereinafter referred to as
the "MANDATORY EVENT REDEMPTION DATE"):
(i) in the event of the closing of a firm commitment,
underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of shares
of Common Stock for the account of the Corporation which is an IPO Event;
or
(ii) any consolidation or merger to which the
Corporation is a party other than a merger in which the Corporation is
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the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or Series B Preferred Stock, or
(iii) any sale or conveyance of all or substantially
all of the property or business of the Corporation as an entirety
(including, in the case of any of the foregoing events, any statutory
exchange of securities with another corporation).
(c) If a redemption pursuant to this Section D.3(a) or
(b) of this Article FOURTH has not occurred by March 31, 2006 (the "SERIES B
PREFERRED MANDATORY REDEMPTION DATE"), the Corporation shall, on the Series B
Preferred Mandatory Redemption Date, redeem all shares, of Series B Preferred
Stock outstanding at the Series B Preferred Redemption Price. The Series B
Preferred Redemption Price shall be payable in cash.
(d) If, for any reason, the Corporation shall fail to
discharge its mandatory redemption obligations pursuant to Section D.3(b) or (c)
of this Article FOURTH, such purchase obligations shall be discharged as soon as
the Corporation is able to discharge such obligations. If and so long as any
mandatory redemption obligations with respect to the shares of the Series B
Preferred Stock shall not be fully discharged, the Corporation shall not,
directly or indirectly:
(i) declare or pay any dividend on any Junior
Securities or make any payment on account of, or set apart money for, a
sinking or other analogous fund for the purchase, redemption or other
Retirement of, or purchase, redeem or retire, any Junior Securities, make
any distribution in respect of Junior Securities, either directly or
indirectly and whether in cash or property or in obligations or shares of
the Corporation (other than in Junior Securities);or
(ii) purchase or redeem (except in either case for
consideration payable in Junior Securities) any Junior Securities then
outstanding (other than pursuant to a Management Repurchase Note
delivered in accordance with the provisions of the Stockholders Agreement
or an Outside Director/Employee Stockholder Agreement).
Dividends shall continue to accrue on a cumulative basis with
respect to any shares of Series B Preferred Stock subject to a mandatory
redemption obligation that has not been discharged by the Corporation pursuant
to Section D.3(b) or (c) of this Article FOURTH.
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(e) If less than all of the outstanding shares of
Series B Preferred Stock are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors, and the shares to be redeemed
shall be determined pro rata or by lot or in such other manner and subject to
such regulations as the Board of Directors in its sole discretion shall
prescribe.
(f) At least 10 days but not more than 60 days prior to
a Mandatory Event Redemption Date, the Series B Preferred Mandatory Redemption
Date or the date fixed for any optional redemption of shares of Series B
Preferred Stock (such date for optional redemption together with the Mandatory
Event Redemption Date and the Series B Preferred Mandatory Redemption Date,
shall be hereinafter referred to as the "SERIES B PREFERRED REDEMPTION DATE"), a
written notice shall be mailed to each holder of record of shares of Series B
Preferred Stock to be redeemed and each holder of record of shares of Series A
Preferred Stock which such shares have automatically been converted into shares
of Series B Preferred Stock but which such shares have not yet been issued, in a
postage prepaid envelope addressed to such holder at such holder's post office
address as shown on the records of the Corporation, notifying such holder of the
Mandatory Event Redemption Date, the Series B Preferred Mandatory Redemption
Date or the election of the Corporation to redeem such shares, stating the date
fixed for redemption thereof, specifying the Series B Preferred Redemption
Price, and calling upon such holder to surrender to the Corporation on the
Series B Preferred Redemption Date at the place designated in such notice and
the certificate or certificates representing the number of shares specified in
such notice of redemption. On or after the Series B Preferred Redemption Date,
each holder of shares of Series B Preferred Stock to be redeemed and each holder
of record of shares of Series A Preferred Stock which such shares have
automatically been converted into shares of Series B Preferred Stock, but which
such shares have not yet been issued, shall surrender the certificate or
certificates for such shares to the Corporation at the place designated in such
notice, and against such surrender the Series B Preferred Redemption Price of
such shares shall be paid to or on the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled. In case less than all the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(g) From and after the Series B Preferred Redemption
Date (unless default shall be made by the Corporation in payment in full of the
Series B Preferred Redemption Price), all dividends on the shares of Series B
Preferred Stock designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the Corporation, except
the right to receive the Series B Preferred Redemption Price of such shares
(including all
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accrued and unpaid dividends up to the Series B Preferred Redemption Date) upon
the surrender of certificates representing the same, shall cease and terminate,
and such shares shall not thereafter be transferred (except with the consent of
the Corporation) on the books of the Corporation and shall not be deemed to be
outstanding for any purpose whatsoever.
(h) Shares of Series B Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section D.3 or
surrendered to the Corporation upon conversion shall thereupon be retired and
may not be reissued.
4. VOTING RIGHTS. Except as otherwise provided in Section D.
7 of this Article FOURTH or as required under the DGCL, the holders of shares of
Series B Preferred Stock shall not be entitled to vote on any matter submitted
to a vote of stockholders of the Corporation. Any vote expressly required by
Section D.7 of this Article FOURTH or by the DGCL may be given in person or by
proxy, either in writing without a meeting or by vote at any meeting called for
such purpose.
5. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or otherwise,
the holders of shares of Series B Preferred Stock shall be entitled to receive,
out of the assets of the Corporation available for distribution to its
stockholders, in cash, the amount of $10,000 for each share of Series B
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
each such share up to the date fixed for distribution, before any distribution
shall be made to the holders of shares of Junior Securities. If upon any
liquidation, dissolution or winding up of the Corporation, the assets
distributable among the holders of shares of Series B Preferred Stock and shares
of Series A Preferred Stock are insufficient to permit the payment in full to
the holders of all such shares of all preferential amounts payable to such
holders, then the entire assets of the Corporation so distributable shall be
distributed ratably among the holders of the shares of Series B Preferred Stock
and the shares of Series A Preferred Stock in proportion to the respective
amounts that would be payable per share if such assets were sufficient to permit
payment in full.
(b) The holder of any shares of Series B Preferred
Stock shall not be entitled to receive any payment for such shares under this
Section D.5 until such holder shall cause to be delivered to the Corporation (i)
the certificate(s) representing such shares and (ii) transfer instrument(s)
satisfactory to
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the Corporation and sufficient to surrender such shares to the Corporation free
of any adverse interest.
(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of Series B Preferred Stock, such
holders shall be entitled to no other or further participation in the
distribution of the assets of the Corporation.
6. The holders of shares of Series B Preferred Stock shall
have no right to convert any such shares into shares of Common Stock or any
other securities of the Corporation.
7. LIMITATIONS. In addition to any other rights provided by
applicable law, so long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote, or the
written consent as provided by law, of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock, voting separately as a class:
(a) create, authorize or issue any class or series of
Preferred Stock or any other class of capital stock ranking either as to payment
of dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the Corporation on a parity with, or having preference or
priority over, the Series B Preferred Stock (other than the Series A Preferred
Stock); or
(b) change the powers, preferences or rights with
respect to the Series B Preferred Stock so as to affect the Series B Preferred
Stock adversely; PROVIDED, HOWEVER, any vote which would adversely affect the
amount or timing of the payment of the dividends on the Series B Preferred
Stock, the amount or timing of the payment of the Series B Redemption Price or
any amounts paid pursuant to Section D-5 of this Article FOURTH would require
the affirmative vote of the holders of all of the outstanding shares of Series B
Preferred Stock; and PROVIDED, FURTHER, (except as otherwise required by
applicable law) nothing herein contained shall require such a vote or consent in
connection with (i) any increase in the total number of authorized shares of
Common Stock, or (ii) the authorization or increase of any class or series of
shares ranking, as to dividends and in liquidation, dissolution or winding up of
the affairs of the Corporation, junior to the Series B Preferred Stock; PROVIDED
that no such vote or written consent of the holders of the shares of Series B
Preferred Stock shall be required if, at or prior to the time when the issuance
of any such shares ranking on a parity with, or having preference or priority
over, the Series B Preferred Stock is to be made or any such change is to take
effect, as the case may be, provision is made for the redemption of all the then
outstanding shares of Series B Preferred Stock.
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8. DIVIDEND RECEIVED DEDUCTION. For federal income tax
purposes, the Corporation shall report distributions on the Series B Preferred
Stock as dividends, to the extent of the Corporation's current and accumulated
earnings and profits (as determined for federal income tax purposes). In
addition, the Corporation covenants not to take any action voluntarily which
could reasonably be expected to cause dividends on the Series B Preferred Stock
to fail to be eligible for the dividend received deduction pursuant to Section
243 of the Code.
FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation, and of
its directors and stockholders:
A. MANAGEMENT OF CORPORATION. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the DGCL, this
Amended and Restated Certificate of Incorporation, and any By-Laws adopted by
the stockholders; PROVIDED that no By-Laws hereafter adopted by the stockholders
shall invalidate any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
B. NUMBER AND ELECTION OF DIRECTORS. The number of directors of the
Corporation shall be as from time to time fixed by, or in the manner provided
in, the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
C. SPECIAL VOTING REQUIREMENTS OF BOARD OF DIRECTORS AND COMMITTEE
OF THE BOARD OF DIRECTORS. In addition to any requirement under the DGCL, except
as specifically provided for in the Stockholders Agreement the approval of the
members of the Board of Directors (or any committee of the Board of Directors)
that are Windward Nominees (as such term is defined in the Stockholders
Agreement) acting by majority vote (or by written consent) is required in order
for the Board of Directors (or any committee of the Board of Directors) to take
any action or for the Company to take any action for which Board of Directors
approval is required. Any committee of the Board of Directors shall include, as
a majority of its members, Windward Nominees, unless Windward consents
otherwise.
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D. AMENDMENT, ETC. OF THIS AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
E. AMENDMENT OF THE BY-LAWS. In furtherance and not in limitation
of the power conferred by statute, the Board of Directors is expressly
authorized to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation, subject to any specific limitation on such power contained in any
By-Laws adopted by the stockholders.
F. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken by the stockholders of the Corporation must be effected at an annual or
special meeting of the stockholders of the Corporation; PROVIDED, THAT, the
stockholders of the Corporation may take action, without prior notice (except as
provided below) and without a vote, by written consent in lieu of a meeting, to
the extent that any such written consent (a) is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote on the action were present and voted (the "Consenting Holders"
and each a "Consenting Holder"), if Windward or its Permitted Transferees (as
defined in the Stockholders Agreement) (but only if such signing party is at
such time a stockholder of the Corporation entitled to vote on such matter) is a
Consenting Holder and (b) is otherwise permitted pursuant to the provisions of
the DGCL; PROVIDED, FURTHER, that (i) notice of such action must be given by the
Consenting Holder to the other stockholders of the Corporation at least one
business day prior to the approval of any such action, and (ii) any such action
taken by stockholders by written consent as provided herein shall have the
effect as if it had been effected at an annual or special meeting.
G. MEETINGS OF STOCKHOLDERS; BOOKS OF THE CORPORATION. Meetings of
stockholders may be held within or without the State of Delaware, as the By-Laws
may provide. The books of the Corporation may be kept (subject to any provision
contained in the DGCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-Laws
of the Corporation.
SIXTH: No director shall be personally liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholder, (ii) for acts or omissions not in
good faith or which
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involve intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. Any repeal or modification of the
foregoing provision of this Article SIXTH shall not adversely affect any right
or protection of a director of the Corporation in respect of any act or omission
occurring prior to the time of such repeal or modification. The provisions of
this Article SIXTH shall not be deemed to limit or preclude indemnification of a
director by the Corporation for any liability as a director that has not been
eliminated by the provisions of this Article SIXTH.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation is executed this 16th day of March, 1998.
WINDWARD AUTOMOTIVE COMPONENTS
INTERNATIONAL INC.
By: /s/ James D. Abstrom
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<PAGE>
Exhibit 3.2
BY-LAWS
OF
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
A Delaware Corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
in the State of Delaware shall be located at 10 13 Centre Road, in the City of
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be Corporation Service Company. The
registered office and/or registered agent of the Corporation may be changed from
time to time by action of the board of directors.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETING. An annual meeting of the stock-
holders shall be held each year within one hundred eighty (180) days after the
close of the immediately preceding fiscal year of the Corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the Chief Executive Officer of the Corporation; provided, that if
the Chief Executive Officer does not act, the board of directors shall determine
the date, time and place of such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the Chief Executive Officer and shall be called by the
Chief Executive Officer upon the written request of holders of shares entitled
to cast not less than twenty percent of the votes at the meeting. Such written
request shall state the purpose or purposes of the meeting and shall be
delivered to the Chief Executive Officer. On such written request, the
<PAGE>
Chief Executive Officer shall fix a date and time for such meeting within two
days of the date requested for such meeting in such written request.
SECTION 3. PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the-State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the Chief Executive Officer, the President
or the Secretary, and if mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
Corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the Corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 6. QUORUM. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place. When a quorum is once present to commence a meeting
of stockholders, it is not broken by the subsequent withdrawal of any
stockholders or their proxies.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to
another time and place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment is
for
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more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the Corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. At each meeting of
the stockholders, and before any voting commences, all proxies filed at or
before the meeting shall be submitted to and examined by the Secretary or a
person designated by the Secretary, and no shares may be represented or voted
under a proxy that has been found to be invalid or irregular. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the state of Delaware, or the Corporation's principal place of business, or an
officer or agent of the Corporation having custody
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of the book or books in which proceedings of meetings of the stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the Corporation as required by this section,
written consents signed by the holders of a sufficient number of shares to take
such corporate action are so recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing. Any action
taken pursuant to such written consent or consents of the stockholders shall
have the same force and effect as if taken by the stockholders at a meeting
thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the board of directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of directors
which shall constitute the first board shall be seven (7). Thereafter, the
number of directors shall be established from time to time in accordance by
resolution of the board, and in accordance with the provisions of Article 2 of
that certain Investor Stockholders Agreement, dated as of April 21, 1999 (the
"Stockholders Agreement"), among certain of the stockholders of the Corporation.
The directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors, in
accordance with the provisions of Article 2 of the Stockholders Agreement.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the Corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the shares then entitled to vote at an election of directors,
in accordance with the provisions of Article 2 of the Stockholders
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Agreement. Each director so chosen shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as herein provided.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held on not less than one days
notice to each director, at such time and at such place as shall from time to
time be determined by resolution of the board. Special meetings of the board of
directors may be called, to be held at the registered office of the Company, by
holders of at least 20% of the Corporation's Common Stock on at least 10 days
notice to each director, either personally, by telex or telecopy or by reputable
overnight courier, and shall be deemed given on the date on which delivery is
made.
SECTION 7. DIRECTOR PROPOSALS. Any director may require the
Company to include in the business to be discussed at the annual or any
regular meeting, any one or more proposals submitted by such director.
SECTION 8. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors, as further specified in Section 33(g) of the
Stockholders Agreement, shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors, as further
specified in Section 3.3(g) of the Stockholders Agreement. If a quorum shall not
be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 9. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation, which
to the extent provided in such resolution or these By-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the Corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 10. EXECUTIVE COMMITTEE. The board of directors of the
Corporation may, by resolution adopted by a majority of the whole board,
designate certain directors to constitute an executive committee. The executive
committee, to the extent provided in the resolution, shall have and may exercise
all of the authority of the board of directors in the management of the
Corporation, except that the committee shall have no authority in reference to
amending the certificate of
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incorporation; adopting an agreement of merger or consolidation; recommending to
the stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets; recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution; amending the
By-laws of the Corporation; electing or removing directors or officers of the
Corporation or members of the executive committee; declaring dividends; or
amending, altering, or repealing any resolution of the board of directors which,
by its terms, provides that it shall not be amended, altered or repealed by the
executive committee. The board of directors shall have power at any time to fill
vacancies in, to change the size or membership of and to discharge the executive
committee.
SECTION 11. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
SECTION 12. COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
SECTION 13. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
SECTION 14. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
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ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation shall be elected by
the board of directors and shall consist of a Chairman, Chief Executive Officer,
a President, a Chief Financial Officer, one or more Vice-Presidents, a
Treasurers, a Secretary, one or more Assistant Secretaries, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of Chief Executive
Officer and President shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any meeting
of the board of directors. Each officer shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
SECTION 6. CHAIRMAN. The Chairman shall be the chairman of the board of
directors, and shall have the powers and perform the duties incident to that
position. He or she shall preside at all meetings of the board of directors and
stockholders and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or provided in these By-laws.
SECTION 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
subject to the power of the board of directors, be in the general and active
charge of the entire business and affairs of the corporation, and shall be its
chief policy making officer. He or she shall preside at all meetings of the
board of directors and stockholders and shall have such other powers and perform
such other duties as may be prescribed by the board of directors or provided in
these By-laws. Whenever the President is unable to serve, by reason of sickness,
absence or otherwise, the Chief
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Executive Officer shall perform all the duties and responsibilities and exercise
all the powers of the President.
SECTION 8. PRESIDENT. The President of the Corporation, subject to the
powers of the board of directors and the Chief Executive Officer, shall have
general charge of the business affairs and property of the Corporation, and
control over its officers, agents and employees, and shall see that all orders
and resolutions of the board of directors are carried into effect. The President
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed or except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the Corporation. The President shall have such other powers and perform
such other duties as may be prescribed by the Chief Executive Officer, the board
of directors or as may be provided in these By-laws.
SECTION 9. CHIEF FINANCIAL OFFICER. The Chief Financial Officer of the
Corporation shall, under the direction of the Chief Executive Officer, be
responsible for all financial and accounting matters of the Corporation. The
Chief Financial Officer shall have such other powers and perform such other
duties as may be prescribed by the Chief Executive Officer or the board of
directors or as may be provided in these By-laws.
SECTION 10. VICE-PRESIDENTS. The Vice-President, or if there shall be
more than one, the Vice-Presidents in the order determined by the board of
directors, shall, in the absence or disability of the President, act with all of
the powers and be subject to all the restrictions of the President. The
Vice-Presidents shall also perform such other duties and have such other powers
as the board of directors, the Chief Executive Officer or these By-laws may,
from time to time, prescribe.
SECTION 11. THE SECRETARY AND ASSISTANT SECRETARIES. The Secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the Chief Executive Officer's supervision, the Secretary shall give, or
cause to be given, all notices required to be given by these By-laws or by law;
shall have such powers and perform such duties as the board of directors, the
Chief Executive Officer or these By-laws may, from time to time, prescribe; and
shall have custody of the corporate seal of the Corporation. The Secretary, or
an Assistant Secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such Assistant Secretary. The board of
directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his or her signature. The
Assistant Secretary, or if there be more than one, the Assistant Secretaries in
the order determined by the board of directors, shall, in the absence or
disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
board of directors, the Chief Executive Officer or the Secretary may, from time
to time, prescribe.
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SECTION 12. THE TREASURER AND ASSISTANT TREASURER. The Treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the board of directors;
shall cause the funds of the Corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the Chief Executive Officer and the board of directors, at its
regular meeting or when the board of directors so requires, an account of the
Corporation; shall have such powers and perform such duties as the board of
directors, the Chief Executive Officer or these By-laws may, from time to time,
prescribe. If required by the board of directors, the Treasurer shall give the
Corporation a bond (which shall be rendered every six (6) years) in such sums
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the office of Treasurer
and for the restoration to the Corporation, in case of death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the possession or under the control of the
Treasurer belonging to the Corporation. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
board of directors, shall in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. The Assistant Treasurers
shall perform such other duties and have such other powers as the board of
directors, the and Chief Executive Officer or Treasurer may, from time to time,
prescribe.
SECTION 13. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
SECTION 14. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY . Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another Corporation or of a
partnership, joint venture, trust or other enterprise,
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shall be indemnified and held harmless by the Corporation to the fullest extent
which it is empowered to do so unless prohibited from doing so by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment) against
all expense, liability and loss (including attorneys' fees actually and
reasonably incurred by such person in connection with such proceeding) and such
indemnification shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in Section 2 hereof,
the Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the Corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition. The Corporation may, by action of its board of directors,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any
indemnification of a director or officer of the Corporation under Section I of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the Corporation fails to respond within sixty (60) days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
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SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another Corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section I of this Article V in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
SECTION 6. EMPLOYEES AND AGENT. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the Corporation
as employees or agents of another Corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect aby rights or obligations then
existing with respect to any state of facts or proceeding then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the Corporation" shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect
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to the resulting or surviving Corporation as he or she would have with respect
to such constituent Corporation if its separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the Chief Executive Officer, the President, the Chief Financial Officer or a
Vice-President and the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by such holder in the Corporation. If such
a certificate is countersigned (1) by a transfer agent or an assistant transfer
agent other than the Corporation or its employee or (2) by a registrar, other
than the Corporation or its employee, the signature of any such Chief Executive
Officer, President, Chief Financial Officer, Vice-President, Secretary, or
Assistant Secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the Corporation, such certif
icate or certificates may nevertheless be issued and delivered as though the
person or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such officer
or officers of the Corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the books of the Corporation. Shares of stock of the
Corporation shall only be transferred on the books of the Corporation by the
holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the Corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the Corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the Corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify
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the Corporation against any claim that may be made against the Corporation on
account of the loss, theft or destruction of any such certificate or the
issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETING . In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If no record date is fixed by the
board of directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In order
that the Corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
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SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer
or officers, or any agent or agents, of the Corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances.
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SECTION 4. LOANS. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiary, including any officer or employee who is a
director of the Corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including. without limitation, a pledge of shares of
stock of the Corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities or
interests in any other corporation or entity held by the Corporation shall be
voted by the Chief Executive Officer unless the board of directors specifically
confers authority to vote with respect thereto, which authority may be general
or confined to specific instances, upon some other person or officer. Any person
authorized to vote securities shall have the power to appoint proxies, with
general power of substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation at its registered
office in the State of Delaware or at its principal place of business.
SECTION 9. SECTION HEADINGS. Section headings in these By-laws
are for convenience of reference only and shall not be given any substantive
effect in limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision of
these By-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these By-
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laws shall not be given any effect to the extent of such inconsistency but
shall otherwise be given full force and effect.
ARTICLE VIII
AMENDMENTS
These By-laws may be amended, altered, or repealed and new By-laws
adopted at any meeting of the stockholders by a majority vote.
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STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
---------------------------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "FRENCH HOLDINGS, INC.", FILED IN THIS OFFICE ON THE FIRST DAY OF
APRIL, A.D. 1996, AT 2 O'CLOCK P.M.
/s/ Edward Freel
EDWARD FREEL, SECRETARY OF STATE
2604567 8100 AUTHENTICATION: 9765816
991208559 DATE: 05-25-99
exh3-3-frholdinc.wpd
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
FRENCH HOLDINGS, INC.
a Delaware corporation
French Holdings, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
1. The name of the Corporation is French Holdings, Inc. ("the
Corporation"). The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on March 26, 1996.
2. The Corporation has not received any payment for any of its
stock.
3. The Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 241 of the General Corporation Law of
the State of Delaware ("Delaware Law").
4. The restatement herein set forth has been duly adopted pursuant
to Section 245 of the Delaware Law. This Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Corporation's
Certificate of Incorporation as heretofore restated and amended.
5. The test of the Certificate of Incorporation is hereby restated
and amended to read in its entirety as follows:
FIRST: CORPORATE NAME. The name of the Corporation is French
Holdings, Inc. (The "CORPORATION").
SECOND: REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: CORPORATE PURPOSE. The purpose of the Corporation is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "DECL.").
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FOURTH:
A. AUTHORIZED SHARES. The total number of shares which the
Corporation is authorized to issue is One Hundred Three Thousand (103,000)
shares. One Hundred Thousand (100,000) shares shall be designated Common Stock,
par value $.0001 per share (the "Common Stock"), of which Ninety-Four Thousand
Five Hundred (94,500) shares shall be designated Class A Common Stock (the
"Class A Common Stock"), Five Thousand (5,000) shares shall be designated Class
B Common Stock (the "Class B Common Stock"), Five Hundred (500) shares shall be
designated Class C Common Stock (the "Class C Common Stock"). Three Thousand
(3,000) shares shall be designated Preferred Stock (the "Preferred Stock"), of
which One Thousand Five Hundred (1,500) shares shall be designated Series A
Convertible Preferred Stock, par value $.0001 per share (the "SERIES A PREFERRED
STOCK"), and One Thousand Five Hundred (1,500) shares shall be designated Series
B Redeemable Preferred Stock, par value $.0001 per share (the "Series B
Preferred Stock").
B. SERIES A PREFERRED STOCK. The powers, preferences and rights of
the Series A Preferred Stock, and the qualifications, limitations or
restrictions thereof, are as follows:
1. RANK. The Series A Preferred Stock shall, with respect to
dividend rights and rights of liquidation, winding up and dissolution, rank (i)
on a parity with the Series B Preferred Stock and (ii) senior to all other
equity securities of the Corporation, including all classes of the Corporation's
Common Stock and all subsequently issued preferred stock of the Corporation (all
of such equity securities of the Corporation to which the Series A Preferred
Stock and the Series B Preferred Stock rank senior, including, without
limitation, the Common Stock, are collectively referred to herein as the "JUNIOR
SECURITIES").
2. DIVIDENDS.
(a) The holders of shares of Series A Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, cumulative cash dividends
at the per share rate of $700.00 per annum, or $175.00 per quarter for each of
the quarterly periods ending on the last day of March, June, September and
December of each year, and no more, payable in arrears on each succeeding April
1, July 1, October 1 and January 1, respectively, commencing on the later of
January 1, 1997 and the first dividend payment date after the date of original
issue; PROVIDED that: (i) if any such payment date is not a Business Day then
such dividend shall be payable on the next Business Day, and (ii) accumulated
and unpaid dividends for any prior quarterly period may be paid at any time. The
term "BUSINESS DAY" whenever used herein with reference to the Preferred Stock
means a day other than a Saturday, Sunday or day on which banking institutions
in New York or Wisconsin are authorized or required to remain closed. Such
dividends shall accrue and be cumulative from the date of original issue of each
share of Series A Preferred Stock, whether or not there are funds legally
available for the payment of dividends on any payment date. Each such dividend
shall be paid to the holders of record of the shares of Series A Preferred Stock
as they appear on the share register of the Corporation on such record date, not
more than 60 days nor less than 10 days preceding the dividend payment date, as
shall be fixed by the Board of Directors or a duly authorized committee thereof.
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(b) If dividends are not paid in full, or declared in full and
sums set apart for the payment thereof, upon the shares of Series A Preferred
Stock and Series B Preferred Stock, all dividends declared upon shares of Series
A Preferred Stock and shares of Series B Preferred Stock shall be paid or
declared pro rata so that in all cases the amount of dividends paid or declared
per share on the Series A Preferred Stock and the Series B Preferred Stock shall
bear to each other the same ratio that unpaid accumulated dividends per share,
including dividends accrued or in arrears, if any, on the shares of Series A
Preferred Stock and the shares of Series B Preferred Stock bear to each other.
Unless and until full cumulative dividends on the shares of Series A Preferred
Stock in respect of all past quarterly dividend periods have been paid, and the
full amount of dividends on the shares of Series A Preferred Stock in respect of
the then current quarterly dividend period shall have been or are
contemporaneously declared in full and sums set aside for the payment thereof,
(i) no dividends shall be paid or declared and set aside for payment or other
distribution made upon any of the Junior Securities, other than in shares of, or
warrants or rights to acquire, Junior Securities; and (ii) no shares of Junior
Securities or Series B Preferred Stock shall be redeemed, retired, purchased or
otherwise acquired for any consideration (or any payment made to or available
for a sinking fund for the redemption of any such shares) by the Corporation or
any subsidiary of the Corporation (except by conversion into or exchange for
shares of Junior Securities or pursuant to a Management Repurchase Note
delivered in accordance with the provisions of the Stockholders Agreement or an
Employee Stockholder Agreement). Holders of shares of Series A Preferred Stock
shall not be entitled to any dividends, whether payable in cash, property or
shares of capital stock, in excess of full accrued and cumulative dividends as
herein provided. No interest or sum of money in lieu of interest shall be
payable in respect of any dividend payment or payments on the shares of Series A
Preferred Stock that may be in arrears.
The terms "accrued dividends," "dividends accrued" and
"dividends in arrears," whenever used herein with reference to shares of
Preferred Stock shall be deemed to mean an amount which shall be equal to
dividends thereon at the annual dividend rates per share for the respective
series from the date or dates on which such dividends commence to accrue to the
end of the then current quarterly dividend period for such Preferred Stock (or,
in the case of redemption, to the date of redemption), whether or not earned or
declared and whether or not assets for the Corporation are legally available
therefor, less the amount of all such dividends paid, or declared in full and
sums set aside for the payment thereof, upon such shares of Preferred Stock.
(c) Dividends payable on the shares of Series A Preferred
Stock for any period less than a full quarterly dividend period shall be
computed on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in the period for which payable.
3. OPTIONAL REDEMPTION AND MANDATORY REDEMPTION.
(a) The shares of Series A Preferred Stock are redeemable in
cash at the option of the Corporation by resolution of its Board of Directors,
in whole or from time to time in part:
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(i) at any time upon giving notice as provided in
SECTION B.3(e) of this ARTICLE FOURTH, provided that the
holders of a majority of the outstanding shares of Series A
Preferred Stock consent to such redemption, at a redemption
price equal to the sum of (A) $10,000 for each share of Series
A Preferred Stock called for redemption plus (B) all dividends
accrued and unpaid on the shares of Series A Preferred Stock
up to the date fixed for redemption, (such price, plus such
dividends accrued and unpaid, shall be hereinafter referred to
as the "SERIES A PREFERRED REDEMPTION PRICE"); or
(ii) at any time on or after April 2, 2001 at the
Series A Preferred Redemption Price, upon giving notice as
provided in SECTION B.3(e) of this ARTICLE FOURTH.
(b) To the extent any shares of Series A Preferred Stock have
not been redeemed pursuant to SECTION B.3(a) of this ARTICLE FOURTH by April 2,
2006 (the "SERIES A PREFERRED MANDATORY REDEMPTION DATE"), the Corporation
shall, on the Series A Preferred Mandatory Redemption Date, redeem all shares of
Series A Preferred Stock then outstanding at the Series A Preferred Redemption
Price. The Series A Preferred Redemption Price shall be payable in cash.
(c) If, for any reason, the Corporation shall fail to
discharge its mandatory redemption obligations pursuant to Section B.3(b) of
this Article Fourth, such purchase obligations shall be discharged as soon as
the Corporation is able to discharge such obligations. If and so long as any
mandatory redemption obligations with respect to the shares of the Series A
Preferred Stock shall not be fully discharged, the Corporation shall not,
directly or indirectly:
(i) declare or pay any dividend on any Junior
Securities or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, or purchase, redeem or
retire, any Junior Securities, make any distribution in
respect of Junior Securities, either directly or indirectly
and whether in cash or property or in obligations or shares of
the Corporation (other than in Junior Securities); or
(ii) purchase or redeem (except in either case for
consideration payable in Junior Securities) any Junior
Securities then outstanding.
Dividends shall continue to accrue on a cumulative basis with respect to any
shares of Series A Preferred Stock subject to a mandatory redemption obligation
that has not been discharged by the Corporation pursuant to SECTION B.3(b) of
this ARTICLE FOURTH.
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(d) If less than all of the outstanding shares of Series A
Preferred Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors, and the shares to be redeemed shall be
determined pro rata or by lot or in such other manner and subject to such
regulations as the Board of Directors in its sole discretion shall prescribe.
(e) At least 10 days but not more than 60 days prior to the
date fixed for any optional redemption of shares of Series A Preferred Stock
pursuant to SECTION B.3(a) of this ARTICLE FOURTH or the Series A Preferred
Mandatory Redemption Date (such date for optional redemption together with the
Series A Preferred Mandatory Redemption Date shall be hereinafter referred to as
the "SERIES A PREFERRED REDEMPTION DATE"), a written notice shall be mailed to
each holder of record of shares of Series A Preferred Stock to be redeemed in a
Postage prepaid envelope addressed to such holder at such holder's post office
address as shown on the records of the Corporation, notifying such holder of the
Series A Preferred Mandatory Redemption Date or the election of the Corporation
to redeem such shares, stating the date fixed for redemption thereof, specifying
the Series A Preferred Redemption Price and the then effective conversion rate,
and calling upon such holder to surrender to the Corporation on the Series A
Preferred Redemption Date at the place designated in such notice and the
certificate or certificates representing the number of shares specified in such
notice of redemption. On or after the Series A Preferred Redemption Date, each
holder of shares of Series A Preferred Stock to be redeemed shall surrender the
certificate or certificates for such shares to the Corporation at the place
designated in such notice, and against such surrender the Series A Preferred
Redemption Price of such shares shall be paid to or on the order of the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled. In case less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(f) If a notice of redemption has been given pursuant to
SECTION B.3 (e) of this ARTICLE FOURTH and any holder of shares of Series A
Preferred Stock shall, prior to the close of business on the last Business Day
preceding the Series A Preferred Redemption Date, give written notice to the
Corporation pursuant to SECTION B.6 of this ARTICLE FOURTH of the conversion of
any or all of the shares to be redeemed held by such holder (accompanied by a
certificate or certificates for such shares, a duly executed notice of election
to convert and instruments of transfer and such taxes, stamps, funds or other
evidence of payment, as required by SECTION B.6 of this ARTICLE FOURTH), then
such redemption shall not become effective as to such shares to be converted,
such conversion shall become effective as provided in SECTION B.6 of this
ARTICLE FOURTH and any monies deposited or set aside by the Corporation for the
redemption of such shares of converted Series A Preferred Stock shall revert to
the general funds of the Corporation.
(g) From and after the Series A Preferred Redemption Date
(unless default shall be made by the Corporation in payment in full of the
Series A Preferred Redemption Price), all dividends on the shares of Series A
Preferred Stock designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the Corporation, except
the right to receive the Series A Preferred Redemption Price of such shares
(including all accrued and unpaid dividends up to the Series A Preferred
Redemption Date) upon the surrender of certificates representing the same, shall
cease and terminate and such shares shall not
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thereafter be transferred (except with the consent of the Corporation) on the
books of the Corporation and shall not be deemed to be outstanding for any
purpose whatsoever.
(h) Shares of Series A Preferred Stock redeemed, repurchased
or retired pursuant to the provisions of this SECTION B.3 or surrendered to the
Corporation upon conversion shall thereupon be retired and may not be reissued.
4. VOTING RIGHTS. Except as otherwise provided in SECTION B.7
of this ARTICLE FOURTH or as required under the DECL., the holders of shares of
Series A Preferred Stock shall not be entitled to vote on any matter submitted
to a vote of stockholders of the Corporation. Any vote expressly required by
SECTION B.7 of this ARTICLE FOURTH or by the DECL. may be given in person or by
proxy, either in writing without a meeting or by vote at any meeting called for
such purpose.
5. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or otherwise, the holders
of shares of Series A Preferred Stock shall be entitled to receive, out of the
assets of the Corporation available for distribution to its stockholders, in
cash, the amount of $10,000 for each share of Series A Preferred. Stock, plus an
amount equal to all dividends accrued and unpaid on each such share up to the
date fixed for distribution, before any distribution shall be made to the
holders of shares of Junior Securities. If upon any liquidation, dissolution or
winding up of the Corporation, the assets distributable among the holders of
shares of Series A Preferred Stock and the shares of Series B Preferred Stock
are insufficient to permit the payment in full to the holders of all such shares
of all preferential amounts payable to such holders, then the entire assets of
the Corporation so distributable shall be distributed ratably among the holders
of the shares of Series A Preferred Stock and the shares of Series B Preferred
Stock in proportion to the respective amounts that would be payable per share if
such assets were sufficient to permit payment in full.
(b) The holder of any shares of Series A Preferred Stock shall
not be entitled to receive any payment owed for such shares under this SECTION
B.5 until such holder shall cause to be delivered to the Corporation (i) the
certificate(s) representing such shares and (ii) transfer instrument(s)
satisfactory to the Corporation and sufficient to surrender such shares to the
Corporation free of any adverse interest.
(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of Series A Preferred Stock, such
holders shall not be entitled to any other or further participation in the
distribution of the assets of the Corporation.
6. CONVERSION.
(a) OPTIONAL CONVERSION. Each share of Series A Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share into (i) 2.26372 fully paid and
nonassessable shares of Class A Common Stock (the "Common Stock Conversion
Shares") and (ii) one fully paid and nonassessable shares of Series B Preferred
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Stock (the "Series B Conversion Shares"). However, the Common Stock Conversion
Shares and the Series B Conversion Shares shall be subject to adjustment from
time to time in accordance with SECTION B.6(d) of this ARTICLE FOURTH.
(b) AUTOMATIC CONVERSION. Each share of Series A Preferred
Stock shall automatically convert into shares of fully paid and nonassesable
Class A Common Stock and Series B Preferred Stock, without any further action
required on the part of the holder thereof, either:
(i) immediately prior to the closing of the
Corporation's initial underwritten public offering pursuant to
a Registration Statement filed with and declared effective by
the Securities Exchange Commission under the Securities Act of
1933, as amended, which is an IPO Event; or
(ii) any consolidation or merger to which the
Corporation is a party other than a merger in which the
Corporation is the continuing corporation and which does not
result in any reclassification of, or change (other than a
change in name, or par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common
Stock or Series A Preferred Stock; or
(iii) any sale or conveyance of all or substantially
all of the property or business of the Corporation as an
entirety (including, in the case of any of the foregoing
events, any statutory exchange of securities with another
corporation).
The number of shares of Class A Common Stock issuable upon such automatic
conversion of a share of Class A Preferred Stock shall be equal to the Common
Stock Conversion Shares as in effect at such time and the number of shares of
Series B Preferred Stock shall be equal to the Series B Conversion Shares as in
effect at such time.
(c) MECHANICS OF CONVERSION. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Class A
Common Stock and Series B Preferred Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for Series A Preferred Stock and shall give
written notice by mail, postage prepaid, to the Corporation at its principal
corporate office of the election to convert the same and shall state therein the
name or names in which the certificate or certificates for shares of Class A
Common Stock and Series B Preferred Stock are to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series A Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Class A Common
Stock and Series B Preferred Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such
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surrender of the shares of Series A Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Class A Common Stock and
Series B Preferred Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Class A Common Stock
and Series B Preferred Stock as of such date. If the conversion is in connection
with an underwritten offering of securities registered pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), the conversion may,
at the option of any holder tendering Series A Preferred Stock for conversion,
be conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person converting such Series A
Preferred Stock shall not be deemed to have converted such Series A Preferred
Stock until immediately prior to the closing of such sale of securities and the
person(s) entitled to receive the Class A Common Stock and Series B Preferred
Stock issuable upon such conversion of Series A Preferred Stock shall not be
deemed to be record holders of such Class A Common Stock and Series B Preferred
Stock until immediately prior to the closing of such sale of securities. No
payment or adjustment shall be made on conversion for any dividends payable on
the Class A Common Stock delivered on conversion. Effective as of any
conversion, the Corporation shall be excused from paying any dividends on the
shares converted, except for any dividends accrued and unpaid through the day of
conversion.
(d) ANTIDILUTION PROVISIONS. The Common Stock Conversion
Shares and the Series B Conversion Shares shall be subject to adjustment from
time to time as follows:
(i) STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK
SPLITS; RECLASSIFICATIONS. In case the Corporation shall (A)
pay a dividend or make any other distribution with respect to
its Class A Common Stock in shares of its capital stock, (B)
subdivide its outstanding Class A Common Stock, (C) combine
its outstanding Class A Common Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a
reclassification of the Class A Common Stock (including any
such reclassification in connection with a merger,
consolidation or other business combination in which the
Corporation is the continuing corporation) then the Common
Stock Conversion Shares issuable upon conversion of a share of
Series A Preferred Stock immediately prior to the record date
for such dividend or distribution or the effective date of
such subdivision or combination shall be adjusted so that the
holder of a share of Series A Preferred Stock shall thereafter
be entitled to receive the kind and number of shares of Class
A Common Stock or other securities of the Corporation that
such holder would have owned or have been entitled to receive
after the happening of any of the events described above, had
such share of Series A Preferred Stock been converted
immediately prior to the happening of such event or any record
date with respect thereto. An adjustment made pursuant to this
SECTION B.6(d) (i) shall become effective immediately after
the effective date of such event retroactive to the record
date, if any, for such event.
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(ii) RIGHTS; OPTIONS; WARRANTS.
(A) In case the Corporation shall issue rights,
options, warrants or convertible or exchangeable securities
(other than a convertible or exchangeable security subject to
SECTION B.6(d)(i) of this ARTICLE FOURTH) to all holders of
its Common Stock, entitling them to subscribe for or purchase
shares of Common Stock at a price per share of Common Stock
that is lower (at the close of business on the Business Day
immediately prior to the record date for such issuance) than
the Current Market Value per share of Class A Common Stock,
then the Common Stock Conversion Shares thereafter issuable
upon the conversion of a share of Series A Preferred Stock
shall be determined by multiplying the Common Stock Conversion
Shares theretofore issuable upon the conversion of a share of
Series A Preferred Stock by a fraction, of which the numerator
shall be the number of shares of Common Stock Outstanding on a
Fully Diluted Basis on the date of issuance of such rights,
options, warrants or convertible or exchangeable securities,
plus the number of additional shares of Common Stock to be
issued upon exercise, conversion or exchange of such rights,
options, warrants or convertible or exchangeable securities
and of which the denominator shall be the number of shares of
Common Stock Outstanding on a Fully Diluted Basis on the date
of issuance of such rights, options, warrants or convertible
or exchangeable securities, plus the number of shares of
Common Stock which the aggregate consideration to be received
by the Corporation in connection with such issuance would
purchase at the then Current Market Value per share of Class A
Common Stock.
(B) For purposes of this SECTION B.6(d) (ii), the
consideration received by the Corporation in connection with
the issuance of rights, options, warrants or convertible or
exchangeable securities shall be deemed to be the
consideration received by the Corporation for such rights,
options, warrants or convertible or exchangeable securities,
plus the consideration or premiums stated in such rights,
options, warrants or convertible or exchangeable securities to
be paid for the shares of Common Stock covered thereby.
(C) Any adjustment pursuant to this SECTION B.6(d) (ii)
shall be made whenever any such rights, options, warrants
or convertible or exchangeable securities are issued, but
shall also become effective retroactively in respect of
conversions made between the record dates for the
determination of stockholders entitled to receive such rights,
options, warrants or convertible or
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exchangeable securities and the date such rights, options,
warrants or convertible or exchangeable securities are issued.
(D) For purposes of adjustments under this SECTION
B.6(d)(ii), if the Corporation shall issue rights, options,
warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock
for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then in
determining the "price per share of Class A Common Stock" and
the "consideration" receivable by or payable to the
Corporation for purposes of the first sentence of this SECTION
B.6(d)(ii), the Board of Directors of the Corporation shall
determine, in good faith, the fair value of such property. In
case the Corporation shall issue rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, together
with one or more other securities as part of a unit at a price
per unit, then in determining the "price per share of Class A
Common Stock" and the "consideration" receivable by or payable
to the Corporation for purposes of the first sentence of this
SECTION B.6(d)(ii), the Board of Directors of the Corporation
shall determine, in good faith, the fair value of the rights,
options, warrants or convertible or exchangeable securities
then being sold as part of such unit.
(iii) ISSUANCE OF COMMON STOCK AT LOWER VALUES.
(A) In case the Corporation shall, in a transaction
in which SECTION 13.6(d)(ii) of this ARTICLE FOURTH is
inapplicable, issue or sell shares of Common Stock, or rights,
options (other than options issued pursuant to the French
Holdings, Inc. 1996 Performance Stock Option Plan), warrants
or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock, at a
price per share of Common Stock that is lower than the then
Current Market Value per share of the Class A Common Stock in
effect immediately prior to such sale or issuance, then the
Common Stock Conversion Shares thereafter issuable upon the
conversion of a share of Series A Preferred Stock shall be
determined by multiplying the Common Stock Conversion Shares
theretofore issuable upon the conversion of a share of Series
A Preferred Stock by a fraction, of which the numerator shall
be the number of shares of Common Stock Outstanding on a Fully
Diluted Basis on the date of issuance of such shares of Common
Stock or rights, options, warrants or convertible or
exchangeable securities, plus the number of additional shares
of Common Stock offered for subscription or purchase or to be
issued upon exercise, conversion or exchange of such rights,
options, warrants or
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convertible or exchangeable securities and of which the
denominator shall be the number of shares of Common Stock
Outstanding on a Fully Diluted Basis on the date of issuance
of such shares of Common Stock or rights, options, warrants or
convertible or exchangeable securities, plus the number of
shares of Common Stock which the aggregate consideration to be
received by the Corporation in connection with such issuance
would purchase at the then Current Market Value per share of
Class A Common Stock.
(B) For purposes of such adjustments under this
SECTION B.6(d)(iii), the shares of Common Stock which the
holder of any such rights, options, warrants or convertible or
exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of
the date of the sale and issuance of the rights, warrants or
convertible or exchangeable securities and the consideration
received by the Corporation therefor shall be deemed to be the
consideration received by the Corporation for such rights,
options, warrants or convertible or exchangeable securities,
plus the consideration or premiums stated in such rights,
options, warrants or convertible or exchangeable securities to
be paid for the shares of Common Stock covered thereby.
(C) In case the Corporation shall issue and sell
shares of Common Stock or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the
"price per share of Class A Common Stock" and the
"consideration" receivable by or payable to the Corporation
for purposes of the first sentence of this SECTION B.6(d)
(iii), the Board of Directors of the Corporation shall
determine, in good faith, the fair value of such property. In
case the Corporation shall issue and sell rights, options,
warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock,
together with one or more other securities as part of a unit
at a price per unit, then in determining the "price per share
of Class A Common Stock" and the "consideration" receivable by
or payable to the Corporation for purposes of the first
sentence of this SECTION B.6(d)(iii), the Board of Directors
of the Corporation shall determine, in good faith, the fair
value of the rights, options, warrants or convertible or
exchangeable securities then being sold as part of such unit.
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(iv) DISTRIBUTIONS OF CASH, DEBT, ASSETS. SUBSCRIPTION
RIGHTS OR CONVERTIBLE SECURITIES.
(A) In case the Corporation shall fix a record date
for the making of a distribution to all holders of shares of
its Common Stock of cash, evidences of indebtedness of the
Corporation, assets or securities (excluding those referred to
in Section B.6(d)(ii) of this ARTICLE FOURTH and excluding
cash dividends which are not Extraordinary Dividends) (any
such cash, evidences of indebtedness, assets or securities,
the "Assets or Securities"), then, at the election of the
Corporation, either (I) the Common Stock Conversion Shares
theretofore issuable after such record date upon conversion of
a share of Series A Preferred Stock shall be adjusted by
multiplying the Common Stock Conversion Shares theretofore
issuable upon the conversion of a share of Series A Preferred
Stock immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Market Value per
share of Class A Common Stock at the close of business on the
Business Day immediately prior to the record date for such
distribution and the denominator of which shall be the then
Current Market Value per share of Class A Common Stock at the
close of business on the Business Day immediately prior to the
record date for such distribution less an amount equal to the
then fair value (as determined by the Board of Directors of
the Corporation acting in good faith) of the Assets or
Securities applicable to one share of Class A Common Stock, or
(II) adequate provision shall be made so that in the event of
a conversion of a share of Series A Preferred Stock the Holder
of the Series A Preferred Stock shall have the right to
receive, in addition to Common Stock Conversion Shares, at the
election of the Corporation, either (A) the Assets or
Securities to which such holder would have been entitled as a
holder of Class A Common Stock if such holder had converted
such holder's share of Series A Preferred Stock immediately
prior to the record date for such distribution or (B) the cash
equivalent of such Assets or Securities.
(B) If the Corporation elects to adjust the number of
Common Stock Conversion Shares issuable upon the conversion of
a share of Series A Preferred Stock pursuant to SECTION
B.6(d)(iv)(A)(I) of this ARTICLE FOURTH, such adjustment shall
be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to
the record date for the determination of stockholders entitled
to receive such distribution; PROVIDED that the Corporation
shall deliver to any holder that converts a share of Series A
Preferred Stock after any such record date, but prior to the
related distribution, a due bill or other
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appropriate instrument evidencing such holder's right to
receive such distribution upon its occurrence.
(C) Notwithstanding the foregoing, the Corporation
shall not elect the adjustment provided for in SECTION
B.6(d)(iv)(A)(I) of this ARTICLE FOURTH if the then fair value
(as determined by the Board of Directors of the Corporation
acting in good faith) of the Assets or Securities applicable
to one share of Common Stock is equal to or greater than the
then Current Market Value per share of Class A Common Stock at
the close of business on the Business Day immediately prior to
the record date for such distribution.
(v) EXPIRATION OF RIGHTS, OPTIONS AND CONVERSION
PRIVILEGES. Upon the expiration of any rights, options,
warrants or conversion or exchange privileges that have
previously resulted in an adjustment hereunder, if any thereof
shall not have been exercised, the Common Stock Conversion
Shares issuable upon the conversion of a share of Series A
Preferred Stock shall, upon such expiration, be readjusted and
shall thereafter, upon any future conversion, be such as they
would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as
if (A) the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion
or exchange rights and (B) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Corporation upon such exercise plus the
consideration, if any, actually received by the Corporation
for issuance, sale or grant of all such rights, options,
warrants or conversion or exchange rights whether or not
exercised; PROVIDE that no such readjustment shall have the
effect of decreasing the Common Stock Conversion Shares by a
number, in excess of the number of the adjustment initially
made in respect to the issuance, sale or grant of such rights,
options, warrants or conversion or exchange rights.
(vi) NO ADJUSTMENT FOR ORDINARY DIVIDENDS. Except as
otherwise provided in this SECTION B.6(d), no adjustment in
respect of any ordinary dividends declared and paid on Common
Stock, or on any other capital stock of the Corporation, shall
be made to the Common Stock Conversion Shares.
(vii) DE MINIMIS ADJUSTMENTS. Except as provided in
SECTION B.6(d)(iii) of this ARTICLE FOURTH with reference to
adjustments required by such SECTION B.6(d)(iii) of this
ARTICLE
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FOURTH, no adjustment in the shares of Common Stock Conversion
Shares issuable hereunder shall be required unless cumulative
adjustments would require an increase or decrease of at least
one percent (1%) in the number of shares of Class A Common
Stock issuable upon the conversion of a share of Series A
Preferred Stock; PROVIDED that any adjustments which by reason
of this SECTION B.6(d)(vii) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made and rounded to the
nearest one-thousandth of a share (with calculations of five
ten-thousandth and above rounded up, and calculations less
than five ten-thousandths rounded down).
(viii) OTHER ADJUSTMENTS. In the event that at any
time, as a result of an adjustment made pursuant to this
SECTION B.6(d), the registered holders of the Series A
Preferred Stock shall become entitled to receive any
securities of the Corporation other than shares of Class A
Common Stock, thereafter the number of such other securities
so receivable upon the conversion of a share of Series A
Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of
Class A Common Stock contained in this SECTION B.6(d).
(ix) OTHER DILUTIVE EVENTS. In case any event shall
occur as to which the other provisions of this SECTION B.6(d)
are not strictly applicable but the failure to make any
adjustment would not fairly protect the conversion rights of
the Series A Preferred Stock in accordance with the essential
intent and principles of this SECTION B.6(d), then, in each
such case, the Corporation shall appoint a firm of independent
certified public accountants of recognized national standing
(which may be the regular auditors of the Corporation), which
shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles
established in this SECTION B.6(d), necessary to preserve,
without dilution, the conversion rights of this SECTION
B.6(d). Upon receipt of such opinion, the Corporation will
promptly mail a copy thereof to each record holder of Series A
Preferred Stock and shall make the adjustments described
therein.
(e) NO IMPAIRMENT. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of
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this SECTION B.6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of Series A
Preferred Stock against impairment.
(f) FRACTIONAL SHARES; CERTIFICATE AS TO ADJUSTMENTS. Prior to
an IPO Event, fractional shares of Class A Common Stock and Series B Preferred
Stock may be issued upon conversion of shares of Series A Preferred Stock. After
an IPO Event, no fractional shares shall be issued upon conversion of shares of
Series A Preferred Stock. After an IPO Event, if one or more shares of Series A
Preferred Stock shall be presented for conversion at the same time by the same
stockholder, the number of full shares of Class A Common Stock and Series B
Preferred Stock which shall be issuable upon the conversion thereof shall be
computed on the basis of the aggregate number of shares of Class A Common Stock
and Series B Preferred Stock to be issued upon conversion of the Series A
Preferred Stock so presented. If any fraction of shares of Class A Common Stock
or Series B Preferred Stock would, except for the provisions of this SECTION
D.6(f), be issuable on the conversion of shares of Series A Preferred Stock, the
Corporation shall pay an amount in cash equal to the Current Market Value of one
share of the Class A Common Stock or one share of Series B Preferred Stock, as
the case may be, on the Business Day immediately preceding the date the share of
Series A Preferred Stock is presented for conversion multiplied by such
fraction. Upon the occurrence of each adjustment or readjustment of the Common
Stock Conversion Shares pursuant to this SECTION B.6, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of shares of Series A Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
A Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Common Stock Conversion Shares and Preferred Stock Conversion Shares at the time
in effect, and (iii) the number of shares of Class A Common Stock and Series B
Preferred Stock and the amount, if any, of other property which at the time
would be received upon the conversion of shares of Series A Preferred Stock.
(g) NOTICES OF RECORD DATE. In the event that the Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional
shares of stock of any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a
change in the Common Stock;
(iv) to merge or consolidate with or into any other
corporation or other entity or person, or sell, lease or
convey all or
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substantially all its property or business, or to liquidate,
dissolve or wind up; or
(v) any firm commitment underwritten public offering
pursuant to an effective registration statement under the
Securities Act covering the offer and sale of Class A Common
Stock for the account of the Corporation;
then, in connection with each such event, the Corporation shall send to the
holder of Series A Preferred Stock:
(1) at least twenty days' prior written
notice of the date on which a record shall be taken
for such dividend, distribution or subscription
rights (and specifying the date on which the holders
of Common Stock shall be entitled thereto) or for
determining rights to vote in respect of the matters
referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to
in (iii), (iv) and (v) above, at least twenty days'
prior written notice of the date when the same shall
take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other
property deliverable upon the occurrence of such
event).
Each written notice shall be delivered personally or given
by United States mail, return receipt requested, postage prepaid, addressed to
the holders of Series A Preferred Stock at the address for each such holder as
shown on the books of the Corporation.
(h) TRANSFER TAXES. If a holder converts shares of Series A
Preferred Stock, the Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of Class A Common Stock and Series B
Preferred Stock upon the conversion. The holder, however, shall pay to the
Corporation the amount of any tax which is due (or shall establish to the
satisfaction of the Corporation the payment thereof or that no such payment is
due) if the shares are to be issued in a name other than the name of such
holder.
(i) RESERVATION OF SHARES. The Corporation shall reserve and
shall at all times have reserved out of its authorized but unissued shares of
Class A Common Stock and Series B Preferred Stock, solely for the purpose of
effecting the conversion of Series A Preferred Stock, enough shares of Class A
Common Stock and Series B Preferred Stock to permit the conversion of the then
outstanding shares of Series A Preferred Stock. All shares of Class A Common
Stock and Series B Preferred Stock which may be issued upon conversion of shares
of Series A Preferred Stock shall be validly issued, fully paid and
nonassessable. The Corporation shall from time to time, in accordance with the
laws of the State of Delaware, increase the authorized number of shares of Class
A Common Stock or Series B Preferred Stock if at any time the
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number of shares of Class A Common Stock or Series B Preferred Stock, as the
case may be, authorized but not outstanding shall not be sufficient to permit
conversion of all then-outstanding shares of Series A Preferred Stock. In order
that the Corporation may issue shares of Class A Common Stock and Series B
Preferred Stock upon conversion of shares of Series A Preferred Stock, the
Corporation shall use its reasonable best effort to assure that all such shares
of Class A Common Stock and Series B Preferred Stock may be so issued without
violation of any applicable law or governmental regulations or any requirements
of any domestic securities exchange upon which shares of Common Stock or
Preferred Stock of the relevant series may be listed (except for official notice
of issuance which shall be immediately transmitted by the Corporation upon
issuance).
(j) In the event that, as a result of an adjustment made
pursuant to SECTION B.6(c) (viii) of this ARTICLE FOURTH, the holder of any
shares of Series A Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of capital stock of the Corporation other
than shares of Class A Common Stock, thereafter the number of such other shares
so receivable upon conversion of any shares of Series A Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Class A Common
Stock contained in this SECTION B.6.
(k) In the event that there are any stock dividends, stock
splits, reverse stock splits, reclassifications or similar transactions to the
Series B Preferred Stock, the Series B Conversion Shares shall be appropriately
adjusted to reflect such stock dividend, stock split, reverse stock split,
reclassification or similar transaction.
7. LIMITATIONS. In addition to any other rights provided by
applicable law, so long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote, or the
written consent as provided by law, of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting separately as a class,
(a) create, authorize or issue any class or series of
Preferred Stock or any other class of capital stock ranking either as to payment
of dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the Corporation on a parity with, or having preference or
priority over, the Series A Preferred Stock (other than the Series B Preferred
Stock); or
(b) change the powers, preferences or rights with respect to
the Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely;
PROVIDED, HOWEVER, any vote which would adversely affect the amount or timing of
the payment of dividends on the Series A Preferred Stock, the amount or timing
of the payment of the Series A Redemption Price, any amounts paid pursuant to
SECTION B.5 of this ARTICLE FOURTH, the computation of the Series A Conversion
Shares or the computation of the Series B Conversion Shares would require the
affirmative vote of the holders of all of the outstanding shares of Series A
Preferred Stock; and PROVIDED, FURTHER, (except as otherwise required by
applicable law) nothing herein contained shall require such a vote or consent in
connection with (i) any increase in the total number of authorized shares of
Common Stock, or (ii) the authorization or increase of
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any class or series of shares ranking, as to dividends and in liquidation,
dissolution or winding up of the affairs of the Corporation, junior to the
Series A Preferred Stock; PROVIDED that no such vote or written consent of the
holders of the shares of Series A Preferred Stock shall be required if, at or
prior to the time when the issuance of any such shares ranking on a parity with,
or having preference or priority over, the Series A Preferred Stock is to be
made or any such change is to take effect, as the case may be, provision is made
for the redemption of all the then outstanding shares of Series A Preferred
Stock.
8. DIVIDEND RECEIVED DEDUCTION. For federal income tax
purposes, the Corporation shall report distributions on the Series A Preferred
Stock as dividends, to the extent of the Corporation's current and accumulated
earnings and profits (as determined for federal income tax purposes). In
addition, the Corporation covenants not to take any action voluntarily which
could reasonably be expected to cause dividends on the Series A Preferred Stock
to fail to be eligible for the dividend received deduction pursuant to Section
243 of the Internal Revenue Code of 1986, as amended from time to time.
9. CERTAIN DEFINITIONS. The following terms shall have the
meanings ascribed to them below:
"BUSINESS DAY" means any day other than a Saturday or a Sunday
or a day on which commercial banking institutions in the City of New York are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
"CURRENT MARKET VALUE" means on any date specified herein, the
amount per share of the Class A Common Stock, equal to (a) the last sale price
of such Class A Common Stock, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked prices
thereof on such date, in each case as officially reported on the principal
national securities exchange on which such Class A Common Stock is then listed
or admitted to trading or (b) if such Class A Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of the
Common Stock on such date, or (c) if there shall have been no trading on such
date or if the Class A Common Stock is not so designated, the average of the
closing bid and asked price of the Class A Common Stock on such date as shown by
the NASD automated quotation system, or (d) if such Class A Common Stock is not
then listed or admitted to trading on any national exchange or quoted in the
over-the-counter market, the Fair Market Value (as defined in the Stockholders
Agreement). Any determination made in good faith by the Corporation's Board of
Directors as to the Current Market Value of the Class A Common Stock shall be
binding on the Corporation and all Holders.
"EMPLOYEE STOCKHOLDER AGREEMENT" has the meaning specified in
the Stockholders Agreement.
"EXTRAORDINARY DIVIDEND" means any dividend or other
distribution of cash or other property (other than Common Stock) made with
respect to Common Stock which the Board of Directors declare generally to be
other than an ordinary dividend.
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"IPO EVENT" has the meaning specified in the Stockholders
Agreement.
"MANAGEMENT REPURCHASE NOTE" has the meaning specified in the
Stockholders Agreement.
"NASD" means The National Association of Securities Dealers.
OUTSTANDING ON A FULLY DILUTED BASIS: An amount equal to the
total outstanding number of shares of Common Stock assuming the conversion or
exchange of all outstanding shares of securities convertible or exchangeable
into Common Stock of the Corporation and the exercise of all warrants, options
and other rights (including, without limitation, employee stock options (other
than options issued pursuant to the French Holdings, Inc. 1996 Performance Stock
Option Plan)) to purchase shares of Common Stock of the Corporation.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of April 1996, by and among the Corporation, the Stockholders (as
defined therein) and the Note Purchasers (as defined therein), as such agreement
may be amended, supplemented or otherwise modified from time to time after the
date hereof.
"WINDWARD GROUP" has the meaning specified in the Stockholders
Agreement.
C. SERIES B PREFERRED STOCK. No shares of Series B Preferred
Stock shall be issued except pursuant to the conversion of the Series A
Preferred Stock. The powers, preferences and rights of the Series B Preferred
Stock, and the qualifications, limitations or restrictions thereof, are as
follows:
1. RANK. The Series B Preferred Stock shall, with respect to
dividend rights and rights of liquidation, winding up and dissolution, rank (i)
on a parity with the Series A Preferred Stock and (ii) senior to any of the
Junior Securities.
2. DIVIDENDS.
(a) The holders of shares of Series B Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, cumulative cash dividends
at the per share rate of $700 per annum, or $175 per quarter for each of the
quarterly periods ending on the last day of March, June, September and December
of each year, and no more, payable in arrears on each succeeding April 1, July
1, October 1 and January 1, respectively, commencing on the later of January 1,
1997 and the first dividend payment date after the date of original issue;
PROVIDED that: (i) if any such payment date is not a Business Day then such
dividend shall be payable on the next Business Day, and (ii) accumulated and
unpaid dividends for any prior quarterly period may be paid at any time. Such
dividends shall accrue and be cumulative from the date of original issue of each
share of Series B Preferred Stock, whether or not there are funds legally
available for the payment of dividends on any payment date. Each such dividend
shall be paid to the holders of record of the shares of Series B Preferred Stock
as they appear on the share register of the Corporation on such
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record date, not more than 60 days nor less than 10 days preceding the dividend
payment date, as shall be fixed by the Board of Directors or a duly authorized
committee thereof.
(b) If dividends are not paid in full, or declared in full and
sums set apart for the payment thereof, upon the shares of Series B Preferred
Stock and Series A Preferred Stock, all dividends declared upon shares of Series
B Preferred Stock and shares of Series A Preferred Stock shall be paid or
declared pro rata so that in all cases the amount of dividends paid or declared
per share on the Series B Preferred Stock and the Series A Preferred Stock shall
bear to each other the same ratio that unpaid accumulated dividends per share,
including dividends accrued or in arrears, if any, on the shares of Series B
Preferred Stock and the shares of Series A Preferred Stock bear to each other.
Unless and until full cumulative dividends on the shares of Series B Preferred
Stock in respect of all past quarterly dividend periods have been paid, and the
full amount of dividends on the shares of Series B Preferred Stock in respect of
the then current quarterly dividend period shall have been or are
contemporaneously declared in full and sums set aside for the payment thereof,
(i) no dividends shall be paid or declared and set aside for payment or other
distribution made upon any of the Junior Securities, other than in shares of, or
warrants or rights to acquire, Junior Securities; and (ii) no shares of Junior
Securities or shares of Series A Preferred Stock shall be redeemed, retired,
purchased or otherwise acquired for any consideration (or any payment made to or
available for a sinking fund for the redemption of any such shares) by the
Corporation or any subsidiary of the Corporation (except by conversion into or
exchange for shares of Junior Securities or pursuant to a Management Repurchase
Note delivered in accordance with the provisions of the Stockholders Agreement
or an Employee Stockholder Agreement). Holders of shares of Series B Preferred
Stock shall not be entitled to any dividends, whether payable in cash, property
or shares of capital stock, in excess of full accrued and cumulative dividends
as herein provided. No interest or sum of money in lieu of interest shall be
payable in respect of any dividend payment or payments on the shares of Series B
Preferred Stock that may be in arrears.
(c) Dividends payable on the shares of Series B Preferred
Stock for any period less than a full quarterly dividend period shall be
computed on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in the period for which payable.
3. OPTIONAL REDEMPTION AND MANDATORY REDEMPTION.
(a) The shares of Series B Preferred Stock are redeemable at
the option of the Corporation by resolution of its Board of Directors, in whole
or from time to time in part, at any time upon giving notice as provided in
SECTION C.3(f) of this ARTICLE FOURTH at a redemption price in cash equal to the
sum of (A) $10,000 for each share of Series B Preferred Stock called for
redemption plus (B) all dividends accrued and unpaid thereon up to the date
fixed for redemption, (such price, plus such dividends accrued and unpaid, shall
be hereinafter referred to as the "SERIES B PREFERRED REDEMPTION PRICE").
(b) The shares of Series B Preferred Stock shall be redeemed
in cash at the Series B Preferred Redemption Price if any of the following
events shall occur (such events shall be hereinafter referred to as the
"MANDATORY EVENT REDEMPTION DATE"):
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(i) in the event of the closing of a firm commitment,
underwritten public offering pursuant to an effective
registration statement under the Securities Act covering the
offer and sale of shares of Common Stock for the account of
the Corporation which is an IPO Event; or
(ii) any consolidation or merger to which the
Corporation is a party other than a merger in which the
Corporation is the continuing corporation and which does not
result in any reclassification of, or change (other than a
change in name, or par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common
Stock or Series B Preferred Stock; or
(iii) any sale or conveyance of all or substantially
all of the property or business of the Corporation as an
entirety (including, in the case of any of the foregoing
events, any statutory exchange of securities with another
corporation).
(c) If a redemption pursuant to this SECTION C.3(a) or (b) of
this ARTICLE FOURTH has not occurred by March 31, 2006 (the "SERIES B PREFERRED
MANDATORY REDEMPTION DATE"), the Corporation shall, on the Series B Preferred
Mandatory Redemption Date, redeem all shares of Series B Preferred Stock
outstanding at the Series B Preferred Redemption Price. The Series B Preferred
Redemption Price shall be payable in cash.
(d) If, for any reason, the Corporation shall fail to
discharge its mandatory redemption obligations pursuant to SECTION C.3(b) or (c)
of this ARTICLE FOURTH, such purchase obligations shall be discharged as soon as
the Corporation is able to discharge such obligations. If and so long as any
mandatory redemption obligations with respect to the shares of the Series B
Preferred Stock shall not be fully discharged, the Corporation shall not,
directly or indirectly:
(i) declare or pay any dividend on any Junior
Securities or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, or purchase, redeem or
retire, any Junior Securities, make any distribution in
respect of Junior Securities, either directly or indirectly
and whether in cash or property or in obligations or shares of
the Corporation (other than in Junior Securities); or
(ii) purchase or redeem (except in either case for
consideration payable in Junior Securities) any Junior
Securities then outstanding (other than pursuant to a
Management Repurchase Note delivered in accordance with the
provisions of the Stockholders Agreement or an Employee
Stockholder Agreement).
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Dividends shall continue to accrue on a cumulative basis with respect to any
shares of Series B Preferred Stock subject to a mandatory redemption obligation
that has not been discharged by the Corporation pursuant to SECTION C.3(b) or
(c) of this ARTICLE FOURTH.
(e) If less than all of the outstanding shares of Series B
Preferred Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors, and the shares to be redeemed shall be
determined pro rata or by lot or in such other manner and subject to such
regulations as the Board of Directors in its sole discretion shall prescribe.
(f) At least 10 days but not more than 60 days prior to a
Mandatory Event Redemption Date, the Series B Preferred Mandatory Redemption
Date or the date fixed for any optional redemption of shares of Series B
Preferred Stock (such date for optional redemption together with the Mandatory
Event Redemption Date and the Series B Preferred Mandatory Redemption Date,
shall be hereinafter referred to as the "SERIES B PREFERRED REDEMPTION DATE"), a
written notice shall be mailed to each holder of record of shares of Series B
Preferred Stock to be redeemed and each holder of record of shares of Series A
Preferred Stock which such shares have automatically been converted into shares
of Series B Preferred Stock, but which such shares have not yet been issued, in
a postage prepaid envelope addressed to such holder at such holder's post office
address as shown on the records of the Corporation, notifying such holder of the
Mandatory Event Redemption Date, the Series B Preferred Mandatory Redemption
Date or the election of the Corporation to redeem such shares, stating the date
fixed for redemption thereof, specifying the Series B Preferred Redemption
Price, and calling upon such holder to surrender to the Corporation on the
Series B Preferred Redemption Date at the place designated in such notice and
the certificate or certificates representing the number of shares specified in
such notice of redemption. On or after the Series B Preferred Redemption Date,
each holder of shares of Series B Preferred Stock to be redeemed and each holder
of record of shares of Series A Preferred Stock which such shares have
automatically been converted into shares of Series B Preferred Stock, but which
such shares have not yet been issued, shall surrender the certificate or
certificates for such shares to the Corporation at the place designated in such
notice, and against such surrender the Series B Preferred Redemption Price of
such shares shall be paid to or on the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled. In case less than all the shares represented by
any such certificate are redeemed, a new certificate shall he issued
representing the unredeemed shares.
(g) From and after the Series B Preferred Redemption Date
(unless default shall be made by the Corporation in payment in full of the
Series B Preferred Redemption Price), all dividends on the shares of Series B
Preferred Stock designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the Corporation, except
the right to receive the Series B Preferred Redemption Price of such shares
(including all accrued and unpaid dividends up to the Series B Preferred
Redemption Date) upon the surrender of certificates representing the same, shall
cease and terminate and such shares shall not thereafter be transferred (except
with the consent of the Corporation) on the books of the Corporation and shall
not be deemed to be outstanding for any purpose whatsoever.
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(h) Shares of Series B Preferred Stock redeemed, repurchased
or retired pursuant to the provisions of this SECTION C-3 or surrendered to the
Corporation upon conversion shall thereupon be retired and may not be reissued.
4. VOTING RIGHTS. Except as otherwise provided in SECTION C.7
of this ARTICLE FOURTH or as required under the DGCL, the holders of shares of
Series B Preferred Stock shall not be entitled to vote on any matter submitted
to a vote of stockholders of the Corporation. Any vote expressly required by
SECTION C.7 of this ARTICLE FOURTH or by the DGCL may be given in person or by
proxy, either in writing without a meeting or by vote at any meeting called for
such purpose.
5. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or otherwise, the holders
of shares of Series B Preferred Stock shall be entitled to receive, out of the
assets of the Corporation available for distribution to its stockholders, in
cash, the amount of $10,000 for each share of Series B Preferred Stock, plus an
amount equal to all dividends accrued and unpaid on each such share up to the
date fixed for distribution, before any distribution shall be made to the
holders of shares of Junior Securities. If upon any liquidation, dissolution or
winding up of the Corporation, the assets distributable among the holders of
shares of Series B Preferred Stock and shares of Series A Preferred Stock are
insufficient to permit the payment in full to the holders of all such shares of
all preferential amounts payable to such holders, then the entire assets of the
Corporation so distributable shall be distributed ratably among the holders of
the shares of Series B Preferred Stock and the shares of Series A Preferred
Stock in proportion to the respective amounts that would be payable per share if
such assets were sufficient to permit payment in full.
(b) The holder of any shares of Series B Preferred Stock shall
not be entitled to receive any payment for such shares under this Section C.5
until such holder shall cause to be delivered to the Corporation (i) the
certificate(s) representing such shares and (ii) transfer instrument(s)
satisfactory to the Corporation and sufficient to surrender such shares to the
Corporation free of any adverse interest.
(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of Series B Preferred Stock, such
holders shall be entitled to no other or further participation in the
distribution of the assets of the Corporation.
6. CONVERSION RIGHTS. The holders of shares of Series B
Preferred Stock shall have no right to convert any such shares into shares of
Common Stock or any other securities of the Corporation.
7. LIMITATIONS. In addition to any other rights provided by
applicable law, so long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote, or the
written consent as provided by law, of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock, voting separately as a class:
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(a) create, authorize or issue any class or series of
Preferred Stock or any other class of capital stock ranking either as to payment
of dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the Corporation on a parity with, or having preference or
priority over, the Series B Preferred Stock (other than the Series A Preferred
Stock); or
(b) change the powers, preferences or rights with respect to
the Series B Preferred Stock so as to affect the Series B Preferred Stock
adversely;
PROVIDED, HOWEVER, any vote which would adversely affect the amount or timing of
the payment of the dividends on the Series B Preferred Stock, the amount or
timing of the payment of the Series B Redemption Price or any amounts paid
pursuant to SECTION C.5 of this ARTICLE FOURTH would require the affirmative
vote of the holders of all of the outstanding shares of Series B Preferred
Stock; and PROVIDED, FURTHER, (except as otherwise required by applicable law)
nothing herein contained shall require such a vote or consent in connection with
(i) any increase in the total number of authorized shares of Common Stock, or
(ii) the authorization or increase of any class or series of shares ranking, as
to dividends and in liquidation, dissolution or winding up of the affairs of the
Corporation, junior to the Series B Preferred Stock; Provide that no such vote
or written consent of the holders of the shares of Series B Preferred Stock
shall be required if, at or prior to the time when the issuance of any such
shares ranking on a parity with, or having preference or priority over, the
Series B Preferred Stock is to be made or any such change is to take effect, as
the case may be, provision is made for the redemption of all the then
outstanding shares of Series B Preferred Stock.
8. DIVIDEND RECEIVED DEDUCTION. For federal income tax
purposes, the Corporation shall report distributions on the Series B Preferred
Stock as dividends, to the extent of the Corporation's current and accumulated
earnings and profits (as determined for federal income tax purposes). In
addition, the Corporation covenants not to take any action voluntarily which
could reasonably be expected to cause dividends on the Series B Preferred Stock
to fail to be eligible for the dividend received deduction pursuant to Section
243 of the Internal Revenue Code of 1986, as amended from time to time.
D. COMMON STOCK. The powers, preferences and rights of the
Class A Common Stock, the Class B Common Stock and the Class C Common Stock and
the qualifications, limitations or restrictions thereof are as follows:
1. VOTING.
(a) CLASS A COMMON STOCK. Each share of Class A Common Stock
shall entitle the holder thereof to one (1) vote.
(b) CLASS B COMMON STOCK. The shares of Class B Common Stock
shall be non-voting shares except to the extent that a class vote is required
under the DGCL and except that the consent of the holders of at least a majority
of the shares of Class B Common Stock then outstanding shall be necessary to
permit, effect or validate (x) the issuance of any series of capital stock of
the Corporation, other than the Class A Common Stock, the Class C Common Stock,
the
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Series A Preferred Stock or the Series B Preferred Stock, which is on a parity
with or senior as to liquidation to the Class B Common Stock; or (y) the repeal,
amendment or other change in this Certificate of Incorporation in a manner which
would increase or decrease the aggregate number of authorized shares of Class B
Common Stock, increase or decrease the par value per share of the Class B Common
Stock, or alter or change the powers, preferences or rights of the Class B
Common Stock in any material respect.
(c) CLASS C COMMON STOCK. Each share of Class C Common Stock
shall entitle the holder thereof to ten (10) votes.
2. CONVERSION OF SHARES.
(a) CONVERSION OF CLASS A COMMON STOCK.
(i) Except as provided in SECTION D.2(b) of this
ARTICLE FOURTH, upon the transfer of any shares of Class A
Common Stock to any holder who is subject to, or whose
Affiliates (as defined in Regulation Y of the Board of
Governors of the Federal Reserve System (12 C.F.R. 225) or any
successor to such regulation ("REGULATION Y")) are subject to,
the limitations of the Bank Holding Company Act of 1956, as
amended, or the International Banking Act of 1978, as amended
(such holder shall be hereinafter referred to as a "REGULATED
HOLDER"), such Regulated Holder of the Class A Common Stock so
transferred shall have the right, but not the obligation, to
convert such shares of Class A Common Stock to shares of Class
B Common Stock on a share-for-share basis by providing written
notice to the Corporation (the "CONVERSION TO NON-VOTING") and
each such conversion shall be deemed to have been effected as
of the close of business on the date on which such notice has
been received.
(ii) Upon the Conversion to Non-Voting of each share
of Class A Common Stock pursuant to SECTION D.2(a)(i) of this
ARTICLE FOURTH, one-ninth of a share of Class A Common Stock
held by persons other than Regulated Holders shall
automatically be converted to one-ninth of a share of Class C
Common Stock as described in the following sentences. The
holder of the shares subject to the Conversion to Non-Voting
shall specify in writing to the Corporation the names of the
holders of the Class A Common Stock which are to be converted
to Class C Common Stock pursuant to this clause (ii), which
specification shall be approved by each holder of Class A
Common Stock specified therein.
(b) Conversion of Class B Common Stock. In connection with the
occurrence (or the expected occurrence, as described herein) of any of the
following events (each such event shall be hereinafter referred to as a
"CONVERSION EVENT"):
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(i) any registered underwritten public offering of
common equity securities of the Corporation; or
(ii) any sale of Securities of the Corporation to a
person or group of related persons (such sale being within the
meaning of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")) if, after such sale, such person or
group of persons in the aggregate would own or control
securities of the Corporation (excluding any shares of Class B
Common Stock being converted and disposed of in connection
with such Conversion Event) which possess in the aggregate,
the ordinary voting power to elect a majority of the
corporation's directors; or
(iii) any sale of securities of the Corporation to a
person or group of persons (such sale being within the meaning
of the Exchange Act) if, after such sale, such person or group
of persons would not, in the aggregate, own, control or have
the right to acquire more than two percent (2k) of the
outstanding securities of any class of voting securities of
the Corporation; or
(iv) a merger, consolidation or similar transaction
involving the Corporation if, after such transaction, a person
or group of persons in the aggregate would own or control
securities of the Corporation which possess in the aggregate
the ordinary voting power to elect a majority of the
Corporation's directors (provided that the transaction has
been approved by the Board of Directors of the Corporation or
a committee thereof and by the holders of a majority of the
Common Stock then outstanding (excluding all shares of Class B
Common Stock));
each holder of shares of Class B Common Stock shall be entitled at any time and
from time to time to convert into an equal number of Shares of Class A Common
Stock any of such holder's Class B Common Stock which are being (or are expected
to be) distributed, disposed of or Bold in connection with such Conversion
Event. Each holder of shares of Class B Common Stock shall be entitled to
convert its shares of Class B Common Stock in connection with any Conversion
Event if such holder reasonably believes that such Conversion Event shall be
consummated. A written request for conversion from any holder of Class B Common
Stock to the Corporation stating such holder's reasonable belief that a
Conversion Event shall occur shall be a conclusive determination thereof and
shall obligate the Corporation to effect such conversion in a timely manner so
as to enable each such holder to participate in such Conversion Event. The
Corporation shall not cancel the shares of Class B Common Stock so converted
before the tenth day following such Conversion Event and shall reserve such
shares until such tenth day for possible reissuance. If any shares of Class B
Common Stock are converted into shares of Class A Common Stock in connection
with a Conversion Event and such shares of Class A Common Stock are not actually
distributed, disposed of or sold pursuant to such
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Conversion Event, such shares of Class A Common Stock shall be promptly
converted back into the same number of shares of Class B Common Stock.
(c) CONVERSION OF CLASS C COMMON STOCK. One-ninth of an
outstanding share of Class C Common Stock shall automatically, without any
further act or deed on the part of the Corporation or any other person, be
converted into one-ninth of a share of Class A Common Stock, on a
share-for-share basis, immediately upon, and concurrently with, the conversion
of each share of Class B Common Stock into a share of Class A Common Stock
pursuant to SECTION D.2(b) of this ARTICLE FOURTH. If, however, any shares or
fraction of a share of Class A Common Stock are converted back into the same
number of shares or fraction of a share of Class B Common Stock because such
shares or fraction of a share of Class A Common Stock were not actually
distributed, disposed of or gold pursuant to a Conversion Event as provided in
SECTION D.2(b) of this ARTICLE FOURTH, then any shares or fraction of a share of
Class B Common Stock which converted into shares or fraction of a share of Class
A Common Stock pursuant to this SECTION D.2(c) shall be promptly converted back
into the same number of shares or fraction of a share of Class C Common Stock.
Unless otherwise specified in a writing delivered by the holder of the shares or
fraction of a share of Class B Common Stock being converted pursuant to SECTION
D.2(b) of this ARTICLE FOURTH, the number of shares or fraction of a share of
Class C Common Stock of each holder of Class C Common Stock which shall be
converted into a share or fraction of a share of Class A Common Stock shall he
determined by multiplying the total number of shares or fraction of a share to
be converted times a fraction, the numerator of which is the number of shares of
Class C Common Stock held by such holder, and the denominator of which is the
total number of shares of Class C Common Stock outstanding.
(d) CONVERSION PROCEDURE; ISSUANCE OF CERTIFICATES.
(i) Unless otherwise provided for in connection with
a Conversion Event, each conversion of shares of Class B
Common Stock into shares of Class A Common Stock pursuant to
SECTION D.2(b) of this ARTICLE FOURTH shall be effected by the
surrender of the certificates representing the shares of Class
B Common Stock to be converted at the principal office of the
Corporation (or such other office or agency of the Corporation
as the Corporation may designate by notice in writing to the
holders of the Class B Common Stock) at any time during normal
business hours, together with a written notice by the holder
Of such shares of Class B Common Stock stating that such
holder desires to convert such shares. Such notice shall also
state the name or names (with addresses) and denominations in
which the certificate or certificates for such shares of Class
A Common Stock are to be issued and shall include instructions
for reasonable delivery thereof. Unless otherwise provided for
in connection with a Conversion Event, each conversion of
Class B Common Stock to Class A Common Stock shall be deemed
to have been effected as of the close of business on the date
on which such certificates representing such Class B Common
Stock have been surrendered
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and such notice has been received. At such time, the rights of
the holder of the surrendered shares of Class B Common Stock
as such holder shall cease, and the person in whose name the
certificates for the shares of Class A Common Stock will he
issued upon such conversion shall be deemed to have become the
holder of record of the shares Of Class A Common Stock
represented thereby. Promptly after the surrender of the
certificates and the receipt of written notice, the
Corporation shall issue and deliver in accordance with the
surrendering holder's instructions, the certificates for the
shares of Class A Common Stock issuable upon such conversion,
and certificates representing any surrendered shares of Class
B Common Stock which were delivered to the Corporation in
connection with such conversion but which were not requested
to be converted and, therefore, were not converted.
(ii) Unless otherwise provided for in connection with
a Conversion Event, each conversion of shares of Class A
Common Stock into shares of Class B Common Stock pursuant to
SECTION D.2(a) of this ARTICLE FOURTH shall be effected by the
surrender of the certificates representing the shares of Class
A Common Stock to be converted at the principal office of the
Corporation (or such other office or agency of the Corporation
as the Corporation may designate by notice in writing to the
holders of the Class B Common Stock) at any time during normal
business hours, together with a written notice by the holder
of such shares of Class A Common Stock stating that such
holder desires to convert such shares; PROVIDED, that the
conversion of shares of Common Stock from one class to another
pursuant to SECTION D.2(a) of this ARTICLE FOURTH shall be
deemed effective as provided in SECTION D.2(a)(i) of this
ARTICLE FOURTH whether or not the certificates representing
such shares indicate the proper class designation.
(iii) Each holder of any shares Common Stock of any
class which are automatically converted into shares of Common
Stock of another class in accordance with SECTION D.2(c) of
this ARTICLE FOURTH shall tender certificates representing
such shares to the Corporation promptly for reissuance with
the post-conversion class designation; Provided, that the
conversion of Common Stock from one class to another pursuant
to SECTION D.2(c) of this ARTICLE FOURTH shall occur
automatically and be effective whether or not the certificates
representing such shares indicate the proper class
designation.
(iv) The issuance of certificates for any class of
Common Stock upon conversion from any other class of Common
Stock shall he made without charge to the holders of such
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Common Stock for any documentary, stamp or similar issue or
transfer tax due on the issue of Common Stock upon the
conversion. The holder, however, shall pay to the Corporation
the amount of any tax which is due (or shall establish to the
satisfaction of the Corporation the payment thereof or that no
such payment is due) if the shares are to be issued in a name
other than the name of such holder.
(v) The Corporation shall reserve and at all times
shall have reserved out of its authorized but unissued Class A
Common Stock, Class B Common Stock and Class C Common Stock,
solely for the purpose of issuance upon the conversion of any
shares of Common Stock in accordance with this SECTION D.2,
such number of shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock, respectively, as may be
issuable upon such conversion. All shares of Common Stock
issuable upon any conversion pursuant to this SECTION D.2
shall, when issued, constitute duly and validly issued, fully
paid and nonassessable shares of Common Stock. The Corporation
shall from time to time, in accordance with the laws of the
State of Delaware, increase the authorized number of shares of
Class A Common Stock, Class B Common Stock or Class C Common
Stock, as the case may be, to permit issuance of Class A
Common Stock, Class B Common Stock or Class C Common Stock in
accordance with this SECTION D.2. The Corporation shall use
its reasonable best effort to assure that all such shares of
Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of
Common Stock of the relevant class may be listed (except for
official notice of issuance which shall be immediately
transmitted by the Corporation upon issuance).
(vi) The Corporation shall not close its books
against the transfer of Common Stock in any manner which would
interfere with the timely conversion of any Common Stock
pursuant to this SECTION D.2. The Corporation shall assist and
cooperate with any holder of shares of Common Stock required
to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of
Common Stock hereunder (including, without limitation, making
any filings required to be made by the corporation).
3. DIVIDENDS. Subject to the rights of the holders of
Preferred Stock or any other class or series of stock having a preference as to
dividends over the Common Stock then outstanding, the holders of Common Stock
will be entitled to receive, to the extent permitted by law, and to share
equally and ratably, share for share, to the exclusion of the holders of any and
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all series of Preferred Stock, such dividends as may be declared from time to
time by the Board of Directors. No dividends shall be paid on the Class A Common
Stock, the Class B Common Stock or the Class C Common Stock, whether in cash,
property or shares of stock of the Corporation, unless the same dividend shall
be payable on each share of Class A Common Stock, Class B Common Stock and Class
C Common Stock; PROVIDED that if dividends so declared are payable in shares of
Common Stock, dividends will he declared which are payable at the same rate on
all series of Common Stock, and the dividends on the Class A Common Stock will
be paid in Class A Common Stock, the dividends on the Class B Common Stock will
be paid in Class B Common Stock and the dividends on the Class C Common Stock
will be paid in Class C Common Stock.
4. OTHER POWERS, PREFERENCES AND RIGHTS.
(a) The Class A Common Stock, the Class B Common Stock and the
Class C Common Stock are subject to all the powers, preferences and rights of
the Preferred Stock as may be stated in this Certificate of Incorporation of the
Corporation.
(b) Except as otherwise required by law or expressly provided
for in this Certificate of Incorporation, the powers, preferences and rights of
the Class A Common Stock, the Class B Common Stock and the Class C Common Stock,
and the qualifications, limitations or restrictions thereof, shall in all
respects be identical.
5. STOCK ADJUSTMENTS. The Corporation shall not be a party to
or effect any merger, consolidation, reorganization, reclassification or
recapitalization pursuant to which any Regulated Holder would be required to
receive, or which would result in such Regulated Holder owning or controlling,
(a) any voting securities which would cause such holder to hold more than 4.999k
(or 24.999% in the case of Windward/Merchant, L.P. either alone or in the
aggregate with Windward/Merban, L.P. and CS First Boston Merchant Investments
1995/96, L.P.) of the outstanding shares of any Class of voting securities, (b)
any securities convertible into voting securities which if such conversion took
place would cause such holder to hold more than 4.999k (or 24.999k in the case
of Windward/Merchant, L.P. either alone or in the aggregate with
Windward/Merban, L.P. and CS First Boston Merchant Investments 1995/96, L.P.) of
the outstanding shares of any Class of voting securities other than securities
which are specifically provided to be convertible only in the event that such
conversion may occur without any violation of Regulation Y or (c) with
Windward/Merchant, L.P., Windward/Merban, L.P. and CS First Boston Merchant
Investments 1995/96, L.P. in the aggregate more than 24.999k of the total
outstanding shares of Common Stock. The term "Class" shall have the meaning
determined by reference to Regulation Y and all authoritative interpretations of
Regulation Y. In the event of any merger, consolidation, reorganization,
reclassification or recapitalization, effective provision shall be made in the
certificate of incorporation of the resulting or surviving corporation or
otherwise for the protection of the conversion rights of the Class A Common
Stock, Class B Common Stock and Class C Common Stock that shall be applicable,
as nearly as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of Class A Common Stock,
Class B Common Stock or Class C Common Stock, respectively. In case securities
or property other than Class A Common Stock, Class B Common Stock or Class C
Common Stock shall be issuable or deliverable upon conversion as aforesaid,
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then all references in this Section D.5 shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
6. LIQUIDATION. In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or otherwise,
after payment shall have been made to the holders of any Preferred Stock, the
holders of Class A Common Stock, Class B Common Stock and Class C Common Stock
shall be entitled, to the exclusion of the holders of Preferred Stock, to share
ratably according to the number of shares Of Class A Common Stock, Class B
Common Stock and Class Q Common Stock held by them in the remaining assets of
the Corporation available for distribution to its stockholders.
7. DESIGNATION OF ADDITIONAL SHARES OF CLASS A COMMON STOCK,
CLASS B COMMON STOCK AND CLASS C COMMON STOCK.
(a) The Board of Directors of the Corporation is expressly
authorized at any time, and from time to time, to provide for the issuance at
any time, and from time to time, of shares of Common Stock not previously
designated as to class as Class A Common Stock, Class B Common Stock or Class C
Common Stock as shall be stated and expressed in the resolution or resolutions
providing for the issue thereof adopted by the Board of Directors.
(b) Each share of Common Stock issued by the Corporation, if
reacquired by the Corporation (whether by repurchase or other means), shall upon
such reacquisition resume the status of authorized and unissued shares of Common
Stock, undesignated as to class and available for designation and issuance by
the Corporation in accordance with paragraph (a) of this SECTION D.7.
FIFTH: INCORPORATOR. The name and mailing address of the
incorporator is Sherry S. Treston, Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603.
SIXTH: NUMBER AND ELECTION OF DIRECTORS. The number of
directors of the Corporation shall be as from time to time fixed by, or in the
manner provided in, the By-laws of the Corporation. Election of directors need
not be by written ballot unless the By-laws so provide.
SEVENTH: LIABILITY OF DIRECTORS. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability W for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. If the DGCL is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended. Any repeal or modification of this Article Eighth by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
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EIGHTH: INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each
person who is or was a director or officer of the Corporation, and each person
who serves or served at the request of the Corporation as a director or officer
of another enterprise, shall be indemnified by the Corporation in accordance
with, and to the fullest extent authorized-by, the DGCL.
NINTH: AMENDMENT OF BY-LAWS. In furtherance and not in
limitation of the powers conferred by statute, the Board of Directors is
expressly authorized to make, alter or repeal the By-laws of the Corporation,
subject to any specific limitation on such power contained in any By-laws
adopted by the stockholders.
TENTH: AMENDMENT OF CERTIFICATE OF INCORPORATION. The
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon the stockholders herein are
granted subject to this reservation.
ELEVENTH: MEETINGS OF STOCKHOLDERS: BOOKS OF THE CORPORATION.
Meetings of the stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the DGCL) outside the State of Delaware
at such place or places as may be designated from time to time by the Board of
Directors or in the By-laws of the Corporation.
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IN WITNESS WHEREOF, the undersigned, being the President of
this Corporation, does make this certificate, hereby declaring and certifying
that this is his act and deed and the facts herein stated are true, and
accordingly, has hereunto set his hand this 1st day of April, 1996.
French Holdings, Inc
By: /s/ Gary L. Swenson
-----------------------
Title: President
Attest:
/s/ Bela R. Schwartz
Title: Secretary
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Exhibit 3.4
AMENDED AND RESTATED BY-LAWS
OF
FRENCH HOLDINGS, INC.
Dated: March 16, 1998
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
FRENCH HOLDINGS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE AND AGENT. The registered office
of the Corporation shall be at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware. The name of its registered agent at
that address is The Corporation Trust Company.
SECTION 2. OTHER OFFICES. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The annual meetings of
stockholders for the election of directors shall be held on such date and at
such time as shall be designated from time to time by the Board of Directors.
Any other proper business may be transacted at the annual meeting of
stockholders.
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SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law
or by the Amended and Restated Certificate of Incorporation of the Corporation,
as amended and restated from time to time (the "Certificate of Incorporation"),
special meetings of stockholders, for any purpose or purposes, may be called by
either W the Chairman, if there be one, or (ii) the President, (iii) any Vice
President, if there be one, (iv) the Secretary or (v) any Assistant Secretary,
if there be one, and shall be called by any such officer at the request in
writing of (i) the Board of Directors, (ii) a committee of the Board of
Directors that has been duly designated by the Board of Directors and whose
powers and authority include the power to call such meetings or (iii)
stockholders owning a majority of the capital stock of the Corporation issued
and outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. At a special meeting of stockholders, only
such business shall be conducted as shall be specified in :he notice of meeting
(or any supplement thereto).
SECTION 4. NOTICE. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders
may be adjourned from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
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which might have been transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting shall be given
each stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the
Amended and Restated Certificate of Incorporation, the holders of a majority of
the capital stock issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall consti tute a quorum at all meetings of
the stockholders for the transaction of business. A quorum, once established,
shall not be broken by the withdrawal of enough votes to leave less than a
quorum. If, however, such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, in the manner provided in Section 5, until a quorum shall be
present or represented.
SECTION 7. VOTING. Unless otherwise required by law, the
Amended and Restated Certificate of Incorporation or these Amended and Restated
By-Laws, any question brought before any meeting of stockholders, other than the
election of directors, shall be decided by the vote of the holders of a majority
of the total number of votes of the capital stock represented and entitled to
vote thereat, voting as a single class. Unless Otherwise provided in the Amended
and Restated Certificate Incorporation, and subject to Section 5 of Article V
hereof, each stockholder represented at a meeting of stockholders shall be
entitled to cast one vote for each share of the capital stock entitled to vote
thereat held by such stockholder. Such votes may be cast in person or by proxy
but no proxy shall be voted on or after three years from
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its date, unless such proxy provides for a longer period. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in such officer's discretion, may require that any
votes cast at such meeting shall be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless
otherwise provided in the Amended and Restated Certificate of Incorporation, any
action required or permitted to be taken at any annual or special meeting of
stockholders of the Corporation, may be taken Without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by delivery to its
registered Office in the State of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this Section 8 to the Corporation, written consents signed by a sufficient
number of holders to take action are delivered to the Corporation by delivery to
its registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be
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given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder of the Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 9 of this Article 11 or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and
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regulations as adopted by the Board of Directors, the chairman of any meeting of
the stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the Board of Directors or
prescribed by the chairman of the meeting, may include, without limitation,
following: (i) the establishment of an agenda or order of business for the
meeting; (ii) the determination of when the polls shall open and close for any
given matter to be voted on at the meeting; (iii) rules and procedures for
maintaining order at the meeting and the safety of those present; (iv)
limitations on attendance at or participation in the meeting to stockholders of
record of the corporation, their duly authorized and constituted proxies or such
other persons as the chairman of the meeting shall determine; (v) restrictions
on entry to the meeting after the time fixed for the commencement thereof; and
(vi) limitations on the time allotted to questions or comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall be fixed from time to time by the Board of
Directors. Except as provided in Section 2 of this Article 1II, directors shall
be elected by a plurality of the votes cast at the annual meetings of
stockholders and each director so elected shall hold office until the next
annual meeting of stockholders and until such director's successor is duly
elected and qualified, or until such
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director's earlier death, resignation or removal. Any director may resign at
any time upon written notice to t~he corporation. Directors need not be
stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Amended and Restated Certificate of Incorporation, vacancies arising through
death, resignation, removal, an increase in the number of directors or otherwise
may be filled only by a majority of the directors then in office, though less
than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier death, resignation or
removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Amended and
Restated Certificate of Incorporation or by these Amended and Restated
By-Laws required to be exercised or done by the stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined
by the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President, or by any director.
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than forty-eight (48) hours before
the date of the meeting, by telephone or telegram on twenty-four (24) hours,
notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
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SECTION 5. QUORUM. Except as otherwise required by law or the
Amended and Restated Certificate of Incorporation, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting of the time
and place of the adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise
provided in the Amended and Restated Certificate of Incorporation, or these
Amended and Restated By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided in the Amended and Restated Certificate of Incorporation,
members of the Board of Directors of the Corporation, or any committee thereof,
may participate in a meeting of the Board of Directors or such committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall constitute presence
in person at such meeting.
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SECTION 8. COMMITTEES. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any absent or disqualified member. Any committee,
to the extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required .
SECTION 9. COMPENSATION. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any
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other corporation, partnership, association, or other organization in which one
or more of its directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because the direct or officer's vote is counted for such
purpose if (i) the material facts as to the director or officer's relationship
or interest and as to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board of Directors or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to the director
or officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, also may choose a Chairman
of the Board of Directors (who must be a director)
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and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and
other of officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Amended and Restated Certificate of
Incorporation. The officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of Directors,
need such officers be directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first
meeting held after each annual meeting of stockholders (or action by written
consent of stockholders in lieu of the annual meeting of stockholders), shall
elect the officers of the Corporation who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and qualified,
or until their earlier death, resignation or removal. Any officer elected by the
Board of Directors may be removed at any time by the affirmative vote of the
Board of Directors. Any vacancy occurring in any office of the Corporation, all
be filled by the Board of Directors. The salaries cf all officers of the
Corporation shall be fixed by the Board of Directors.
SECTION 3. SECTION VOTING SECURITIES OWNED BY THE CORPORATION.
Powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors and
any such officer may, in the name of and on behalf of the corporation, take all
such action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any corporation in which the Corporation
may own securities and
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at any such meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, during the
absence or disability of the President, the Chairman of the Board of Directors
shall exercise all the powers and discharge all the duties of the President and
shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as may from time to
time be assigned by these Amended and Restated By-Laws or by the Board of
Directors.
SECTION 5. PRESIDENT. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. The President shall execute all bonds, mortgages, contracts
and other instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or Permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so
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authorized by these Amended and Restated By-Laws, the Board of Directors or t he
President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The president
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these Amended and Restated
By-Laws or by the Board of Directors.
SECTION 6. VICE PRESIDENTS. At the request of the President or
in the President's absence or in the event of the President's inability or
refusal to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors f rom time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
4nability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 7. SECRETARY. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of
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all meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chairman of the Board of Directors or the President, under whose
supervision the Secretary shall be. If the Secretary shall be unable or shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if here be no
Assistant Secretary, then either the Board of Directors or the President may
choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such; Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest to the affixing by such officer's signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in :he name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so. requires, an account of
all transactions as Treasurer and of the financial condition of the
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Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under the Treasurer's control
belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer. If required
by the Board of Directors, an Assistant Treasurer shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Assistant Treasurer and for the restoration to the Corporation, in case of
the Assistant Treasurer's death, resignation, retirement or removal from office,
of all books,
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papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging to
the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board
of Directors may choose shall perform sl-'ch duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation W by the Chairman of the Board of Directors, the President or a Vice
President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who ha~ signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may
direct a new certificate to be issued in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person
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claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or the owner's legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost,, stolen or destroyed or
the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Amended and Restated
By-Laws. Transfers stock shall be made on the books of the Corporation only by
the person named in the certificate or by such person's attorney lawfully
constituted in writing and upon the surrender of the certificate therefor, which
shall be cancelled before a new certificate shall be issued. No transfer of
stock shall be valid as against the Corporation for any purpose until it shall
have been entered in the stock records of the Corporation by an entry showing
from and to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockho1ders shall be at the close of business on the day next Preceding the day
on which notice
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is given, or, f notice is waived, at the close of business on the day next
Preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or vote at a meeting of stockholders shall apply
to any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by, certified or registered mail, return receipt requested. if no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on :he day on which the Board of Directors adopts the
resolutions taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders
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entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
SECTION 6. SECTION RECORD OWNERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise required
by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by
law, the Amended and Restated Certificate of Incorporation or these Amended and
Restated By-Laws, to be given to any director, member of a committee or
stockholder, such notice may be given by mail, addressed to such director,
member of a committee or stockholder, such person's address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Written notice may also be given personally or by telegram, telex
or cable.
19
<PAGE>
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required
by law, the Amended and Restated Certificate of Incorporation or these Amended
and Restated By-Laws, to be given to any director, member of a committee or
stockholder, a waiver thereof in writing, signed, by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Attendance of a person at a meeting, present in
person or represented by proxy, shall constitute a waiver of notice of such
meeting, except where the person attends the meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the General Corporation Law of the
State of Delaware and the provisions of the Amended and Restated Certificate of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting the Board of Directors (or any action by written consent in
lieu thereof in accordance with Section 6 of Article III hereof), and may be
paid in cash, in property, or in shares of the Corporation's capital stock.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and the
Board of Directors may modify or abolish any such reserve.
20
<PAGE>
SECTION 2. DISBURSEMENTS. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation
shall be fixed by resolution of the Board cf Directors .
SECTION 4. CORPORATE SEAL. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS
OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, Joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys, fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted i,-.
good faith and in a manner such person reasonably believed to be in or not
21
<PAGE>
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership,_joint venture, trust, employee benefit plan or
other enterprise against expenses (including attorneys, fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such per son acted in good faith and in a manner such
person reasonably believed to be in or not opposed the best interests of the
Corporation; except that no Indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
22
<PAGE>
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion or (iii) by the stockholders. To
the extent, however, that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys, fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed to
have acted in good and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the
23
<PAGE>
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section 4 shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to the Court of Chancery in the State of Delaware
for indemnification to the extent otherwise permissible under Sections 1 and 2
of this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. if successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
24
<PAGE>
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a
director or officer in defending any Civil, criminal, administrative or
investigative action, Suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT
OF EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Amended and Restated Certificate of Incorporation, any
By-Law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to action in another
capacity while holding such office, it being the policy of the Corporation that
indemnification of the persons specified in Sections 1 and 2 of this Article
VIII shall be made to the fullest extent permitted by law. The provisions of
this Article VIII shall not be deemed to preclude the indemnification of any
person who is not specified in Section 1 or 2 of this Article VIII but whom the
Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other
25
<PAGE>
enterprise against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article
VIII, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would '"ave had Dower and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to 11fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
26
<PAGE>
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding
anything contained in this Article VIII to the contrary, except for proceedings
to enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These Amended and Restated By-Laws
may be altered, amended or repealed, in whole or in part, or new By-Laws may be
adopted by the stockholders or by the Board of Directors in the manner now or
hereafter prescribed by statute, provided, however, that notice of such
alteration, amendment, repeal or adoption of new By-Laws be contained in the
notice of such meeting of stockholders or Board of Directors as the case may be.
All such
27
<PAGE>
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used Jn this Article
IX and in these Amended and Restated By-laws generally, the term "entire Board
of Directors" means the total number of directors which the Corporation would
have if there were no vacancies.
28
<PAGE>
Exhibit 3.5
ARTICLES OF INCORPORATION
OF
J. L. FRENCH CORPORATION
Executed by the undersigned, natural person over the age of twenty-one
years, for the purpose of forming a Wisconsin corporation under Chapter 180
of the Wisconsin Statutes:
ARTICLE I -- NAME
-----------------
The name of the corporation shall be J. L. FRENCH CORPORATION.
ARTICLE II -- TERM
------------------
The period of existence shall be perpetual.
ARTICLE III -- PURPOSE
----------------------
The purpose shall be to engage in any lawful business or purpose
whatever for which corporations may be organized under the Wisconsin
Business Corporation Law, Chapter 180 of the Wisconsin Statutes.
ARTICLE IV -- SHARES
--------------------
The number of shares which it shall have authority to issue,
itemized by classes, par value of shares, shares without par value, and
series, if any, within a class, is:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE PER SHARES
----- ---------------- ---------------------
<S> <C> <C>
Common 1,250 Shares are without par value
</TABLE>
ARTICLE V -- INITIAL OFFICE
---------------------------
Address of initial registered office is 602 North 6th Street,
Sheboygan, Wisconsin, 53081.
ARTICLE VI -- NAME OF AGENT
---------------------------
Name of initial registered agent at said address is
<PAGE>
ARTICLE VII -- DIRECTORS
------------------------
The number of directors constituting the initial board of directors
shall be three. Thereafter the number may be fixed by law but shall not be
less than three.
ARTICLE VIII -- INCORPORATORS
-----------------------------
The name and address of the incorporator is
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
James L. French 1132 North 5th Street,
Sheboygan, Wisconsin 53081
</TABLE>
ARTICLE IX -- AMENDMENTS
------------------------
These articles may be amended in the manner authorized by law at
the time of amendment.
Executed in duplicate on the 5th day of August, 1968
/s/ JAMES L. FRENCH
---------------------------------------
James L. French
STATE OF WISCONSIN )
) ss.
SHEBOYGAN COUNTY )
Personally came before me this 5th day of August, 1968, the above
named James L. French to me known to be the person who executed the foregoing
instrument and acknowledged the same.
/s/ Alvin R. Kloet
---------------------------------------
Notary Public, Sheboygan Co.,
Wisc.
My Commission is Permanent.
<PAGE>
ORIGINAL
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
OF
J. L. FRENCH CORPORATION
- -------------------------------------------------------------------------------
STATE OF WISCONSIN
DEPARTMENT OF STATE
FILED
AUG 14 1968
ROBERT C. ZIMMERMAN
SECRETARY OF STATE
$40.00
- -------------------------------------------------------------------------------
LAW OFFICES
OLSEN & KLOET
602 NORTH 6TH STREET
SHEBOYGAN, WISCONSIN
<PAGE>
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
J. L. FRENCH CORPORATION
KNOW ALL MEN BY THESE PRESENTS, that the sole shareholder of J. L. FRENCH
CORPORATION, a corporation organized under the laws of the State of
Wisconsin, at a special meeting of such shareholders held and convened on
April 6, 1985, pursuant to the Articles of Incorporation and By-Laws of the
corporation, adopted the following amendment to the Articles of Incorporation
of J. L. French Corporation:
RESOLUTION
"BE IT RESOLVED: that ARTICLE VII of the Articles of Incorporation be
and the same hereby is amended to read as follows:
ARTICLE VII - DIRECTORS
The number of directors may be fixed from time to time by the By-Laws
but shall not be less than the minimum number allowed by Wisconsin
Law.
The number of shares of the corporation outstanding and the number of
shares entitled to vote thereon at the time of the adoption of such amendment
was 500 common shares, no par value. Of such shares, five hundred (500)
shares were present and represented at such meeting, and all of such common
shares voted for and none against such amendment, such vote being the
affirmative vote of the majority of the shares of the corporation issued and
outstanding and entitled to vote thereon.
The Original Articles of Incorporation were recorded in Volume 550 of
Records on pages 190 3, on the 16th day of August, 1968 at 9:07 A.M. in the
office of the Register of Deeds for Sheboygan County, Wisconsin as Document
Number 905435.
<PAGE>
IN WITNESS WHEREOF, we, James L. French, President, and Mary Lou French,
Secretary, of J. L. French Corporation have hereunto affixed our signatures
and have caused the seal of the corporation to be hereunto affixed at
Sheboygan, Sheboygan County, Wisconsin, this 6th day of April, 1985.
/s/ James L. French
--------------------------------------
JAMES L. FRENCH President
[CORPORATE SEAL]
/s/ Mary Lou French
--------------------------------------
MARY LOU FRENCH Secretary
This instrument was drafted by:
Atty. Alvin R. Kloet
<PAGE>
Amendment
- ---------
Change directors provision
Return recorded document to:
Atty. Alvin R. Kloet
Chase, Olsen, Kloet & Gunderson [STAMP]
392 North 6th Street
Sheboygan, Wisconsin 53081
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
--------------------------------------
OF
--
J. L. FRENCH CORPORATION
------------------------
RESOLVED, That the Articles of Incorporation be amended to provide for
two classes of Common shares of stock and one class of Preferred shares of
stock and, accordingly, "ARTICLE IV - SHARES" of the Articles of
Incorporation of J. L. FRENCH CORPORATION be and the same hereby is amended
to read as follows:
"ARTICLE IV - SHARES
-------------------
"The capital shares of this Corporation shall be as follows:
"(1) COMMON SHARES. There shall be two (2) classes of Common Shares:
(a) Class "A" VOTING Common Shares; and
(b) Class "B" NON-VOTING Common Shares.
The Class "A" and Class "B" Common Shares shall be identical in all
respects, except that the holders of Class "B" Common Shares shall have
no voting power for any purpose whatsoever, except as specifically
provided herein, and the holders of Class "A" Common Shares shall, to the
exclusion of the holders of Class "B" Common Shares, have full voting
power for all purposes. The aggregate number of Common Shares which the
Corporation shall have authority to issue is 30,000 shares without par
value, consisting of:
"(i) 10,000 shares designated 'Class "A" Voting Common Shares';
and
"(ii) 20,000 shares designated 'Class "B" Non-Voting Common
Shares'.
"(iii) The following rights, privileges, and limitations shall
attach to the Class "B" Non-Voting Common Shares: Class "B"
Non-Voting Common Shareholders shall be permitted to vote along with
Class "A" Voting Common Shareholders on any provision to allow
Preferred Shares to be converted into Class "B" Non-Voting Shares;
and Class "B" Non-Voting Common Shareholders shall be permitted to
vote along with Class "A" Voting Common Shareholders on any
provision to allow Preferred Shares to be converted into Class "A"
Voting Common Shares.
<PAGE>
"(2) PREFERRED SHARES. In addition to the above Common Shares, there
shall be one class of Preferred Shares. The aggregate number of Preferred
Shares which this Corporation shall have authority to issue is 10,000
shares, having a par value of Five Hundred Dollars ($500.00) per share.
The following is a description of the powers, preferences, and rights and
the restrictions, qualifications, and limitations of the Preferred Stock
authorized above:
"(a) The Board of Directors may, except as otherwise provided
below, by resolution from time to time classify or reclassify and
issue in one or more series any unissued shares of Preferred Stock
and may fix or alter in one or more respects, from time to time
before reissuance of such shares, the number and designation of any
series or classification, liquidation and dividend rights,
preference rights, redemption rights, conversion rights, and any
other rights, restrictions and qualifications of and the terms of
any purchase, retirement, or sinking fund which may be provided for
such shares of Preferred Stock.
"(b) The Preferred Shares of the Corporation shall be
non-voting shares.
"(c) No holder of stock of the Corporation shall be entitled as
a matter of right preemptive or otherwise, to subscribe for or
purchase any part of any Preferred Stock now or hereafter authorized
to be issued, or shares thereof, held in the treasury of the
Corporation, whether issued for cash or other consideration or by
way of dividend or otherwise.
"(d) In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the affairs of the Corporation, the
holders of the Preferred Stock shall be entitled to receive Five
Hundred Dollars ($500.00) in cash for each share thereof, together
with an amount in cash equal to any declared dividends thereon to
the date of such payment, before any distribution of the assets of
the Corporation shall be made to the holders of Common Stock. After
such payment shall have been made in full to the holders of the
outstanding Preferred Stock or funds necessary for such payment
shall have been set aside in trust for the account of
-2-
<PAGE>
the holders of the outstanding Preferred Stock so as to be and continue
available therefor, the holders of the outstanding Preferred Stock shall be
entitled to no further participation in such distribution of the assets of
the Corporation and the remaining assets of the Corporation shall be
divided and distributed among the holders of the Common Stock then
outstanding according to their respective shares. If, upon such
liquidation, dissolution, or winding up, the assets of the Corporation
distributable as aforesaid among the holders of the Preferred Stock shall
be insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the Preferred
Stock. A consolidation or merger of the Corporation, a sale or transfer of
all or substantially all of its assets as an entirety, or any purchase or
redemption of stock of the Corporation of any class, shall not be regarded
as a "liquidation, dissolution, or winding up of the affairs of the
Corporation" within the meaning of this paragraph.
"(e) The holders of record of Preferred Stock shall be entitled to
receive, when and as declared from the surplus only by the Board of
Directors, non-cumulative cash dividends at the rate of, but never
exceeding, Twelve Percent (12%) per annum per share for the fiscal year
ending with July 31, 1989, and for each and every fiscal year thereafter,
payable each year after the annual meeting of the Corporation in preference
and priority to any payment for and any dividends upon the Class "A" Voting
Common Shares and Class "B" Non-Voting Common Shares for such fiscal year;
and, if such surplus of any fiscal year is not sufficient to pay a
dividend of Twelve Percent (12%) per annum per share on said Preferred
Shares, then such dividend declared by the Board of Directors may be paid
thereon as such surplus of such fiscal year will suffice to pay.
"After the full Twelve Percent (12%) dividend on the Preferred
Shares for such fiscal year has been paid or declared and a sum sufficient
for the payment thereof set apart, dividends on the Class "A" Voting Common
Shares and Class "B" Non-Voting Common Shares may be paid
-3-
<PAGE>
out of the remainder of the surplus available therefor.
"(f) Such other preferences, limitations, and relative rights as
the Board of Directors may require at the time of issuance, but such
provisions shall be set forth on the stock certificates and may not be
changed without reissuing such stock with the consent of the holder
thereof."
----------------------------------------------------------
The undersigned officers of J.L. FRENCH CORPORATION, a Wisconsin
corporation with registered office in Sheboygan County, Wisconsin, CERTIFY:
The foregoing amendment of the articles of incorporation of said
corporation was consented to in writing by the holders of all shares entitled
to vote with respect to the subject matter of said amendment, duly signed by
said shareholders or in their names by their duly authorized attorneys.
Executed in duplicate and seal affixed this 21st day of December 1987.
/s/ James L. French
-----------------------------------
JAMES L. FRENCH, President
(SEAL)
/s/ Mary Lou French
-----------------------------------
MARY LOU FRENCH, Secretary
This document was drafted by:
Attorney Alexander Hopp
-4-
<PAGE>
$12 Sheboygan
Amendment
---------
Increase authorized shares from: 1,250 Shares Common N.P.O.
To: 10,000 Shares Class A Voting Common Shares N.P.O.
20,000 Shares Class B Non-Voting Common Shares N.P.O.
10,000 Shares Preferred at $500.00 P.O.
[STAMP]
Atty. Alexander Hopp
Hopp, Hodson, [ILLEGIBLE]
601 North 5th St.
P.O. Box 178
Sheboygan, Wis. 53082
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
--------------------------------------
OF
--
J. L. FRENCH CORPORATION
------------------------
RESOLVED, That Subsection (2)(e) of "ARTICLE IV - SHARES" of the Articles
of Incorporation be amended to read:
"(e) The holders of record of Preferred Stock shall be entitled to
receive, when and as declared from the surplus only by the Board of
Directors, non-cumulative cash dividends at the rate of, but never
exceeding, Twelve Percent (12%) per annum per share for the fiscal year
ending with July 31, 1988, and for each and every fiscal year thereafter,
payable each year after the annual meeting of the Corporation in
preference and priority to any payment for and any dividends upon the
Class "A" Voting Common Shares and Class "B" Non-Voting Common Shares for
such fiscal year; and if such surplus of any fiscal year is not
sufficient to pay a dividend of Twelve Percent (12%) per annum per share
on said Preferred Shares, then such dividend declared by the Board of
Directors may be paid thereon as such surplus of such fiscal year will
suffice to pay.
"After the full Twelve Percent (12%) dividend on the Preferred
Shares for such fiscal year has been paid or declared and a sum
sufficient for the payment thereof set apart, dividends on the Class "A"
Voting Common Shares and Class "B" Non-Voting Common Shares may be paid
out of the remainder of the surplus available therefor."
(The only change in the above subsection is the change of the date from
July 31, 1989, to July 31, 1988. In all other regards the subsection is the
same.)
------------------------------
The undersigned officers of J. L. FRENCH CORPORATION, a Wisconsin
corporation with registered office in Sheboygan County, Wisconsin, CERTIFY:
The foregoing amendment of the articles of incorporation of said
corporation was consented to in writing by the holders of all shares entitled
to vote with respect to the subject matter of said amendment, duly signed by
said share-
<PAGE>
holders or in their names by their duly authorized attorneys.
Executed in duplicate and seal affixed this 4th day of February 1988.
/s/ James L. French
--------------------------------
JAMES L. FRENCH, President
/s/ Mary Lou French
--------------------------------
MARY LOU FRENCH, Secretary
-2-
<PAGE>
Amendment
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
J. L. FRENCH CORPORATION
RESOLVED, that "Article IV - Shares" of the Articles of
Incorporation of J. L. French Corporation ???:
"Article IV - Shares
The capital shares of this Corporation shall be as follows:
There shall be one (1) class of stock, being common stock
which may be issued in two series:
(1) Series "A" VOTING Common Shares; and
(2) Series "B" NON-VOTING Common Shares.
The Series "A" and Series "B" Common Shares shall be identical in
all respects, except that the holders of Series "B" Common Shares
shall have no voting authority or power for any purpose whatsoever
and the holders of Series "A" Common Shares shall, to the exclusion
of the holders of Series "B" Common Shares, have full voting power
for all purposes. The aggregate number of Common Shares which the
Corporation shall have authority to issue is 30,000 shares without
par value, consisting of:
(a) 10,000 shares designated `Series "A" Voting Common
Shares'; and
(b) 20,000 shares designated `Series "B" Non-Voting Common
Shares'."
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The undersigned officers of J. L. FRENCH CORPORATION, a Wisconsin
corporation with registered office in Sheboygan County, Wisconsin. CERTIFY:
The foregoing amendment of the articles of incorporation of said
corporation was consented to in writing to the holders of all shares entitled
to vote with respect to the subject matter of said amendment, ??? by
said shareholders or in their names by ??? authorized attorneys.
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Executed in duplicate and seal affixed this 27th day of July 1988.
--------------------------------
JAMES L. FRENCH, President
(SEAL)
--------------------------------
MARY LOU FRENCH, Secretary
This document was drafted by:
Attorney Alexander Hopp
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Exhibit B
BY-LAWS
0F
J. L. FRENCH CORPORATION
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(a Wisconsin corporation)
INTRODUCTION -
VARIABLE REFERENCES
0.01. Date of annual shareholders' meeting (See Section 2.01):
10:00 A.M. FIRST MONDAY AUGUST 1960
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(Hour) (Week) (Day) (Month) (First year)
4:30 P.M. First Friday April 1989(Minutes
9/22/89)
*
0.02. Required notice of shareholders' meeting (See Section
2.04): not less than 5 days.
------------------
*
0.03. Authorized number of directors (See Section 3.01): three
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* five (5) pursuant to minutes of April 6, 1985. *Six (6) 4/6/95 Minutes
* six (6) pursuant to minutes of May 30, 1986.
* seven (7) pursuant to minutes of April 1, 1987.
0.04. Required notice of directors' meetings (See Section 3.05):
(a) not less than 4 hours if by mail, and
*
(b) not less than 24 hours if by telegram or personal delivery.
*
0.05. Authorized number of Vice-Presidents (See Section 4.01): one
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* five (5) pursuant to minutes of April 1, 1987
* three (3) pursuant to minutes of April 4, 1991
* These spaces are reserved for official notation of future amendments to
these sections.
<PAGE>
ARTICLE I. OFFICES
1.01. PRINCIPAL AND BUSINESS OFFICES. The corporation may have
such principal and other business offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the business of the
corporation may require from time to time.
1.02. REGISTERED OFFICE. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be maintained
in the State of Wisconsin may be, but need not be, identical with the principal
office in the State of Wisconsin, and the address of the registered office may
be changed from time to time by the Board of Directors. The business office of
the registered agent of the corporation shall be identical to such registered
office.
ARTICLE II. SHAREHOLDERS
2.01. ANNUAL MEETING. The annual meeting of the shareholders
shall be held at the date and hour in each year set forth in Section 0.01, or at
such other time and date within thirty days before or after said date as may be
fixed by or under the authority of the Board of Directors, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Wisconsin, such meeting, shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein, or fixed as herein provided, for any annual meeting of
the shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as conveniently may be.
2.02. SPECIAL MEETING. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may lie
called by the President or the Board of Directors or by the person designated in
the written request of the holders of not less than one-tenth of all shares of
the corporation entitled to vote at the meeting.
2.03. PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the State of Wisconsin, as the place of
meeting for any annual meeting or for any special meeting, called by the Board
of Directors. A waiver of notice signed hy all shareholders entitled to vote at
a meeting may designate any place, either within or without the State of
Wisconsin, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal business office of the corporation in the State of Wisconsin or
such other suitable place in the county of such principal office as may be
designated by the person calling such meeting, but any meeting may be adjourned
to reconvene at any place designated by vote of a majority of the shares
represented thereat.
2.04. NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than the
number of days set forth in Section 0.02 (unless a longer period is required by
law or the articles of incorporation) nor more than fifty days before
<PAGE>
the date of the meeting, either personally or by mail, by or at the direction of
the President, or the Secretary, or other officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the shareholder at his address as it appears on the
stock record books of the corporation, with postage thereon prepaid.
2.05. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For
the purpose of determining, shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the close of business on the date on which notice of the
meeting is mailed or on the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may he, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall be applied to any adjournment
thereof except where the determination has been made through the closing of the
stock transfer books and the stated period of closing has expired.
2.06. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall, before each meeting of
shareholders, make a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, with the address of and the number of
shares held by each, which list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders. Failure to comply with the requirements of this section
shall not affect the validity of any action taken at such meeting.
2.07. QUORUM. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum
is present, the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter shall be the act of the
shareholders unless the vote of a greater number or voting by classes is
required by law or
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the articles of incorporation. Though less than a quorum of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.08. CONDUCT OF MEETINGS. The President, and in his absence,
a Vice-President in the order provided under Section 4.06, and in their absence,
any person chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act is chairman of the meeting, and the
Secretary of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.09. PROXIES. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed in writing by the
shareholder or by his duly authorized attorney in fact. Such proxy shall be
filed with .the Secretary of the corporation before or at the time of the
meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any
time before it is voted, either by written notice filed with the Secretary or
the acting secretary of the meeting or by oral notice riven by the shareholder
to the presiding officer during the meeting. The presence of a shareholder who
has filed his proxy shall not of itself constitute a revocation. No proxy shall
be valid after eleven months from the date of Its execution, unless otherwise
provided in the proxy. The Board of Directors shall have the power and authority
to make rules establishing presumptions as to the validity and sufficiency of
proxies.
2.10. VOTING OF SHARES. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
class or classes are enlarged, limited or denied by the articles of
incorporation.
2.11. VOTING OF SHARES BY CERTAIN HOLDERS.
(a) OTHER CORPORATIONS. Shares standing in the name of another
corporation may be voted either in person or by proxy, by the president
of such corporation or any other officer appointed by such president. A
proxy executed by any principal officer of such other corporation or
assistant thereto shall be conclusive evidence of the signer's
authority to act, in the absence of express notice to this corporation,
given in writing to the Secretary of this corporation, of the
designation of some other person by the board of directors or the
by-laws of such other corporation.
(b) LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an
administrator, executor, guardian, conservator, trustee In bankruptcy,
receiver, or assignee for creditors may be voted by him, either in
person or by proxy, without a transfer of such shares into his name,
provided that there is filed with the Secretary before or at the time
of meeting
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<PAGE>
proper evidence of his incumbency and the number of shares held. Shares
standing in the name of a fiduciary may be voted by him, either in
person or by proxy. A proxy executed by a fiduciary, shall be
conclusive evidence of the signer's authority to act, in the absence of
express notice to this corporation, Given in writing to the Secretary
of this corporation, that such manner of voting is expressly prohibited
or otherwise directed by the document creating the fiduciary
relationship.
(c) PLEDGEES. A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
(d) TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares,
nor shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other
corporation is held by this corporation, shall be voted at any meeting
or counted In determining the total number of outstanding shares
entitled to vote, but shares of its own issue held by this corporation
in a fiduciary capacity, or held by such other corporation in a
fiduciary capacity, may be voted and shall be counted in determining
the total number of outstanding shares entitled to vote.
(e) MINORS. Shares held by a minor may be voted by such minor
in person or hy proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the Secretary of
the corporation has received written notice or has actual
(f) INCOMPETENTS AND SPENDTHRIFTS. Shares held by an
incompetent or spendthrift may be voted by such incompetent or
spendthrift in person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the Secretary of
the corporation has actual knowledge that such shareholder has been
adjudicated an incompetent or spendthrift or actual knowledge of filing
of judicial proceedings for appointment of a guardian.
(g) JOINT TENANTS. Share s registered in the names of two or
more individuals who are named in the registration as joint tenants may
be voted in person or by proxy signed by any one or more of such
individuals if either (i) no other such individual or his legal
representative is present and claims the right to participate in the
voting of such shares or prior to the vote files with the Secretary of
the corporation a contrary written voting authorization or direction or
written denial of authority of the individual present or signing the
proxy proposed to be voted or (ii) all such other individuals are
deceased and the Secretary of the corporation has no actual knowledge
that the survivor has been adjudicated not to be the successor to the
interests of those deceased.
2.12. WAIVER OF NOTICE BY SHAREHOLDERS. Whenever any notice
whatever is required to be given to any shareholder of the corporation under the
articles of incorporation or bylaws or any provision of law, a waiver thereof in
writing, signed at any time, whether before or
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after the time of meeting, by the shareholder entitled to such notice, shall be
deemed equivalent to the Giving of such notice; provided that such waiver in
respect to any matter of which notice is required under any provision of the
Wisconsin Business Corporation Law, shall contain the same information as would
have been required to be included in such notice, except the time and place of
meeting.
2.13. UNANIMOUS CONSENT WITHOUT MEETING. Any action required
or permitted by the articles of incorporation or bylaws or any provision of law
to be taken at a meeting of the shareholders, may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
3.01. GENERAL POWERS AND NUMBER. The business and affairs of
the corporation shall be managed by its Board of Directors. The number of
directors of the corporation shall be as set forth in Section 0.03.
3.02. TENURE AND QUALIFICATIONS. Bach director shall hold
office until the next annual meeting of shareholders and until his successor
shall have been elected, or until his prior death, resignation or removal. A
director may be removed from office by affirmative vote of a majority of the
outstanding shares entitled to vote for the election of such director, taken at
a meeting, of shareholders called for that purpose. A director may resign at any
time by filing his written resignation with the Secretary of the corporation.
Directors need not be residents of the State of Wisconsin or shareholders of the
corporation.
3.03. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately after
the annual meeting of shareholders, and each adjourned session thereof. The
place of such regular meeting shall be the same as the place of the meeting of
shareholders which precedes it, or such other suitable place as may be announced
at such meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Wisconsin,
for the holding of additional regular meetings without other notice than such
resolution.
3.04. SPECIAL MEETINGS. Special meetings of the Board of
Directors may he called by or at the request of the President, Secretary or any
two directors. The President or Secretary calling any special meeting of the
Board of Directors may fix any place, either within or without the State of
Wisconsin, as the place for holding any special meeting of the Board of
Directors called by them, and if no other place is fixed the place of meeting,
shall be the principal business office of the corporation in the State of
Wisconsin.
3.05. NOTICE; WAIVER. Notice of each meeting of the Board
of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be
given by written notice delivered
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personally or mailed or Given by telegram to each director at his business
address or at such other address as such director shall have designated in
writing filed with the Secretary, in each case not less than that number of
hours prior thereto as set forth In Section 0.04. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. Whenever any notice whatever is required to be given to any director of
the corporation under the articles of incorporation or by-laws or any provision
of law, a waiver thereof in writing, signed at any time, whether before or after
the time of meeting, by the director entitled to such notice, shall be deemed
equivalent to the giving of such notice. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting and objects thereat to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.06. QUORUM. Except as otherwise provided by law or by the
articles of incorporation or these by-laws, a majority of the number of
directors set forth in Section 0.03 shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but a majority
of the directors present (though less than such quorum may adjourn the meeting
from time to time without further notice).
3.07. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is p1resent shall be the act of
the Board of Directors, unless the act of a greater number is required by law or
by the articles of incorporation or these by-laws.
3.08. CONDUCT OF MEETINGS. The President, and in his absence,
a Vice-President in the order provided under Section 4.06, and in their absence,
any director chosen by the directors present, shall call meetings of the Board
of Directors to order and shall act as chairman of the meeting. The Secretary of
the corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence of the Secretary, the presiding officer may
appoint any Assistant Secretary or any director or other person present to act
as secretary of the meeting.
3.09. VACANCIES. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled until the next succeeding annual election by the
affirmative vote of a majority of the directors then in office, though less than
a quorum of the Board of Directors; provided, that in case of a vacancy created
by the removal of a director by vote of the shareholders, the shareholders shall
have the right to fill such vacancy at the same meeting or any adjournment
thereof.
3.10. COMPENSATION. The Board of Directors, by affirmative
vote of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, may establish reasonable compensation
of all directors for services to the corporation as
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directors, officers or otherwise, or may delegate such authority to an
appropriate committee The Board of Directors also shall have authority to
provide for or to delegate authority to an appropriate committee to provide for
reasonable pensions, disability or death benefits, and other benefits or
payments, to directors, officers and employees and to their estates, families,
dependents or beneficiaries an account of prior services rendered by such
directors, officers and employees to the corporation.
3.11. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors or a committee thereof of
which he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
3.12. COMMITTEES. The Board of Directors by resolution adopted
by the affirmative vote of a majority of the number of directors set forth in
Section 0.03 may designate one or more committees, each committee to consist of
three or more directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of the corporation,
except action in respect to dividends to shareholders, election of the principal
officers or the filling of vacancies In the Board of Directors or committees
created pursuant to this section. The Board of Directors may elect one or more
of its members as alternate members of any such committee who may take the place
of any absent member or members at any meeting of such committee, upon request
by the President or upon request by the chairman of such meeting. Each such
committee shall fix its own rules governing the conduct of its activities and
shall make such reports to the Board of Directors of its activities as the Board
of Directors may request.
3.13. UNANIMOUS CONSENT WITHOUT MEETING. Any action required
or permitted by the articles of incorporation or by-laws or any provision of law
to be taken by the Board of Directors at a meeting or by resolution may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors then in office.
ARTICLE IV.OFFICERS
4.01. NUMBER. The principal officers of the corporation shall
be a President, the number of Vice-Presidents as set forth in Section 0.05, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. Any two or
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more offices may be held by the same person, except the offices of President and
Secretary and the offices of President and Vice-President.
4.02. ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected to the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the shareholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected or until his prior death, resignation or removal.
4.03. REMOVAL. Any officer or agent may be removed by the
Board of Directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
Election or appointment shall not of itself create contract rights.
4.04. VACANCIES. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be filled by
the Board of Directors for the unexpired portion of the term.
4.05. PRESIDENT. The President shall be the principal
executive officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He shall have authority, subject
to such rules as may be prescribed by the Board of Directors, to appoint such
agents and employees of the corporation as he shall deem necessary, to prescribe
their powers, duties and compensation, and to delegate authority to them. Such
agents and employees shall hold office at the discretion of the President. He
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper to be
executed in the course of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, he may authorize any Vice President
or other officer or agent of the corporation to sign, execute and acknowledge
such documents or instruments in his place and stead. In general he shall
perform all duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
4.06. THE VICE-PRESIDENTS. In the absence of the President or
in the event of his death, inability or refusal to act, or in the event for any
reason it shall be impracticable for the President to act personally, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice-President
may sign, with the Secretary or Assistant Secretary,
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certificates for shares of the corporation; and shall perform such other duties
and have such authority as from time to time may be delegated or assigned to him
by the President or by the Board of Directors. The execution of any instrument
of the corporation by any Vice-President shall be conclusive evidence, as to
third parties, of his authority to act in the stead of the President.
4.07. THE SECRETARY. The Secretary shall: (a) keep the minutes
of the meetings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
or arrange for the keeping of a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, or a Vice-President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him by the President or by the Board of
Directors.
4.08. THE TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall be
selected in accordance with the provisions of Section 5.04; and (c) 1n general
perform all of the duties incident to the office of Treasurer and have such
other duties and exercise such other authority, as from time to time may be
delegated or assigned to him by the President or by the Board of Directors. If
required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
4.09. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize. The Assistant Secretaries
may sign with the President or a Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties and have such authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer ' respectively, or by the
Pre3ident or the Board of Directors.
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4.10. OTHER ASSISTANTS AND ACTING OFFICERS. The Board of
Directors shall have the power to appoint any person to act as assistant to any
officer, or as agent for the corporation in his stead, or to perform the duties
of such officer whenever for any reason it is impracticable for such officer to
act personally, and such assistant or acting officer or other agent so appointed
by the Board of Directors shall have the power to perform all the duties of the
office to which he is so appointed to be assistant, or as to which he is so
appointed to act, except as such power may be otherwise defined or restricted by
the Board of Directors.
4.11. SALARIES. The salaries of the principal officers shall
be fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS,
CHECKS AND DEPOSITS; SPECIAL
CORPORATE ACTS
5.01. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances. In the absence
of other designation, all deeds, mortgages and instruments of assignment or
pledge made by the corporation shall be executed in the name of the corporation
by the President or one of the Vice-Presidents and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or
an Assistant Secretary, when necessary or required, shall affix the corporate
seal thereto; and when so executed no other party to such instrument or any
third party shall be required to make any inquiry into the authority of the
signing officer or officers.
5.02. LOANS. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.
5.03. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued In the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by or under the authority of a resolution of the Board of Directors.
5.04. DEPOSITS. All-funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
-10-
<PAGE>
5.05. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by this
corporation may be voted at any meeting of security holders of such other
corporation by the President of this corporation if he be present, or in his
absence by any Vice-President of this corporation who may be present, and (b)
whenever, in the judgment of the President, or in his absence, of any
Vice-President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any other
corporation and owned by this corporation, such proxy or consent shall be
executed in the name of this corporation by the President or one of the
Vice-Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer. Any person or persons designated in the manner
above stated as the proxy or proxies of this corporation shall have full right,
power and authority to vote the shares or other securities issued by such other
corporation and owned by this corporation the same as such shares or other
securities might be voted by this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND
THEIR TRANSFER
6.01. CERTIFICATES FOR SHARES. Certificates representing,
shares of the corporation shall be in such form, consistent with law, as shall
be determined by the Board of Directors. Such certificates shall be signed by
the President or a Vice-President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except as provided
in Section 6.06.
6.02. FACSIMILE SIGNATURES AND SEAL. The seal of the
corporation on any certificates for shares may be a facsimile. The signatures of
the President or Vice-President and the Secretary or Assistant Secretary upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employe of the corporation.
6.03. SIGNATURE BY FORMER OFFICERS. In case any officer, who
has signed or whose facsimile signature has been placed upon any certificate for
shares, shall have ceased to be such officer before such certificate is issued,
it may be issued by the corporation with the same effect as if he were such
officer at the date of its issue.
6.04. TRANSFER OF SHARES. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may treat
the registered owner of such shares as the person
-11-
<PAGE>
exclusively entitled to vote, to receive notifications and otherwise to exercise
all the rights and powers of an owner. Where a certificate for shares is
presented to the corporation with a request to register for transfer, the
corporation shall not be liable to the owner or any other person suffering loss
as a result or such registration of transfer if (a) there were on or with the
certificate the necessary endorsements, and (b) the corporation had no duty to
inquire into adverse claims or has discharged any such duty. The corporation may
require reasonable assurance that said endorsements are genuine and effective
and compliance with such other regulations as may be prescribed under the
authority of the Board of Directors.
6.05. RESTRICTIONS ON TRANSFER. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corpora tion upon the transfer of such shares.
6.06. LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner
claims that his certificate for shares has been lost, destroyed or wrongfully
taken, a new certificate shall be issued in place thereof if the owner (a) so
requests before the-corporation has notice that such shares have been acquired
by a bona fide purchaser, and (b) files with the corporation a sufficient
indemnity bond, and (a) satisfies such other reasonable requirements as the
Board or Directors may prescribe.
6.07. CONSIDERATION FOR SHARES. The shares of the corporation
may be issued for such consideration as shall be fixed from time to time by the
Board of Directors, provided that any shares having a par value shall not be
issued for a consideration less than the par value thereof. The consideration to
be paid for shares may be paid in whole or in part, in money, in other property,
tangible or intangible, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be issued
shall have been received by the corporation, such shares shall be deemed to be
fully paid and nonassessable by the corporation. No certificate shall be issued
for any share until such share is fully paid.
6.08. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal."
-12-
<PAGE>
ARTICLE VIII. AMENDMENTS
8.01. BY SHAREHOLDERS. These by-laws may be altered, amended
or repealed and new by-laws may be adopted by the shareholders by affirmative
vote of not less than a majority of the shares present or represented at any
annual or special meeting of the shareholders at which a quorum is in
attendance.
8.02. BY DIRECTORS. These by-laws may also be altered, amended
or repealed and new by-laws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of directors present at any meeting
at which a quorum is in attendance; but no by-law adopted by the shareholders
shall be amended or repealed by the Board of Directors if the by-law so adopted
so provides.
8.03. IMPLIED AMENDMENTS. Any action taken or authorized by
the shareholders or by the Board of Directors, which would be inconsistent with
the by-laws then in effect but is taken or authorized by affirmative vote of not
less than the number of shares or the number of directors required to amend the
by-laws so that the by-laws would be consistent with such action, shall be given
the same effect as though the by-laws had been temporarily amended or suspended
so far, but only so far, as is necessary to permit the specific action so taken
or authorized.
<PAGE>
DFI/CCS/Corp
Fm 38 (7/96 United States of America
State of Wisconsin
DEPARTMENT OF FINANCIAL INSTITUTIONS
I, RICHARD L. DEAN, Secretary, Department of Financial Institutions, do
hereby certify that the annexed copy has been compared by me with the record on
file in the Corporations unit of the Division of Corporate & Consumer Services
of this department and that the same is a true copy thereof, and of the whole of
such record; and that I am the legal custodian of such record, and that this
certification is in due form.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and affixed the official seal of the Department.
/s/ Richard L. Dean, Secretary
Richard L. Dean, Secretary
Department of Financial Institutions
DATE: May 26, 1999 BY:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Effective July 1, 1996, the 5epartment of Financial Institutions assumed the
functions previously performed by the Corporations Division of the Secretary of
State and is the successor custodian of corporate records formerly held by the
Secretary of State.
<PAGE>
ARTICLES OF INCORPORATION
Executed by the undersigned for the purpose of forming a Wisconsin
corporation under the Wisconsin Business Law, Chapter 180 of the Wisconsin
Statutes.
ARTICLE I.
The name of the corporation is ALLOTECH INTERNATIONAL, INC.
ARTICLE II.
The period of existence shall be perpetual.
ARTICLE III.
The purposes shall be to carry out any business authorized by Chapter
180 of the Wisconsin Statutes.
ARTICLE IV.
The number of shares which it shall have authority to issue, itemized
by classes, par value of shares, shares without par value, and series, if any,
within a class, is:
<TABLE>
<CAPTION>
PAR VALUE PER SHARE OR
SERIES NUMBER OF STATEMENT THAT SHARES
CLASS -------- SHARES ARE WITHOUT PAR VALUE
- ----- (If Any) --------- ----------------------
<S> <C> <C> <C>
Common None 2,800 No Par Value
</TABLE>
ARTICLE V.
Address of initial registered office is 1402 East Pinedale Court,
Shorewood, Milwaukee County, Wisconsin 53211.
ARTICLE VI.
Name of initial registered agent at such address is JEANNA L. FRENCH.
ARTICLE VII.
<PAGE>
The number of directors constituting the Board of Directors Shall be
fixed by By-Law.
FOR EXAMINATION
DATE: August 12, 1987
-------------------------------
DATE:
-------------------------------
ARTICLE VIII.
These articles may be amended in the manner authorized by law at the
time of amendment.
ARTICLE IX.
The name and address of incorporator is:
<TABLE>
<CAPTION>
NAME: ADDRESS:
- ----- --------
<S> <C>
Jeanna L. French 1402 East Pinedale Court
Shorewood, Wisconsin 53211.
</TABLE>
Executed in duplicate on this 30th day of June, 1987.
/s/ Jeanna L. French
----------------------
JEANNA L. FRENCH
STATE OF WISCONSIN )
: ss
COUNTY OF SHEBOYGAN )
Personally came before me this 30th day of June, 1987, the above named
Jeanna L. French, to me known to be the person who executed the foregoing
instrument, and acknowledged the same.
/s/ James O. Conway
----------------------
JAMES O. CONWAY
Notary Public, Sheboygan County, WI
My Commission is Permanent.
This Document was Drafted by:
Chase, Olsen, Kloet & Gunderson
By: James O. Conway
<PAGE>
Return recorded document to:
Atty. James O. Conway
Chase, Olsen, Kloet & Gunderson
602 North 6th Street
Sheboygan, WI 53081
<PAGE>
EXHIBIT 3.8
ALLOTECH INTERNATIONAL, LTD.
(a Wisconsin corporation)
INTRODUCTION -
VARIABLE REFERENCES
0.01. Date of annual shareholders' meeting (See Section 2.01):
4:00 P.M. 1ST FRIDAY APRIL 1988
- ---------- ------------ ------- ---------- ------------
(Hour) (Week) (Day) (Month) (First year)
*
0.02. Required notice of shareholders' meeting (See Section 2.04): not
less than 10 days.
*
0.03 Authorized number of directors (See Section 3.01): Four (4)
*
0.04. Required notice. of directors' meetings (See Section 3.05):
*
(a) not less than 72 hours if by mail, and
*
(b) not less than 24 hours if by telegram or personal delivery.
*
0.05. Authorized number of Vice-Presidents (See Section 4.01): one (1)
*
* These spaces are reserved for official notation of future amendments to
these sections.
<PAGE>
ARTICLE I.
OFFICES
1.01 PRINCIPAL. AND BUSINESS OFFICES. The corporation may have such
principal and other business offices, either within or without the State or
Wisconsin, as the Board of Directors may designate or as the business
corporation may require from time to time.
1.02 REGISTERED OFFICE. The registered office of the corporation
required by the Wisconsin Business Corporation Law to be maintained in the State
of Wisconsin may be, but need not be, identical with the principal office in the
State of Wisconsin, and the address of the registered office may be changed from
time to time by the Board of Directors or by the registered agent. The business,
office of the registered agent of the corporation shall be identical to such
registered office.
ARTICLE II.
SHAREHOLDERS
2.01 ANNUAL MEETING. The annual meeting of the shareholders shall be
held at the date and hour in each year set forth in Section 0.01, or at such
other time and date within thirty days before or after said date as may be fixed
by or under the authority of the Board of Directors, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday in the
State of Wisconsin, such meeting shall be held on the next succeeding business
clay. if the election of directors shall not be held on the day designated or
fixed as herein provided, for any annual. meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as conveniently may
be.
2.02 SPECIAL MEETING. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or the Board of Directors or by the person designated in the
written request of the holders of not less than one-tenth of all shares of the
corporation entitled to vote at the meeting.
2.03 PLACE OF MEETING. The Board of Directors may designate any place
either within or without the State of Wisconsin, as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote at a meeting,
designate any place, either within or without the State of Wisconsin, as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
business office of the corporation in the State of Wisconsin or such other
suitable place in the county of such principal office as. may be designated by
the person calling such meeting, .but any meeting may be adjourned to reconvene
at any place designated by vote or a majority of the shares represented thereat.
2.04 NOTICE OF MEETING. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than the number of days
set forth in Section 0.02 (unless a longer period is
<PAGE>
required by law or the articles of incorporation) nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or other officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mailed, addressed to the shareholder at his address as it
appears on the stock record books of the corporation, with postage thereon
prepaid.
2.05 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors, may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or ro tote at a
meeting of shareholders, such books shall be closed for at lest ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to note at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the close of business on the date on which notice of the
meeting is mailed or on the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof, except where the
determination has been made through the closing of the stock transfer books and
the state period of closing has expired.
2.06 VOTING RECORDS. The officer or agent having charge of the stock
transfer books for shares of the corporation shall, before each meeting of
shareholders, make a complete record of the shareholders entitled to vote at
such meeting, or any adjournment thereof, with the address of and the number of
shares held by each. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes of the meeting. The
original are the shareholders entitled to examine such record or transfer books
or to vote at any meeting of shareholders. Failure to comply with the
requirements of this section shall not affect the validity of any action taken
at such meeting.
2.07 QUORUM. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum
is present, the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter shall be the act of the
shareholders unless the vote of a greater number or voting by classes is
required by law or the articles
2
<PAGE>
.of incorporation. Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.08 CONDUCT OF MEETINGS. The President, and in his absence, a
Vice-President in the order provided under Section 4.06, and in their absence,
any person chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act as chairman of the meeting, and the
Secretary of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.09 Proxies. At all meetings of shareholders, a shareholder entitled
to vote may vote in person or by proxy appointed in writing by the shareholder
or by his duly authorized attorney in fact. Such proxy shall be filed with the
Secretary of the corporation before or at the time of the meeting. Unless
otherwise provided in the proxy, a proxy may be revoked at any time before it is
voted, either by written notice filed with the Secretary or the acting secretary
of the meeting or by oral notice given by the shareholder to the presiding
officer during the meeting. The presence of 4 shareholder who has filed his
proxy shall not of itself constitute a revocation. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy. The Board of Directors shall have the power and authority to make rules
establishing presumptions as to the validity and sufficiency of proxies.
2.10 VOTING OF SHARES. Each outstanding share shall. be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders, except
to the extent that the voting rights of the shares of any class or classes are
enlarged, limited or denied by the articles of incorporation.
2.11 VOTING OF SHARES BY CERTAIN HOLDERS.
(a) (a) OTHER CORPORATIONS. Shares standing in the name of
another corporation may be voted either in person or by proxy, by the
president of such corporation or any other officer appointed by such
president. A proxy executed by any principal officer of such other
corporation or assistant thereto shall be conclusive evidence of the
signer's authority to act, in the absence of express notice to this
corporation, given in writing to the Secretary of this corporation, of
the designation of some other person by the board of directors or the
by-laws of such other corporation.
(b) LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an
administrator, executor, guardian, conservator, trustee in bankruptcy,
receiver, or assignee for creditors may be voted by him, either in
person or by proxy, without a transfer of such shares into his name,
provided that there is filed with the Secretary before or at the time
of meeting proper evidence of his incumbency and the number of shares
held. Shares standing in the name of a fiduciary may be voted by him,
either in person or by proxy. A proxy executed by a
3
<PAGE>
fiduciary, shall be concliusive evidence of the signer's authority to
act, in the absence of express notice to this corporation, given in
writing to the Secretary of this corporation, that such manner of
voting is expressly prohibited or otherwise directed by the document
creating the fiduciary relationship.
(c) PLEDGEES. A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
(d) TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares,
nor shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other
corporation is held by this corporation, shall be voted at any meeting
or counted in determining the total number of outstanding shares
entitled to vote, but shares of its own issue held by this corporation
in a fiduciary capacity, or held by such other corporation in a
fiduciary capacity, may be voted and shall be counted in determining
the total number of outstanding shares entitled to vote.
(e) MINORS. Shares held by a trincr may be voted by such minor
in person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the Secretary of
the corporation has received written notice or has actual knowledge
that such shareholder is a minor.
(f) INCOMPETENTS AND SPENDTHRIFTS. Shares held by an
incompetent or spendthrift may be voted by such incompetent or
spendthrift in person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the Secretary of
the corporation has actual knowledge that such shareholder has been
adjudicated an incompetent or spendthrift or actual knowledge of filing
of judicial proceedings for appointment of a guardian.
(g) JOINT TENANTS. Shares registered in the names of two or
more individuals who are named in the registration as joint tenants may
be voted in person or by proxy signed by any one or more of such
individuals if either (i) no other such individual or his legal
representative is present and claims the right to participate in the
voting of such shares or prior to the vote files with the Secretary of
the corporation a contrary written voting authorization or direction or
written denial of authority of the individual present or signing the
proxy proposed to be voted or (ii) all such other individuals are
deceased and the Secretary of the corporation has no actual knowledge
that the survivor has been adjudicated not to be the successor to the
interests of those deceased.
2.12 WAIVER OF NOTICE BY SHAREHOLDERS. Whenever any notice whatever is
required to be given Lo any shareholder of the corporation under the articles of
incorporation or by-laws or any provision of law, a waiver thereof in writing,
signed at any time, whether before or after the time of meeting, by the
shareholder entitled to such notice, shall be deemed equivalent to the giving of
such
4
<PAGE>
notice; provided that such waiver in respect to any matter of which notice is
required under any provision of the Wisconsin Business Corporation Law, shall
contain the same information as would have been required to be included in such
notice, except the time and place of meeting.
2.13 UNANIMOUS CONSENT WITHOUT MEETING Any action required or permitted
by the articLes of incorporation or by-laws or any provision of law to be taken
a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote With respect to the subject matter thereof.
ARTICLE III.
BOARD OF DIRECTORS
3.01 GENERAL ROWERS AND NUMBER. The business and affairs of the
corporation shall be managed by its Board of Directors. The number of directors
of the corporation shall be as provided in Section 0.03.
3.02 TENURE AND QUALIFICATIONS. Each director shall hold office until
the next annual meeting of shareholders and until his successor shall have been
elected, or until his prior death, resignation or removal. A director may be
removed from office by affirmative vote of a majority of the outstanding shares
entitled to vote for the election of such director, taken at a meeting of
shareholders called for that purpose. A director may resign at any time by
filing-his written resignation with the Secretary of the corporation. Directors
need not be residents of the State of Wisconsin or shareholders of the
corporation.
3.03 REGULAR MEETINGS. A regular meeting of the Board of Directors
shall he held without other notice than this by-law immediately after the annual
meeting of shareholders, and each adjourned session thereof. The place of such
regular meeting shall be tile same as the place of the meeting of shareholders
which precedes it, or such other suitable place as may be announced at such
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Wisconsin, for the holding
of additional regular meetings without other notice than such resolution.
3.04 Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the President, Secretary or any two directors.
The President or Secretary. calling any special meeting of the Board of
Directors may fix any place, either within or without the State of Wisconsin, as
the place for holding any special meeting of the Board of Directors called by
them, and if no other place is fixed the place of meeting shall be the principal
business office of the corporation in the State of Wisconsin.
3.05 NOTICE; WAIVER. Notice of each meeting of the Board of Directors
(unless otherwise provided in or pursuant to Section 3.03) shall be given by
written notice delivered personally or mailed or given by telegram to each
director at his business address or at such other address as such
5
<PAGE>
director shall have designated in writing filed with the Secretary, in each case
not less than that number of hours prior thereto as set forth in Section 0.04.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the telegram
is delivered to the telegraph company. Whenever any notice whatever is required
to be given to any director of the corporation under the articles of
incorporation or by-laws or any provision of law, a waiver thereof in writing,
signed at any time, whether before or after the time of meeting, by the director
entitled to such notice, shall be deemed equivalent to the giving of such
notice. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting and objects
thereat to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
3.06 QUORUM. Except as otherwise provided by law or by the articles of
incorporation or these by-laws, a majority of the number of directors as
provided in Section 0.03 shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but a majority of the
directors present (though less than such quorum) may adjourn the meeting from
time to time without further notice.
3.07 MANNER OF ACTING. The act of the majority of the directors
'present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by law or by the
articles of incorporation or these by-laws.
3.08 CONDUCT OF MEETINGS. The President, and in his absence, a
Vice-President in the order provided under Section 4.06, and in their absence,
any director chosen by rhe directors present, shall call meetings of the Board
of Directors to order and shall act as chairman of the meeting. The Secretary of
the corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence of the Secretary, the presiding officer may
appoint any Assistant Secretary or any director or other person present to act
as secretary of the meeting.
3.09 VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled until the next succeeding annual election by the affirmative vote of a
majority of the directors then in office, though less than a quorum of the Board
of Directors; provided, that in case of a vacancy created by the removal of a
director by vote of the shareholders, the shareholders shall have the right to
fill such vacancy at the same meeting or any adjournment thereof.
3.10 COMPENSATION. The Board of Directors, by affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members may establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise or
may delegate such authority to an appropriate committee. The Board of Directors
also shall have authority to provide for or to delegate authority to an
appropriate committee to provide
6
<PAGE>
for reasonable pensions, disability or death benefits, and other benefits or
payments, to directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of prior services rendered by such
directors, officers and employees to the corporation.
3.11 PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors or a committee thereof of which
he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
3.12 COMMITTEES. The Board of Directors by resolution adopted by the
affirmative vote of a majority of the number of directors as provided in Section
0.03 may designate one or more committees, each committee to consist of three or
more directors elected by the Board of Directors, which to the extent provided
in said resolution as initially adopted, and as thereafter supplemented or
amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers ,of the
Board of Directors in the management of the business and affairs of the
corporation, except action in respect to dividends to shareholders, election of
the principal officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this section. The Board of Directors may elect
one or more of its members as alternate members of any such committee who may
take the place of any absent member or members at any meeting of such committee,
upon request by the President or upon request by the chairman of such meeting.
Each such committee shall fix its own rules governing the conduct of its
activities and shall make such reports to the Board of Directors of its
activities as the Board of Directors may request.
3.13 UNANIMOUS CONSENT WITHOUT MEETING. Any action required or
permitted by the articles of incorporation or by-laws or any provision of law to
be taken by the Board of Directors at a meeting or by resolution may be taken
without a meeting if a consent in writing, setting forth the action so
taken,,shall be signed by all of the directors then in office.
7
<PAGE>
ARTICLE IV.
OFFICERS
4.01 Number. The principal officers of the corporation shall be a
President, the number of Vice-Presidents as provided in Section 0.05, a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. Any two or more offices
may he held by the same person, except the offices of President and Secretary
and the Offices of President and Vice-President.
4.02 ELECTION AND TERM OF OFFICE. The officers of the corporation to be
elected by the Board of Directors shall be elected annually fly the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected or until his prior death, resignation or removal.
4.03 REMOVAL. Any officer or agent may be removed by the Board of
Directors whenever ill its judgment the best interests of the corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
4.04 VACANCIES. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise, shall be filled by the
Board of Directors for the unexpired portion of the term.
4.05 PRESIDENT. The President shall be the principal executive officer
of the corporation and, subject to the control of the Board of Directors, shall
in general supervise and control all of the business and affairs of the
corporation. lie shall, when present, preside at all meetings of the
shareholders and of the Board of Directors. He shall have authority, subject to
such rules as may be prescribed by the Board of Directors, to appoint such
agents and employees of the corporation as he shall deem necessary, to prescribe
their powers, duties and compensation, and to delegate authority to them. Such
agents and employees shall hold office at the discretion of the President. He
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper to be
executed in the course of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, he may authorize any Vice-President
or other officer or agent of the corporation to sign, execute and acknowledge
such documents or instruments in his place and stead. In general he shall
perform all duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
4.06 THE VICE-PRESIDENTS. In the absence of the President or in
the event of his death,
8
<PAGE>
inability or refusal to act, or in the event for any reason it shall be
impracticable for the President to act personally, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President, and
when so acting, shall have all the powers of and be subject to all -the
restrictions upon the President. Any Vice-President may sign, with the Secretary
or Assistant Secretary, certificates for shares of the corporation; and shall
perform such other duties and have such authority as from time to time may be
delegated or assigned to him by the President or by the Board of Directors. The
execution of any instrument of the corporation by any Vice-President shall be
conclusive evidence, as to third parties, of his authority to act in the stead
of the President.
4.07 THE SECRETARY. The Secretary shall: (a) keep the minutes of the
meetings of the shareholders and of the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents the execution of which on behalf
of the corporation under its seal is duly authorized; (d) keep or arrange for
the keeping of a register of the post office address of each shareholder which
shall be furnished to the Secretary by such shareholder; (e) sign with- the
President, or a Vice-President, certificates for shares of the corporation, the
issuance or which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer hooks of the
corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him by the President or by the Board of
Directors.
4.08 THE TREASURER. The Treasury shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation: (b) receive
and give receipts for a moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Section 5.04; and (c) in general perform all
of the duties incident to the office of Treasurer and have such other duties and
exercise such other authority as form time may be delegated or assigned to him
by the President or by the Board of Directors, the Treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.09 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. There shall be
such number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time authorize. The Assistant Secretaries may sign
with the President or a Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Director shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties and have such authority as shall from t ime to time be delegated or
assigned to them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
9
<PAGE>
4.10 OTHER ASSISTANTS AND ACTING OFFICERS. The Board of Directors shall
have the power to appoint any person to act as assistant to any officer, or as
agent for the corporation in his stead, or to perform the duties of such officer
whenever for any reason it is impracticable for such officer to act personally,
and such assistant or acting officer or other agent so appointed by the Board of
Directors shall have the power to perform all the duties of the office to which
he is so appointed to be assistant. or as to which he is so appointed to act,
except as such power may be otherwise defined or restricted by the Board of
Directors.
4.11 SALARIES. The salaries of the principal officers shall be fixed
from time to time by the Board of Directors or by a duly authorized committee
thereof, and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or deliver any
instrument in the name of and on behalf of the corporation, and such
authorization may he general or confined to specific instances. In the absence
of other designation, all deeds, mortgages and instruments of assignment or
pledge made by the corporation shall be executed in the name of the corporation
by the President or one of the Vice-Presidents and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or
an Assistant Secretary, when necessary or required, shall affix the corporate
seal thereto; and when so executed no other party to such instrument or any
third party shall be required to make any inquiry into the authority of the
signing officer or officers.
5.02 LOANS. No indebtedness for borrowed money shall be contracted on
behalf of the corporation and no evidences of such indebtedness shall be issued
in its name unless authorized by or under the authority of a resolution :f the
Board of Directors. Such authorization may be general or confined to specific
instances.
5.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
or under the authority of a resolution of the Board of Directors.
5.04 DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.
5.05 VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always to
the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other corporation and owned or controlled by this
corporation may be voted at any meeting of security holders of such
10
<PAGE>
other corporation by the President of this corporation if he be present, or in
his absence by any Vice-President of this corporation who may be present, and
(b) whenever, in the judgment of the President, or in his absence, of any
Vice-President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any other
corporation and owned by this corporation, such proxy or consent shall be
executed in the name of this corporation by the President or one of the
Vice-Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer. Any person or persons designated in the manner
above stated as the proxy or proxies of this corporation shall have full right,
power and authority to vote the shares or other securities issued by such other
corporation and owned by this corporation the same as such shares or other
securities might be voted by this corporation.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 CERTIFICATES FOR SHARES. Certificates representing shares of the
corporation shall be in such form, consistent with law, as shall be determined
by the Board of Directors. Such certificates shall be signed by the President or
a Vice-President and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the corporation. All certificates surrendered Lo the
corporation for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and cancelled, except as provided in Section 6.06.
6.02 FACSIMILE SIGNATURES AND SEAL. The seal of the corporation on any
certificates for shares may be a facsimile. The signatures of the President or
Vice-President and the Secretary or Assistant Secretary upon a certificate may
be facsimiles if the certificate is manually signed on behalf of a transfer
agent, or a registrar, other than the corporation itself or an employee of the
corporation.
6.03 SIGNATURE BY FORMER OFFICERS. In case any officer, who has signed
or whose facsimile signature has been placed upon any certificate for shares,
shall have ceased to be such officer before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer at
the date of its issue.
6.04 TRANSFER OF SHARES. Prior to due presentment of a certificate for
shares for registration of transfer the corporation may treat the registered
owner of such shares as the person exclusively entitled to vote, to receive
notifications and otherwise -to have and exercise all the rights and power of an
owner. Where a certificate for shares is presented to the corporation with a
request to register for transfer, the corporation shall not be liable to the
owner or any other person suffering loss as a result of such registration of
transfer if (a) there were on or which the certificate the necessary
endorsements, and (b) the corporation had no duty to inquire into adverse claims
or has discharged any such duty. The corporation may require reasonable
assurance that said endorsements are genuine
11
<PAGE>
and effective and compliance with such other regulations as may be prescribed by
or under the authority of the Board of Directors.
6.05 RESTRICTIONS ON TRANSFER. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.06 LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner claims
that his certificate for shares has been lost, destroyed or wrongfully taken, a
new certificate shall be issued in place thereof if the owner (a) so requests
before the corporation has notice that such shares have been acquired by a bona
fide purchaser, and (b) files with the corporation a sufficient indemnity bond,
and (c) satisfies such other reasonable requirements as may be prescribed by or
under the authority of the Board of Directors.
6.07 CONSIDERATION FOR SHARES. The shares of the corporation may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors, provided that any shares having a par value shall not be issued
for a consideration less than the par value thereof. The consideration to be
paid for shares may be paid in whole or in part, in money, in other property,
tangible or intangible, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be issued
shall have been received by the corporation, such shares shall be deemed to be
fully paid and nonassessable by the corporation. No certificate shall be issued
for any share until such share is fully paid.
6.08 STOCK REGULATIONS. The Board of Directors shall have the power and
authority to make all such further rules and regulations not inconsistent with
the statutes of the State of Wisconsin as it may deem expedient concerning the
issue, transfer and registration of certificates representing shares of the
corporation.
ARTICLE VII.
SEAL
7.01 The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal."
ARTICLE VIII.
AMENDMENTS
8.01 By Shareholders. These by-laws may be altered, amended or repealed
and new by-laws may be adopted by the shareholders by affirmative vote of not
less than a majority of the shares present or represented at any annual or
special meeting of the shareholders at which a quorum is in attendance.
12
<PAGE>
8.02 BY DIRECTORS. These by-laws may also be altered, amended or
repealed and new by-laws may be adopted by the Board of Directors by affirmative
vote of a majority of the number of directors present at any meeting at which a
quorum is in attendance; but no by-law adopted by the shareholders shall be
amended or repealed by the Board of Directors if the by-law so adopted so
provides.
8.03 IMPLIED AMENDMENTS. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent with the
by-laws then in effect -but is taken or authorized by affirmative vote of not
less than the number of shares or the number of directors required to amend the
by-laws so that the by-laws would be consistent with such action, shall be given
the same effect as though the by-laws had been temporarily amended or suspended
so far, but only so far, as is necessary to permit the specific action-so taken
or authorized.
13
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
FRENCH HOLDINGS, INC.
ALLOTECH INTERNATIONAL, INC.
J. L. FRENCH CORPORATION
11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
----------------------------------------------
INDENTURE
Dated as of May 28, 1999
---------------------------------------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION
Trustee
---------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
<TABLE>
<CAPTION>
Act Section Indenture Section
<S> <C>
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 11.03
(c) 11.03
313 (a) 7.06
(b)(1) 10.03
(b)(2) 7.07
(c) 7.06;11.02
(d) 7.06
314 (a) 4.03;11.02
(b) 10.02
(c)(1) 11.04
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(c)(2) 11.04
(c)(3) N.A.
(d) N.A.
(e) 11.05
(f) N.A.
315 (a) 7.01
(b) 7.05,11.02
(c) 7.01
(d) 7.01
(e) 6.11
316 (a) (last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.12
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) 11.01
(b) N.A.
(c) 11.01
</TABLE>
N.A. means not applicable.
<PAGE>
* This Cross Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. DEFINITIONS.....................................................1
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SECTION 1.02. OTHER DEFINITIONS..............................................23
--
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..............24
--
SECTION 1.04. RULES OF CONSTRUCTION..........................................24
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ARTICLE 2 THE NOTES
SECTION 2.01. FORM AND DATING................................................25
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SECTION 2.02. EXECUTION AND AUTHENTICATION...................................26
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SECTION 2.03. REGISTRAR AND PAYING AGENT.....................................26
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST............................26
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SECTION 2.05. HOLDER LISTS...................................................27
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SECTION 2.06. TRANSFER AND EXCHANGE..........................................27
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SECTION 2.07. REPLACEMENT NOTES..............................................38
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SECTION 2.08. OUTSTANDING NOTES.............................................38G
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SECTION 2.09. TREASURY NOTES.................................................38
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SECTION 2.10. TEMPORARY NOTES................................................39
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SECTION 2.11. CANCELLATION...................................................39
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SECTION 2.12. DEFAULTED INTEREST.............................................39
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SECTION 2.13. CUSIP NUMBERS..................................................39
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ARTICLE 3 REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.............................................40
--
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED..............................40
--
SECTION 3.03. NOTICE OF REDEMPTION...........................................40
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SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.................................41
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE....................................41
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SECTION 3.06. NOTES REDEEMED IN PART.........................................41
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SECTION 3.07. OPTIONAL REDEMPTION............................................41
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SECTION 3.08. MANDATORY REDEMPTION...........................................42
--
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS............42
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ARTICLE 4 COVENANTS
SECTION 4.01. PAYMENT OF NOTES...............................................44
--
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY................................44
--
SECTION 4.03. REPORTS........................................................44
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SECTION 4.04. COMPLIANCE CERTIFICATE.........................................45
--
SECTION 4.05. TAXES..........................................................46
--
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.................................46
--
SECTION 4.07. RESTRICTED PAYMENTS............................................46
--
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.........................................48
--
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK................................................49
--
SECTION 4.10. ASSET SALES....................................................52
</TABLE>
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<TABLE>
<S> <C>
SECTION 4.11. TRANSACTIONS WITH AFFILIATES...................................53
--
SECTION 4.12. LIENS..........................................................54
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SECTION 4.13. BUSINESS ACTIVITIES............................................54
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SECTION 4.14. CORPORATE EXISTENCE............................................54
--
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.....................54
--
SECTION 4.16. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES........55
--
SECTION 4.17. LIMITATION ON FOREIGN INDEBTEDNESS.............................56
--
SECTION 4.18. PAYMENTS FOR CONSENT...........................................56
--
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTIES...............................56
--
SECTION 4.20. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS..........57
--
SECTION 4.21. NO SENIOR SUBORDINATED DEBT....................................57
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ARTICLE 5 SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. 57
--
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. 58
--
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT..............................................58
--
SECTION 6.02. ACCELERATION...................................................59
--
SECTION 6.03. OTHER REMEDIES.................................................60
--
SECTION 6.04. WAIVER OF PAST DEFAULTS........................................60
--
SECTION 6.05. CONTROL BY MAJORITY............................................60
--
SECTION 6.06. LIMITATION ON SUITS............................................60
--
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT..................61
--
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.....................................61
--
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM...............................61
--
SECTION 6.10. PRIORITIES.....................................................63
--
SECTION 6.11. UNDERTAKING FOR COSTS..........................................63
--
ARTICLE 7 TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE..............................................64
--
SECTION 7.02. RIGHTS OF TRUSTEE..............................................65
--
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE...................................65
--
SECTION 7.04. TRUSTEE'S DISCLAIMER...........................................65
--
SECTION 7.05. NOTICE OF DEFAULTS.............................................65
--
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.....................66
--
SECTION 7.07. COMPENSATION AND INDEMNITY.....................................66
--
SECTION 7.08. REPLACEMENT OF TRUSTEE.........................................67
--
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC...............................68
--
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION..................................68
--
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..............68
--
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.......68
--
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.................................68
--
SECTION 8.03. COVENANT DEFEASANCE............................................69
--
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.....................69
--
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS..........................70
--
SECTION 8.06. REPAYMENT TO COMPANY...........................................71
--
SECTION 8.07. REINSTATEMENT..................................................71
--
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES............................72
--
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES...............................72
--
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT............................74
--
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS..............................74
--
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES...............................74
--
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC................................74
--
ARTICLE 10 SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE......................................75
--
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY..........................75
--
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.............................75
--
SECTION 10.04. ACCELERATION OF SECURITIES....................................76
--
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER...........................76
--
SECTION 10.06. NOTICE BY COMPANY.............................................77
--
SECTION 10.07. SUBROGATION...................................................77
--
SECTION 10.08. RELATIVE RIGHTS...............................................77
--
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY..................77
--
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE......................77
--
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT............................78
--
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.........................78
--
SECTION 10.13. AMENDMENTS....................................................78
--
ARTICLE 11 SUBSIDIARY GUARANTIES
SECTION 11.01. GUARANTY......................................................78
--
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTY..........................79
--
SECTION 11.03. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY..................80
--
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTY.................80
--
SECTION 11.05. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS.................................................80
--
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.............................81
--
ARTICLE 12 MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS..................................82
--
SECTION 12.02. NOTICES.......................................................82
--
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES..............................................83
--
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............83
--
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.................83
--
SECTION 12.06. RULES BY TRUSTEE AND AGENTS...................................84
--
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS..............................................84
--
SECTION 12.08. GOVERNING LAW.................................................84
--
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.................84
--
SECTION 12.10. SUCCESSORS....................................................84
--
SECTION 12.11. SEVERABILITY..................................................84
--
</TABLE>
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<TABLE>
<S> <C>
SECTION 12.12. COUNTERPART ORIGINALS.........................................84
--
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC..............................85
--
</TABLE>
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EXHIBITS
EXHIBIT A1 FORM OF NOTE
EXHIBIT A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
EXHIBIT E FORM OF NOTATION OF GUARANTY
EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT
SUBSIDIARY GUARANTORS
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INDENTURE DATED AS OF MAY 28, 1999 BY AND AMONG J. L. FRENCH AUTOMOTIVE
CASTINGS, INC., A DELAWARE CORPORATION (THE "COMPANY"), AND FRENCH HOLDINGS,
INC., A DELAWARE CORPORATION, ALLOTECH INTERNATIONAL, INC., A WISCONSIN
CORPORATION, J. L. FRENCH CORPORATION, A WISCONSIN CORPORATION (EACH
INDIVIDUALLY A "SUBSIDIARY GUARANTOR" AND COLLECTIVELY THE "SUBSIDIARY
GUARANTORS"), AND U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE (THE
"TRUSTEE").
THE COMPANY AND THE TRUSTEE AGREE AS FOLLOWS FOR THE BENEFIT OF EACH
OTHER AND FOR THE EQUAL AND RATABLE BENEFIT OF THE HOLDERS OF THE 11 1/2% SENIOR
SUBORDINATED NOTES DUE 2009 (THE "NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A GLOBAL NOTE" MEANS A GLOBAL NOTE SUBSTANTIALLY IN THE FORM OF
EXHIBIT A1 HERETO BEARING THE GLOBAL NOTE LEGEND AND THE PRIVATE PLACEMENT
LEGEND AND DEPOSITED WITH OR ON BEHALF OF, AND REGISTERED IN THE NAME OF, THE
DEPOSITARY OR ITS NOMINEE THAT WILL BE ISSUED IN A DENOMINATION EQUAL TO THE
OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES SOLD IN RELIANCE ON RULE 144A.
SET FORTH BELOW ARE CERTAIN DEFINED TERMS USED IN THE INDENTURE.
REFERENCE IS MADE TO THE INDENTURE FOR A FULL DISCLOSURE OF ALL SUCH TERMS, AS
WELL AS ANY OTHER CAPITALIZED TERMS USED HEREIN FOR WHICH NO DEFINITION IS
PROVIDED.
"ACQUIRED DEBT" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON:
(1) INDEBTEDNESS OF ANY OTHER PERSON EXISTING AT THE TIME SUCH
OTHER PERSON IS MERGED WITH OR INTO OR BECAME A SUBSIDIARY OF
SUCH SPECIFIED PERSON, WHETHER OR NOT SUCH INDEBTEDNESS IS
INCURRED IN CONNECTION WITH, OR IN CONTEMPLATION OF, SUCH
OTHER PERSON MERGING WITH OR INTO, OR BECOMING A SUBSIDIARY
OF, SUCH SPECIFIED PERSON; AND
(2) INDEBTEDNESS SECURED BY A LIEN ENCUMBERING ANY ASSET ACQUIRED
BY SUCH SPECIFIED PERSON.
"ADDITIONAL NOTES" MEANS UP TO $100.0 MILLION IN AGGREGATE PRINCIPAL
AMOUNT OF NOTES (OTHER THAN THE INITIAL NOTES) ISSUED UNDER THIS INDENTURE IN
ACCORDANCE WITH SECTIONS 2.02 AND 4.09 HEREOF.
"AFFILIATE" OF ANY SPECIFIED PERSON MEANS ANY OTHER PERSON DIRECTLY OR
INDIRECTLY CONTROLLING OR CONTROLLED BY OR UNDER DIRECT OR INDIRECT COMMON
CONTROL WITH SUCH SPECIFIED PERSON. FOR PURPOSES OF THIS DEFINITION, "CONTROL,"
AS USED WITH RESPECT TO ANY PERSON, SHALL MEAN THE POSSESSION, DIRECTLY OR
INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT OR
POLICIES OF SUCH PERSON, WHETHER THROUGH THE OWNERSHIP OF VOTING SECURITIES, BY
AGREEMENT OR OTHERWISE; PROVIDED THAT BENEFICIAL OWNERSHIP OF 10% OR MORE OF THE
VOTING STOCK OF A PERSON SHALL BE DEEMED TO BE CONTROL. FOR PURPOSES OF THIS
DEFINITION, THE TERMS
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"CONTROLLING," "CONTROLLED BY" AND "UNDER COMMON CONTROL WITH" SHALL HAVE
CORRELATIVE MEANINGS.
"AGENT" MEANS ANY REGISTRAR, PAYING AGENT OR CO-REGISTRAR.
"APPLICABLE PROCEDURES" MEANS, WITH RESPECT TO ANY TRANSFER OR EXCHANGE
OF OR FOR BENEFICIAL INTERESTS IN ANY GLOBAL NOTE, THE RULES AND PROCEDURES OF
THE DEPOSITARY, EUROCLEAR AND CEDEL THAT APPLY TO SUCH TRANSFER OR EXCHANGE.
"ASSET SALE" MEANS:
(1) THE SALE, LEASE, CONVEYANCE OR OTHER DISPOSITION OF ANY ASSETS
OR RIGHTS, OTHER THAN SALES OR LEASES IN THE ORDINARY COURSE
OF BUSINESS CONSISTENT WITH PAST PRACTICES; PROVIDED THAT THE
SALE, CONVEYANCE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES TAKEN AS A WHOLE SHALL BE GOVERNED BY THE
PROVISIONS OF THE INDENTURE DESCRIBED IN SECTION 4.15 HEREOF
AND/OR THE PROVISIONS DESCRIBED IN SECTION 5.01 AND NOT BY THE
PROVISIONS OF SECTION 4.10 HEREOF; AND
(2) THE ISSUANCE OF EQUITY INTERESTS BY ANY OF THE COMPANY'S
RESTRICTED SUBSIDIARIES OR THE SALE OF EQUITY INTERESTS IN ANY
OF ITS RESTRICTED SUBSIDIARIES.
NOTWITHSTANDING THE PRECEDING, THE FOLLOWING ITEMS SHALL NOT BE DEEMED
TO BE ASSET SALES:
(1) ANY SINGLE TRANSACTION OR SERIES OF RELATED TRANSACTIONS THAT
INVOLVES ASSETS HAVING A FAIR MARKET VALUE OF LESS THAN $2.5
MILLION;
(2) A TRANSFER OF ASSETS BETWEEN OR AMONG THE COMPANY AND ITS
RESTRICTED SUBSIDIARIES,
(3) AN ISSUANCE OF EQUITY INTERESTS BY A RESTRICTED SUBSIDIARY TO
THE COMPANY OR TO ANOTHER RESTRICTED SUBSIDIARY;
(4) THE SALE, LEASE OR LICENSE OF EQUIPMENT, INVENTORY, ACCOUNTS
RECEIVABLE OR OTHER ASSETS IN THE ORDINARY COURSE OF BUSINESS;
(5) THE SALE OR OTHER DISPOSITION OF CASH OR CASH EQUIVALENTS;
(6) A RESTRICTED PAYMENT OR PERMITTED INVESTMENT THAT IS PERMITTED
BY SECTION 4.07 HEREOF;
(7) THE LICENSING OR SUBLICENSING OF INTELLECTUAL PROPERTY OR
OTHER GENERAL INTANGIBLES AND LICENSES, LEASES OR SUBLEASES OF
OTHER PROPERTY IN THE ORDINARY COURSE OF BUSINESS AND WHICH DO
NOT MATERIALLY INTERFERE WITH THE BUSINESS OF THE COMPANY AND
ITS SUBSIDIARIES;
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<PAGE>
(8) SALES OF RECEIVABLES AND RELATED ASSETS (INCLUDING CONTRACT
RIGHTS) OF THE TYPE SPECIFIED IN THE DEFINITION OF "QUALIFIED
SECURITIZATION TRANSACTION" TO A SECURITIZATION ENTITY FOR THE
FAIR MARKET VALUE THEREOF;
(9) AN EXCHANGE OR SERIES OF EXCHANGES OF LONG-TERM ASSETS;
PROVIDED (I) THAT THE LONG-TERM ASSETS RECEIVED BY THE COMPANY
OR ANY OF ITS RESTRICTED SUBSIDIARIES HAVE A FAIR MARKET VALUE
(AS DETERMINED BY THE COMPANY) AT LEAST EQUAL TO THE FAIR
MARKET VALUE OF THE ASSETS FOR WHICH THEY WERE EXCHANGED AND
ARE USED OR USEFUL IN A PERMITTED BUSINESS AND (II) THAT THE
AGGREGATE FAIR MARKET VALUE (AS DETERMINED ABOVE) OF SUCH
LONG-TERM ASSETS, TAKEN TOGETHER WITH THE FAIR MARKET VALUE OF
ALL OTHER LONG-TERM ASSETS RECEIVED PURSUANT TO THIS CLAUSE
(9) LESS THE AMOUNT OF NET PROCEEDS PREVIOUSLY REALIZED IN
CASH FROM THE DISPOSITION OF SUCH EARLIER RECEIVED LONG-TERM
ASSETS IS, AT THE TIME OF RECEIPT OF SUCH LONG-TERM ASSETS
(WITH THE FAIR MARKET VALUE OF EACH LONG-TERM ASSET BEING
MEASURED AT THE TIME RECEIVED AND WITHOUT GIVING EFFECT TO
SUBSEQUENT CHANGES IN VALUE), LESS THAN 10.0% OF TOTAL ASSETS;
AND
(10) ANY EXCHANGE OF LIKE PROPERTY PURSUANT TO 1031(G) OF THE
INTERNAL REVENUE CODE OF 1986, AS
AMENDED, FOR USE IN A PERMITTED BUSINESS.
"ATTRIBUTABLE DEBT" IN RESPECT OF A SALE AND LEASEBACK TRANSACTION
MEANS, AT THE TIME OF DETERMINATION, THE PRESENT VALUE OF THE OBLIGATION OF THE
LESSEE FOR NET RENTAL PAYMENTS DURING THE REMAINING TERM OF THE LEASE INCLUDED
IN SUCH SALE AND LEASEBACK TRANSACTION INCLUDING ANY PERIOD FOR WHICH SUCH LEASE
HAS BEEN EXTENDED OR MAY, AT THE OPTION OF THE LESSOR, BE EXTENDED. SUCH PRESENT
VALUE SHALL BE CALCULATED USING A DISCOUNT RATE EQUAL TO THE RATE OF INTEREST
IMPLICIT IN SUCH TRANSACTION, DETERMINED IN ACCORDANCE WITH GAAP.
"BANKRUPTCY LAW" MEANS TITLE 11, U.S. CODE OR ANY SIMILAR FEDERAL OR
STATE LAW FOR THE RELIEF OF DEBTORS.
"BENEFICIAL OWNER" HAS THE MEANING ASSIGNED TO SUCH TERM IN RULE 13D-3
AND RULE 13D-5 UNDER THE EXCHANGE ACT, EXCEPT THAT IN CALCULATING THE BENEFICIAL
OWNERSHIP OF ANY PARTICULAR "PERSON" (AS THAT TERM IS USED IN SECTION 13(D)(3)
OF THE EXCHANGE ACT), SUCH "PERSON" SHALL BE DEEMED TO HAVE BENEFICIAL OWNERSHIP
OF ALL SECURITIES THAT SUCH "PERSON" HAS THE RIGHT TO ACQUIRE BY CONVERSION OR
EXERCISE OF OTHER SECURITIES, WHETHER SUCH RIGHT IS CURRENTLY EXERCISABLE OR IS
EXERCISABLE ONLY UPON THE OCCURRENCE OF A SUBSEQUENT CONDITION. THE TERMS
"BENEFICIALLY OWNS" AND "BENEFICIALLY OWNED" SHALL HAVE A CORRESPONDING MEANING.
"BOARD OF DIRECTORS" MEANS:
(1) WITH RESPECT TO A CORPORATION, THE BOARD OF DIRECTORS OF THE
CORPORATION;
(2) WITH RESPECT TO A PARTNERSHIP, THE BOARD OF DIRECTORS OF THE
GENERAL PARTNER OF THE PARTNERSHIP; AND
(3) WITH RESPECT TO ANY OTHER PERSON, THE BOARD OR COMMITTEE OF
SUCH PERSON SERVING A SIMILAR FUNCTION.
"BORROWING BASE" MEANS, AS OF ANY DATE, AN AMOUNT EQUAL TO:
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<PAGE>
(1) 85% OF THE FACE AMOUNT OF ALL ACCOUNTS RECEIVABLE OWNED BY THE
COMPANY AND ITS RESTRICTED SUBSIDIARIES AS OF THE MOST RECENT
MONTH END FOR WHICH SUCH INFORMATION IS AVAILABLE THAT WERE
NOT MORE THAN 90 DAYS PAST DUE; PLUS
(2) 50% OF THE BOOK VALUE OF ALL INVENTORY OWNED BY THE COMPANY
AND ITS RESTRICTED SUBSIDIARIES AS OF THE MOST RECENT MONTH
END FOR WHICH SUCH INFORMATION IS AVAILABLE.
"BROKER-DEALER" HAS THE MEANING SET FORTH IN THE REGISTRATION RIGHTS
AGREEMENT.
"BUSINESS DAY" MEANS ANY DAY OTHER THAN A LEGAL HOLIDAY.
"CAPITAL LEASE OBLIGATION" MEANS, AT THE TIME ANY DETERMINATION THEREOF
IS TO BE MADE, THE AMOUNT OF THE LIABILITY IN RESPECT OF A CAPITAL LEASE THAT
WOULD AT THAT TIME BE REQUIRED TO BE CAPITALIZED ON A BALANCE SHEET IN
ACCORDANCE WITH GAAP.
"CAPITAL STOCK" MEANS:
(1) IN THE CASE OF A CORPORATION, CORPORATE STOCK;
(2) IN THE CASE OF AN ASSOCIATION OR BUSINESS ENTITY, ANY AND ALL
SHARES, INTERESTS, PARTICIPATIONS, RIGHTS OR OTHER EQUIVALENTS
(HOWEVER DESIGNATED) OF CORPORATE STOCK;
(3) IN THE CASE OF A PARTNERSHIP OR LIMITED LIABILITY COMPANY,
PARTNERSHIP OR MEMBERSHIP INTERESTS (WHETHER GENERAL OR
LIMITED); AND
(4) ANY OTHER INTEREST OR PARTICIPATION THAT CONFERS ON A PERSON
THE RIGHT TO RECEIVE A SHARE OF THE PROFITS AND LOSSES OF, OR
DISTRIBUTIONS OF ASSETS OF, THE ISSUING PERSON.
"CASH EQUIVALENTS" MEANS:
(1) WITH RESPECT TO UNITED STATES DOLLARS, (A) UNITED STATES
DOLLARS, (B) SECURITIES WITH MATURITIES OF ONE YEAR OR LESS
FROM THE DATE OF ACQUISITION ISSUED OR FULLY GUARANTEED OR
INSURED BY THE UNITED STATES GOVERNMENT OR ANY AGENCY THEREOF,
(C) CERTIFICATES OF DEPOSIT, TIME DEPOSITS, OVERNIGHT BANK
DEPOSITS, BANKERS ACCEPTANCES AND REPURCHASE AGREEMENTS OF ANY
COMMERCIAL BANK WHICH HAS, OR WHOSE OBLIGATIONS ARE GUARANTEED
BY AN AFFILIATED COMMERCIAL BANK WHICH HAS CAPITAL AND SURPLUS
IN EXCESS OF $500,000,000 HAVING MATURITIES OF ONE YEAR OR
LESS FROM THE DATE OF ACQUISITION, (D) COMMERCIAL PAPER OF A
COMPANY RATED AT LEAST A-1 BY STANDARD & POOR'S CORPORATION OR
P-1 BY MOODY'S INVESTORS SERVICE, INC., OR CARRYING AN
EQUIVALENT RATING BY A NATIONALLY RECOGNIZED RATING AGENCY IF
BOTH OF THE TWO NAMED RATING AGENCIES CEASE PUBLISHING RATINGS
OF INVESTMENTS, (E) MONEY MARKET ACCOUNTS OR FUNDS WITH OR
ISSUED BY QUALIFIED COMPANIES, (F) REPURCHASE OBLIGATIONS WITH
A TERM OF NOT MORE THAN 90 DAYS FOR UNDERLYING SECURITIES OF
THE TYPES DESCRIBED IN CLAUSE (B) ABOVE ENTERED INTO WITH ANY
BANK MEETING THE QUALIFICATIONS SPECIFIED IN CLAUSE (C) ABOVE,
AND (G) DEMAND DEPOSIT ACCOUNTS MAINTAINED IN THE ORDINARY
COURSE OF BUSINESS WITH ANY LENDER OR WITH
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<PAGE>
ANY BANK THAT IS NOT A LENDER NOT IN EXCESS OF $100,000 IN THE
AGGREGATE ON DEPOSIT WITH ANY SUCH BANK; "QUALIFIED COMPANY"
MEANS ANY COMMERCIAL BANK (A) WHICH HAS, OR WHOSE OBLIGATIONS
ARE GUARANTEED BY AN AFFILIATED COMMERCIAL BANK WHICH HAS,
CAPITAL AND SURPLUS IN EXCESS OF $500,000,000 AND (B) THE
OUTSTANDING SHORT-TERM DEBT SECURITIES OF WHICH ARE RATED AT
LEAST A-1 BY STANDARD & POOR'S CORPORATION OR AT LEAST P-1 BY
MOODY'S INVESTORS SERVICE, INC., OR CARRY AN EQUIVALENT RATING
BY A NATIONALLY RECOGNIZED RATING AGENCY IF BOTH OF THE TWO
NAMED RATING AGENCIES CEASE PUBLISHING RATINGS OF INVESTMENTS;
(2) WITH RESPECT TO POUNDS STERLING, (A) POUNDS STERLING, (B) ANY
CREDIT BALANCES, REALIZABLE WITHIN THREE (3) MONTHS, ON ANY
BANK OR OTHER DEPOSIT, SAVINGS OR CURRENT ACCOUNT HELD IN THE
UNITED KINGDOM (OR ANY OTHER JURISDICTION FROM WHICH CASH IS
READILY REMITTABLE TO THE UNITED KINGDOM); (C) CASH IN HAND;
(D) GILT EDGED SECURITIES; (E) STERLING COMMERCIAL PAPER
MATURING NOT MORE THAN TWELVE (12) MONTHS FROM THE DATE OF
ISSUE AND RATED A-1 BY STANDARD & POOR'S CORPORATION OR P-1 BY
MOODY'S INVESTORS SERVICE, INC.; (F) ANY DEPOSIT WITH OR
ACCEPTANCE MATURING NOT MORE THAN ONE (1) YEAR AFTER ISSUE
ACCEPTED BY AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT
1987 OR A BANK; AND (G) STERLING DENOMINATED DEBT SECURITIES
HAVING NOT MORE THAN ONE (1) YEAR UNTIL FINAL MATURITY AND
LISTED ON A RECOGNIZED STOCK EXCHANGE AND RATED AT LEAST AA BY
STANDARD & POOR'S CORPORATION OR AA BY MOODY'S INVESTORS
SERVICE, INC.; AND
(3) WITH RESPECT TO CURRENCIES OF NATIONS IN WHICH THE COMPANY OR
ITS RESTRICTED SUBSIDIARIES DO BUSINESS, (A) THE CURRENCY OF
SUCH NATIONS AND (B) ANY CREDIT BALANCES REALIZABLE WITHIN
THREE (3) MONTHS, ON ANY BANK OR OTHER DEPOSIT, SAVINGS OR
CURRENT ACCOUNT HELD IN SUCH NATIONS (OR ANY OTHER
JURISDICTION FROM WHICH CASH IS READILY REMITTABLE TO SUCH
NATION).
"CEDEL" MEANS CEDELBANK.
"CERTIFICATED NOTE" MEANS A CERTIFICATED NOTE REGISTERED IN THE NAME OF
THE HOLDER THEREOF AND ISSUED IN ACCORDANCE WITH SECTION 2.06 HEREOF,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A1 HEREOF EXCEPT THAT SUCH NOTE SHALL NOT
BEAR THE GLOBAL NOTE LEGEND AND SHALL NOT HAVE THE "SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE" ATTACHED THERETO.
"CHANGE OF CONTROL" MEANS THE OCCURRENCE OF ANY OF THE FOLLOWING:
(1) THE DIRECT OR INDIRECT SALE, TRANSFER, CONVEYANCE OR OTHER
DISPOSITION (OTHER THAN BY WAY OF MERGER OR CONSOLIDATION), IN
ONE OR A SERIES OF RELATED TRANSACTIONS, OF ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY
AND ITS RESTRICTED SUBSIDIARIES TAKEN AS A WHOLE TO ANY
"PERSON" (AS THAT TERM IS USED IN SECTION 13(D)(3) OF THE
EXCHANGE ACT) OTHER THAN A PRINCIPAL OR A RELATED PARTY OF A
PRINCIPAL;
(2) THE ADOPTION OF A PLAN RELATING TO THE LIQUIDATION OR
DISSOLUTION OF THE COMPANY;
(3) THE CONSUMMATION OF ANY TRANSACTION (INCLUDING, WITHOUT
LIMITATION, ANY MERGER OR CONSOLIDATION) THE RESULT OF WHICH
IS THAT ANY "PERSON" (AS DEFINED ABOVE), OTHER THAN THE
PRINCIPALS AND THEIR RELATED PARTIES, BECOMES THE BENEFICIAL
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OWNER, DIRECTLY OR INDIRECTLY, OF MORE THAN 50% OF THE VOTING
STOCK OF THE COMPANY, MEASURED BY VOTING POWER RATHER THAN
NUMBER OF SHARES;
(4) THE FIRST DAY ON WHICH A MAJORITY OF THE MEMBERS OF THE BOARD
OF DIRECTORS OF THE COMPANY ARE NOT CONTINUING DIRECTORS; OR
(5) THE COMPANY CONSOLIDATES WITH, OR MERGES WITH OR INTO, ANY
PERSON, OR ANY PERSON CONSOLIDATES WITH, OR MERGES WITH OR
INTO, THE COMPANY, IN ANY SUCH EVENT PURSUANT TO A TRANSACTION
IN WHICH ANY OF THE OUTSTANDING VOTING STOCK OF THE COMPANY OR
SUCH OTHER PERSON IS CONVERTED INTO OR EXCHANGED FOR CASH,
SECURITIES OR OTHER PROPERTY, OTHER THAN ANY SUCH TRANSACTION
WHERE THE VOTING STOCK OF THE COMPANY OUTSTANDING IMMEDIATELY
PRIOR TO SUCH TRANSACTION IS CONVERTED INTO OR EXCHANGED FOR
VOTING STOCK (OTHER THAN DISQUALIFIED STOCK) OF THE SURVIVING
OR TRANSFEREE PERSON CONSTITUTING A MAJORITY OF THE
OUTSTANDING SHARES OF SUCH VOTING STOCK OF SUCH SURVIVING OR
TRANSFEREE PERSON (IMMEDIATELY AFTER GIVING EFFECT TO SUCH
ISSUANCE).
"CONSOLIDATED CASH FLOW" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON
FOR ANY PERIOD, THE CONSOLIDATED NET INCOME OF SUCH PERSON FOR SUCH PERIOD PLUS:
(1) AN AMOUNT EQUAL TO ANY EXTRAORDINARY LOSS PLUS ANY NET LOSS
REALIZED BY SUCH PERSON OR ANY OF ITS RESTRICTED SUBSIDIARIES
IN CONNECTION WITH AN ASSET SALE, TO THE EXTENT SUCH LOSSES
WERE DEDUCTED IN COMPUTING SUCH CONSOLIDATED NET INCOME; PLUS
(2) PROVISION FOR TAXES BASED ON INCOME OR PROFITS OF SUCH PERSON
AND ITS RESTRICTED SUBSIDIARIES FOR SUCH PERIOD, TO THE EXTENT
THAT SUCH PROVISION FOR TAXES WAS DEDUCTED IN COMPUTING SUCH
CONSOLIDATED NET INCOME; PLUS
(3) CONSOLIDATED INTEREST EXPENSE OF SUCH PERSON AND ITS
RESTRICTED SUBSIDIARIES FOR SUCH PERIOD, WHETHER PAID OR
ACCRUED AND WHETHER OR NOT CAPITALIZED (INCLUDING, WITHOUT
LIMITATION, AMORTIZATION OF DEBT ISSUANCE COSTS AND ORIGINAL
ISSUE DISCOUNT, NON-CASH INTEREST PAYMENTS, THE INTEREST
COMPONENT OF ANY DEFERRED PAYMENT OBLIGATIONS, THE INTEREST
COMPONENT OF ALL PAYMENTS ASSOCIATED WITH CAPITAL LEASE
OBLIGATIONS, IMPUTED INTEREST WITH RESPECT TO ATTRIBUTABLE
DEBT, COMMISSIONS, DISCOUNTS AND OTHER FEES AND CHARGES
INCURRED IN RESPECT OF LETTER OF CREDIT OR BANKERS' ACCEPTANCE
FINANCINGS, AND NET OF THE EFFECT OF ALL PAYMENTS MADE OR
RECEIVED PURSUANT TO HEDGING OBLIGATIONS), TO THE EXTENT THAT
ANY SUCH EXPENSE WAS DEDUCTED IN COMPUTING SUCH CONSOLIDATED
NET INCOME; PLUS
(4) DEPRECIATION, AMORTIZATION (INCLUDING AMORTIZATION OF GOODWILL
AND OTHER INTANGIBLES BUT EXCLUDING AMORTIZATION OF PREPAID
CASH EXPENSES THAT WERE PAID IN A PRIOR PERIOD) AND OTHER
NON-CASH EXPENSES (EXCLUDING ANY SUCH NON-CASH EXPENSE TO THE
EXTENT THAT IT REPRESENTS AN ACCRUAL OF OR RESERVE FOR CASH
EXPENSES IN ANY FUTURE PERIOD OR AMORTIZATION OF A PREPAID
CASH EXPENSE THAT WAS PAID IN A PRIOR PERIOD) OF SUCH PERSON
AND ITS RESTRICTED SUBSIDIARIES FOR SUCH PERIOD TO THE EXTENT
THAT SUCH DEPRECIATION, AMORTIZATION AND OTHER NON-CASH
EXPENSES WERE DEDUCTED IN COMPUTING SUCH CONSOLIDATED NET
INCOME; MINUS
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(5) NON-CASH ITEMS INCREASING SUCH CONSOLIDATED NET INCOME FOR
SUCH PERIOD, OTHER THAN THE ACCRUAL OF REVENUE IN THE ORDINARY
COURSE OF BUSINESS, IN EACH CASE, ON A CONSOLIDATED BASIS AND
DETERMINED IN ACCORDANCE WITH GAAP.
NOTWITHSTANDING THE PRECEDING, THE PROVISION FOR TAXES BASED ON THE
INCOME OR PROFITS OF, AND THE DEPRECIATION AND AMORTIZATION AND OTHER NON-CASH
EXPENSES OF, A RESTRICTED SUBSIDIARY OF THE COMPANY SHALL BE ADDED TO
CONSOLIDATED NET INCOME TO COMPUTE CONSOLIDATED CASH FLOW OF THE COMPANY ONLY TO
THE EXTENT THAT A CORRESPONDING AMOUNT WOULD BE PERMITTED AT THE DATE OF
DETERMINATION TO BE DIVIDENDED TO THE COMPANY BY SUCH RESTRICTED SUBSIDIARY
WITHOUT PRIOR GOVERNMENTAL APPROVAL (THAT HAS NOT BEEN OBTAINED), AND WITHOUT
DIRECT OR INDIRECT RESTRICTION PURSUANT TO THE TERMS OF ITS CHARTER AND ALL
AGREEMENTS, INSTRUMENTS, JUDGMENTS, DECREES, ORDERS, STATUTES, RULES AND
GOVERNMENTAL REGULATIONS APPLICABLE TO THAT RESTRICTED SUBSIDIARY OR ITS
STOCKHOLDERS.
"CONSOLIDATED NET INCOME" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON
FOR ANY PERIOD, THE AGGREGATE OF THE NET INCOME OF SUCH PERSON AND ITS
RESTRICTED SUBSIDIARIES FOR SUCH PERIOD, ON A CONSOLIDATED BASIS, DETERMINED IN
ACCORDANCE WITH GAAP; PROVIDED THAT:
(1) THE NET INCOME (BUT NOT LOSS) OF ANY PERSON THAT IS NOT A
RESTRICTED SUBSIDIARY OR THAT IS ACCOUNTED FOR BY THE EQUITY
METHOD OF ACCOUNTING SHALL BE INCLUDED ONLY TO THE EXTENT OF
THE AMOUNT OF DIVIDENDS OR DISTRIBUTIONS PAID IN CASH TO THE
SPECIFIED PERSON OR A WHOLLY OWNED RESTRICTED SUBSIDIARY
THEREOF;
(2) THE NET INCOME OF ANY RESTRICTED SUBSIDIARY SHALL BE EXCLUDED
TO THE EXTENT THAT THE DECLARATION OR PAYMENT OF DIVIDENDS OR
SIMILAR DISTRIBUTIONS BY THAT RESTRICTED SUBSIDIARY OF THAT
NET INCOME IS NOT AT THE DATE OF DETERMINATION PERMITTED
WITHOUT ANY PRIOR GOVERNMENTAL APPROVAL (THAT HAS NOT BEEN
OBTAINED) OR, 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;
(3) THE NET INCOME OF ANY PERSON ACQUIRED IN A POOLING OF
INTERESTS TRANSACTION FOR ANY PERIOD PRIOR TO THE DATE OF SUCH
ACQUISITION SHALL BE EXCLUDED;
(4) THE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLES
SHALL BE EXCLUDED;
(5) ANY FEES, EXPENSES AND COSTS RELATING TO THE RECAPITALIZATION,
INCLUDING ANY FEES AND EXPENSES INCURRED IN CONNECTION WITH
THE SUBORDINATED CREDIT FACILITY, ANY COMPENSATION EXPENSE
INCURRED IN CONNECTION WITH THE CANCELLATION OF STOCK OPTIONS
AND EXPENSES RELATED TO EARLY EXTINGUISHMENT OF DEBT, SHALL BE
EXCLUDED; AND
(6) THE NET INCOME (BUT NOT LOSS) OF ANY UNRESTRICTED SUBSIDIARY
SHALL BE EXCLUDED, WHETHER OR NOT DISTRIBUTED TO THE SPECIFIED
PERSON OR ONE OF ITS SUBSIDIARIES.
"CONTINUING DIRECTORS" MEANS, AS OF ANY DATE OF DETERMINATION, ANY
MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY WHO:
(1) WAS A MEMBER OF SUCH BOARD OF DIRECTORS ON THE DATE OF THE
INDENTURE; OR
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(2) WAS NOMINATED FOR ELECTION OR ELECTED TO SUCH BOARD OF
DIRECTORS WITH THE APPROVAL OF A MAJORITY OF THE CONTINUING
DIRECTORS WHO WERE MEMBERS OF SUCH BOARD AT THE TIME OF SUCH
NOMINATION OR ELECTION.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" SHALL BE AT THE ADDRESS OF THE
TRUSTEE SPECIFIED IN SECTION 12.02 HEREOF OR SUCH OTHER ADDRESS AS TO WHICH THE
TRUSTEE MAY GIVE NOTICE TO THE COMPANY.
"CREDIT AGREEMENT" MEANS THAT CERTAIN CREDIT AGREEMENT, DATED AS OF
APRIL 21, 1999, BY AND AMONG THE COMPANY, AUTOMOTIVE COMPONENTS INVESTMENTS
LIMITED, MORRIS ASHBY LIMITED, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, AS SYNDICATION AGENT, CHASE MANHATTAN INTERNATIONAL LIMITED, AS
AGENT, AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT, AND THE OTHER
LENDERS SIGNATORY THERETO, PROVIDING FOR UP TO $370 MILLION OF REVOLVING CREDIT
BORROWINGS AND TERM LOANS, INCLUDING ANY RELATED NOTES, GUARANTIES, COLLATERAL
DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION THEREWITH, AND IN
EACH CASE AS AMENDED, MODIFIED, RENEWED, REFUNDED, REPLACED OR REFINANCED, IN
WHOLE OR IN PART, OR INCREASED (PROVIDED THAT SUCH INCREASE IN BORROWINGS IS
PERMITTED BY SECTION 4.09 HEREOF) FROM TIME TO TIME.
"CREDIT FACILITIES" MEANS, ONE OR MORE DEBT FACILITIES (INCLUDING,
WITHOUT LIMITATION, THE CREDIT AGREEMENT) OR COMMERCIAL PAPER FACILITIES, IN
EACH CASE WITH BANKS OR OTHER INSTITUTIONAL LENDERS PROVIDING FOR REVOLVING
CREDIT LOANS, TERM LOANS, RECEIVABLES FINANCING (INCLUDING THROUGH THE SALE OF
RECEIVABLES TO SUCH LENDERS OR TO SPECIAL PURPOSE ENTITIES FORMED TO BORROW FROM
SUCH LENDERS AGAINST SUCH RECEIVABLES) OR LETTERS OF CREDIT, IN EACH CASE, AS
AMENDED, RESTATED, MODIFIED, RENEWED, REFUNDED, REPLACED OR REFINANCED IN WHOLE
OR IN PART FROM TIME TO TIME.
"CUSTODIAN" MEANS THE TRUSTEE, AS CUSTODIAN WITH RESPECT TO THE NOTES
IN GLOBAL FORM, OR ANY SUCCESSOR ENTITY THERETO.
"DEFAULT" MEANS ANY EVENT THAT IS, OR WITH THE PASSAGE OF TIME OR THE
GIVING OF NOTICE OR BOTH WOULD BE, AN EVENT OF DEFAULT.
"DEFINITIVE NOTE" MEANS A CERTIFICATED NOTE REGISTERED IN THE NAME OF
THE HOLDER THEREOF AND ISSUED IN ACCORDANCE WITH SECTION 2.06 HEREOF,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A1 HERETO EXCEPT THAT SUCH NOTE SHALL NOT
BEAR THE GLOBAL NOTE LEGEND AND SHALL NOT HAVE THE "SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE" ATTACHED THERETO.
"DEPOSITARY" MEANS, WITH RESPECT TO THE NOTES ISSUABLE OR ISSUED IN
WHOLE OR IN PART IN GLOBAL FORM, THE PERSON SPECIFIED IN SECTION 2.03 HEREOF AS
THE DEPOSITARY WITH RESPECT TO THE NOTES, AND ANY AND ALL SUCCESSORS THERETO
APPOINTED AS DEPOSITARY HEREUNDER AND HAVING BECOME SUCH PURSUANT TO THE
APPLICABLE PROVISION OF THIS INDENTURE.
"DESIGNATED NONCASH CONSIDERATION" MEANS ANY NON-CASH CONSIDERATION
(OTHER THAN NON-CASH CONSIDERATION THAT WOULD CONSTITUTE A RESTRICTED
INVESTMENT) RECEIVED BY THE COMPANY OR ONE OF ITS RESTRICTED SUBSIDIARIES IN
CONNECTION WITH AN ASSET DISPOSITION THAT IS DESIGNATED AS DESIGNATED NONCASH
CONSIDERATION PURSUANT TO AN OFFICERS' CERTIFICATE EXECUTED BY THE PRINCIPAL
EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY. SUCH OFFICERS' CERTIFICATE SHALL STATE THE BASIS OF SUCH
VALUATION, WHICH SHALL BE A
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REPORT OF A NATIONALLY RECOGNIZED INVESTMENT BANKING FIRM WITH RESPECT TO THE
RECEIPT IN ONE OR A SERIES OF RELATED TRANSACTIONS OF DESIGNATED NONCASH
CONSIDERATION WITH A FAIR MARKET VALUE IN EXCESS OF $5.0 MILLION.
"DESIGNATED PREFERRED STOCK" MEANS PREFERRED STOCK THAT IS DESIGNATED
AS DESIGNATED PREFERRED STOCK, PURSUANT TO AN OFFICERS' CERTIFICATE EXECUTED BY
THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF THE
COMPANY ON THE ISSUANCE DATE THEREOF, THE CASH PROCEEDS OF WHICH ARE EXCLUDED
FROM THE CALCULATION SET FORTH IN CLAUSE (C)(II) OF THE FIRST PARAGRAPH OF
SECTION 4.07 HEREOF.
"DESIGNATED SENIOR DEBT" MEANS:
(1) ANY INDEBTEDNESS OUTSTANDING UNDER OR IN RESPECT OF THE CREDIT
AGREEMENT; AND
(2) AFTER PAYMENT IN FULL OF ALL OBLIGATIONS UNDER THE CREDIT
AGREEMENT, ANY OTHER SENIOR DEBT PERMITTED UNDER THIS
INDENTURE THE PRINCIPAL AMOUNT OF WHICH IS $15.0 MILLION OR
MORE AND THAT HAS BEEN DESIGNATED BY THE COMPANY AS
"DESIGNATED SENIOR DEBT."
"DISQUALIFIED STOCK" MEANS ANY CAPITAL STOCK THAT, BY ITS TERMS (OR BY
THE TERMS OF ANY SECURITY INTO WHICH IT IS CONVERTIBLE, OR FOR WHICH IT IS
EXCHANGEABLE, IN EACH CASE AT THE OPTION OF THE HOLDER THEREOF), OR UPON THE
HAPPENING OF ANY EVENT, MATURES OR IS MANDATORILY REDEEMABLE, PURSUANT TO A
SINKING FUND OBLIGATION OR OTHERWISE, OR REDEEMABLE AT THE OPTION OF THE HOLDER
THEREOF, IN WHOLE OR IN PART, ON OR PRIOR TO THE DATE THAT IS 91 DAYS AFTER THE
DATE ON WHICH THE NOTES MATURE. NOTWITHSTANDING THE PRECEDING SENTENCE, ANY
CAPITAL STOCK THAT WOULD CONSTITUTE DISQUALIFIED STOCK SOLELY BECAUSE THE
HOLDERS THEREOF HAVE THE RIGHT TO REQUIRE THE COMPANY TO REPURCHASE SUCH CAPITAL
STOCK UPON THE OCCURRENCE OF A CHANGE OF CONTROL OR AN ASSET SALE SHALL NOT
CONSTITUTE DISQUALIFIED STOCK IF THE TERMS OF SUCH CAPITAL STOCK PROVIDE THAT
THE COMPANY MAY NOT REPURCHASE OR REDEEM ANY SUCH CAPITAL STOCK PURSUANT TO SUCH
PROVISIONS UNLESS SUCH REPURCHASE OR REDEMPTION COMPLIES WITH THE COVENANT
DESCRIBED IN SECTION 4.07 HEREOF.
"DOMESTIC RESTRICTED SUBSIDIARY" MEANS ANY DOMESTIC SUBSIDIARY THAT IS
A RESTRICTED SUBSIDIARY.
"DOMESTIC SUBSIDIARY" MEANS ANY SUBSIDIARY THAT WAS FORMED UNDER THE
LAWS OF THE UNITED STATES OR ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA.
"EQUITY INTERESTS" MEANS CAPITAL STOCK AND ALL WARRANTS, OPTIONS OR
OTHER RIGHTS TO ACQUIRE CAPITAL STOCK (BUT EXCLUDING ANY DEBT SECURITY THAT IS
CONVERTIBLE INTO, OR EXCHANGEABLE FOR, CAPITAL STOCK).
"EQUITY OFFERING" MEANS AN OFFERING BY THE COMPANY OF SHARES OF ITS
COMMON STOCK (HOWEVER DESIGNATED AND WHETHER VOTING OR NON-VOTING) AND ANY AND
ALL RIGHTS, WARRANTS OR OPTIONS TO ACQUIRE SUCH COMMON STOCK.
"EUROCLEAR" MEANS MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS
OFFICE, AS OPERATOR OF THE EUROCLEAR SYSTEM.
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"EXCHANGE ACT" MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
"EXCHANGE NOTE" MEANS THE NOTES ISSUED IN THE EXCHANGE OFFER PURSUANT
TO SECTION 2.06(F) HEREOF.
"EXCHANGE OFFER" HAS THE MEANING SET FORTH IN THE REGISTRATION RIGHTS
AGREEMENT.
"EXCHANGE OFFER REGISTRATION STATEMENT" HAS THE MEANING SET FORTH IN
THE REGISTRATION RIGHTS AGREEMENT.
"EXISTING INDEBTEDNESS" MEANS INDEBTEDNESS OF THE COMPANY AND ITS
RESTRICTED SUBSIDIARIES (OTHER THAN INDEBTEDNESS UNDER THE CREDIT AGREEMENT) IN
EXISTENCE ON THE DATE OF THE INDENTURE, UNTIL SUCH AMOUNTS ARE REPAID.
"FIXED CHARGES" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON FOR ANY
PERIOD, THE SUM, WITHOUT DUPLICATION, OF:
(1) THE CONSOLIDATED INTEREST EXPENSE OF SUCH PERSON AND ITS
RESTRICTED SUBSIDIARIES FOR SUCH PERIOD, WHETHER PAID OR
ACCRUED, INCLUDING, WITHOUT LIMITATION, AMORTIZATION OF
ORIGINAL ISSUE DISCOUNT, NON-CASH INTEREST PAYMENTS, THE
INTEREST COMPONENT OF ANY DEFERRED PAYMENT OBLIGATIONS, THE
INTEREST COMPONENT OF ALL PAYMENTS ASSOCIATED WITH CAPITAL
LEASE OBLIGATIONS, IMPUTED INTEREST WITH RESPECT TO
ATTRIBUTABLE DEBT, COMMISSIONS, DISCOUNTS AND OTHER FEES AND
CHARGES INCURRED IN RESPECT OF LETTER OF CREDIT OR BANKERS'
ACCEPTANCE FINANCINGS, AND NET OF THE EFFECT OF ALL PAYMENTS
MADE OR RECEIVED PURSUANT TO HEDGING OBLIGATIONS; PLUS
(2) THE CONSOLIDATED INTEREST OF SUCH PERSON AND ITS RESTRICTED
SUBSIDIARIES THAT WAS CAPITALIZED DURING SUCH PERIOD; PLUS
(3) ANY INTEREST EXPENSE ON INDEBTEDNESS OF ANOTHER PERSON THAT IS
GUARANTIED BY SUCH PERSON OR ANY OF ITS RESTRICTED
SUBSIDIARIES OR SECURED BY A LIEN ON ASSETS OF SUCH PERSON OR
ANY OF ITS RESTRICTED SUBSIDIARIES, WHETHER OR NOT SUCH
GUARANTY OR LIEN IS CALLED UPON; PLUS
(4) THE PRODUCT OF (A) ALL DIVIDENDS, WHETHER PAID OR ACCRUED AND
WHETHER OR NOT IN CASH, ON ANY SERIES OF PREFERRED STOCK OF
SUCH PERSON OR ANY OF ITS RESTRICTED SUBSIDIARIES, OTHER THAN
DIVIDENDS ON EQUITY INTERESTS PAYABLE SOLELY IN EQUITY
INTERESTS OF THE COMPANY (OTHER THAN DISQUALIFIED STOCK) OR TO
THE COMPANY OR A RESTRICTED SUBSIDIARY OF THE COMPANY, TIMES
(B) A FRACTION, THE NUMERATOR OF WHICH IS ONE AND THE
DENOMINATOR OF WHICH IS ONE MINUS THE THEN CURRENT COMBINED
FEDERAL, STATE AND LOCAL STATUTORY TAX RATE OF SUCH PERSON,
EXPRESSED AS A DECIMAL, IN EACH CASE, ON A CONSOLIDATED BASIS
AND IN ACCORDANCE WITH GAAP.
"FIXED CHARGE COVERAGE RATIO" MEANS WITH RESPECT TO ANY SPECIFIED
PERSON FOR ANY PERIOD, THE RATIO OF THE CONSOLIDATED CASH FLOW OF SUCH PERSON
FOR SUCH PERIOD TO THE FIXED CHARGES OF SUCH PERSON FOR SUCH PERIOD. IN THE
EVENT THAT THE SPECIFIED PERSON OR ANY OF ITS RESTRICTED SUBSIDIARIES INCURS,
ASSUMES, GUARANTIES, REPAYS, REPURCHASES OR REDEEMS ANY INDEBTEDNESS (OTHER THAN
ORDINARY WORKING CAPITAL BORROWINGS) OR ISSUES, REPURCHASES OR REDEEMS PREFERRED
STOCK
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SUBSEQUENT TO THE COMMENCEMENT OF THE PERIOD FOR WHICH THE FIXED CHARGE COVERAGE
RATIO IS BEING CALCULATED AND ON OR PRIOR TO THE DATE ON WHICH THE EVENT FOR
WHICH THE CALCULATION OF THE FIXED CHARGE COVERAGE RATIO IS MADE (THE
"CALCULATION DATE"), THEN THE FIXED CHARGE COVERAGE RATIO SHALL BE CALCULATED
GIVING PRO FORMA EFFECT TO SUCH INCURRENCE, ASSUMPTION, GUARANTY, REPAYMENT,
REPURCHASE OR REDEMPTION OF INDEBTEDNESS, OR SUCH ISSUANCE, REPURCHASE OR
REDEMPTION OF PREFERRED STOCK, AND THE USE OF THE PROCEEDS THEREFROM AS IF THE
SAME HAD OCCURRED AT THE BEGINNING OF THE APPLICABLE FOUR-QUARTER REFERENCE
PERIOD.
IN ADDITION, FOR PURPOSES OF CALCULATING THE FIXED CHARGE COVERAGE
RATIO:
(1) ACQUISITIONS THAT HAVE BEEN MADE BY THE SPECIFIED PERSON OR
ANY OF ITS RESTRICTED SUBSIDIARIES, INCLUDING THROUGH MERGERS
OR CONSOLIDATIONS AND INCLUDING ANY RELATED FINANCING
TRANSACTIONS, DURING THE FOUR-QUARTER REFERENCE PERIOD OR
SUBSEQUENT TO SUCH REFERENCE PERIOD AND ON OR PRIOR TO THE
CALCULATION DATE SHALL BE GIVEN PRO FORMA EFFECT AS IF THEY
HAD OCCURRED ON THE FIRST DAY OF THE FOUR-QUARTER REFERENCE
PERIOD AND CONSOLIDATED CASH FLOW FOR SUCH REFERENCE PERIOD
SHALL BE CALCULATED ON A PRO FORMA BASIS IN ACCORDANCE WITH
REGULATION S-X UNDER THE SECURITIES ACT (GIVING EFFECT TO ANY
PRO FORMA COST SAVINGS), BUT WITHOUT GIVING EFFECT TO CLAUSE
(3) OF THE PROVISO SET FORTH IN THE DEFINITION OF CONSOLIDATED
NET INCOME;
(2) THE CONSOLIDATED CASH FLOW ATTRIBUTABLE TO DISCONTINUED
OPERATIONS, AS DETERMINED IN ACCORDANCE WITH GAAP, AND
OPERATIONS OR BUSINESSES DISPOSED OF PRIOR TO THE CALCULATION
DATE, SHALL BE EXCLUDED; AND
(3) THE FIXED CHARGES ATTRIBUTABLE TO DISCONTINUED OPERATIONS, AS
DETERMINED IN ACCORDANCE WITH GAAP, AND OPERATIONS OR
BUSINESSES DISPOSED OF PRIOR TO THE CALCULATION DATE, SHALL BE
EXCLUDED, BUT ONLY TO THE EXTENT THAT THE OBLIGATIONS GIVING
RISE TO SUCH FIXED CHARGES SHALL NOT BE OBLIGATIONS OF THE
SPECIFIED PERSON OR ANY OF ITS RESTRICTED SUBSIDIARIES
FOLLOWING THE CALCULATION DATE.
"FOREIGN SUBSIDIARY" MEANS ANY SUBSIDIARY OF THE COMPANY THAT IS NOT A
DOMESTIC SUBSIDIARY.
"GAAP" MEANS GENERALLY ACCEPTED ACCOUNTING PRINCIPLES SET FORTH IN THE
OPINIONS AND PRONOUNCEMENTS OF THE ACCOUNTING PRINCIPLES BOARD OF THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND STATEMENTS AND PRONOUNCEMENTS OF
THE FINANCIAL ACCOUNTING STANDARDS BOARD OR IN SUCH OTHER STATEMENTS BY SUCH
OTHER ENTITY AS HAVE BEEN APPROVED BY A SIGNIFICANT SEGMENT OF THE ACCOUNTING
PROFESSION, WHICH ARE IN EFFECT AS OF THE DATE OF THIS INDENTURE.
"GLOBAL NOTES" MEANS, INDIVIDUALLY AND COLLECTIVELY, EACH OF THE
RESTRICTED GLOBAL NOTES AND THE UNRESTRICTED GLOBAL NOTES, SUBSTANTIALLY IN THE
FORM OF EXHIBIT A HERETO ISSUED IN ACCORDANCE WITH SECTION 2.01, 2.06(B)(IV),
2.06(D)(II) OR 2.06(F) HEREOF.
"GLOBAL NOTE LEGEND" MEANS THE LEGEND SET FORTH IN SECTION 2.06(G)(II),
WHICH IS REQUIRED TO BE PLACED ON ALL GLOBAL NOTES ISSUED UNDER THIS INDENTURE.
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"GOVERNMENT SECURITIES" MEANS DIRECT OBLIGATIONS OF, OR OBLIGATIONS
GUARANTEED BY, THE UNITED STATES OF AMERICA, AND THE PAYMENT FOR WHICH THE
UNITED STATES PLEDGES ITS FULL FAITH AND CREDIT.
"GUARANTY" MEANS A GUARANTY OTHER THAN BY ENDORSEMENT OF NEGOTIABLE
INSTRUMENTS FOR COLLECTION IN THE ORDINARY COURSE OF BUSINESS, DIRECT OR
INDIRECT, IN ANY MANNER INCLUDING, WITHOUT LIMITATION, BY WAY OF A PLEDGE OF
ASSETS OR THROUGH LETTERS OF CREDIT OR REIMBURSEMENT AGREEMENTS IN RESPECT
THEREOF, OF ALL OR ANY PART OF ANY INDEBTEDNESS.
"HEDGING OBLIGATIONS" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON, THE
OBLIGATIONS OF SUCH PERSON UNDER:
(1) INTEREST RATE SWAP AGREEMENTS, INTEREST RATE CAP AGREEMENTS
AND INTEREST RATE COLLAR AGREEMENTS AND FOREIGN EXCHANGE HEDGE
AGREEMENTS; AND
(2) OTHER AGREEMENTS OR ARRANGEMENTS DESIGNED TO PROTECT SUCH
PERSON AGAINST FLUCTUATIONS IN INTEREST RATES AND FOREIGN
EXCHANGE RATES.
"HIDDEN CREEK" MEANS HIDDEN CREEK INDUSTRIES.
"HOLDER" MEANS A PERSON IN WHOSE NAME A NOTE IS REGISTERED.
"IAI GLOBAL NOTE" MEANS THE GLOBAL NOTE SUBSTANTIALLY IN THE FORM OF
EXHIBIT A1 HERETO BEARING THE GLOBAL NOTE LEGEND AND THE PRIVATE PLACEMENT
LEGEND AND DEPOSITED WITH OR ON BEHALF OF AND REGISTERED IN THE NAME OF THE
DEPOSITARY OR ITS NOMINEE THAT WILL BE ISSUED IN A DENOMINATION EQUAL TO THE
OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES SOLD TO INSTITUTIONAL ACCREDITED
INVESTORS.
"INDEBTEDNESS" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON, ANY
INDEBTEDNESS OF SUCH PERSON, WHETHER OR NOT CONTINGENT, IN RESPECT OF:
(1) BORROWED MONEY;
(2) EVIDENCED BY BONDS, NOTES, DEBENTURES OR SIMILAR INSTRUMENTS
OR LETTERS OF CREDIT (OR REIMBURSEMENT AGREEMENTS IN RESPECT
THEREOF);
(3) BANKER'S ACCEPTANCES;
(4) REPRESENTING CAPITAL LEASE OBLIGATIONS;
(5) THE BALANCE DEFERRED AND UNPAID OF THE PURCHASE PRICE OF ANY
PROPERTY, EXCEPT ANY SUCH BALANCE THAT CONSTITUTES AN ACCRUED
EXPENSE OR TRADE PAYABLE; OR
(6) REPRESENTING ANY HEDGING OBLIGATIONS,
IF AND TO THE EXTENT ANY OF THE PRECEDING ITEMS (OTHER THAN LETTERS OF CREDIT
AND HEDGING OBLIGATIONS) WOULD APPEAR AS A LIABILITY UPON A BALANCE SHEET OF THE
SPECIFIED PERSON PREPARED IN ACCORDANCE WITH GAAP. IN ADDITION, THE TERM
"INDEBTEDNESS" INCLUDES ALL INDEBTEDNESS OF OTHERS
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SECURED BY A LIEN ON ANY ASSET OF THE SPECIFIED PERSON (WHETHER OR NOT SUCH
INDEBTEDNESS IS ASSUMED BY THE SPECIFIED PERSON) AND, TO THE EXTENT NOT
OTHERWISE INCLUDED, THE GUARANTY BY THE SPECIFIED PERSON OF ANY INDEBTEDNESS OF
ANY OTHER PERSON.
THE AMOUNT OF ANY INDEBTEDNESS OUTSTANDING AS OF ANY DATE SHALL BE:
(1) THE ACCRETED VALUE THEREOF, IN THE CASE OF ANY INDEBTEDNESS
ISSUED WITH ORIGINAL ISSUE DISCOUNT; AND
(2) THE PRINCIPAL AMOUNT THEREOF, TOGETHER WITH ANY INTEREST
THEREON THAT IS MORE THAN 30 DAYS PAST DUE, IN THE CASE OF
ANY OTHER INDEBTEDNESS.
"INDENTURE" MEANS THIS INDENTURE, AS AMENDED OR SUPPLEMENTED FROM TIME
TO TIME.
"INDIRECT PARTICIPANT" MEANS A PERSON WHO HOLDS A BENEFICIAL INTEREST
IN A GLOBAL NOTE THROUGH A PARTICIPANT.
"INITIAL NOTES" MEANS THE $175.0 MILLION AGGREGATE PRINCIPAL AMOUNT OF
NOTES ISSUED UNDER THE INDENTURE ON THE DATE HEREOF.
"INSTITUTIONAL ACCREDITED INVESTOR" MEANS AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT, WHO ARE NOT ALSO QIBS.
"INVESTMENTS" MEANS, WITH RESPECT TO ANY PERSON, ALL DIRECT OR INDIRECT
INVESTMENTS BY SUCH PERSON IN OTHER PERSONS (INCLUDING AFFILIATES) IN THE FORMS
OF LOANS (INCLUDING GUARANTIES OR OTHER OBLIGATIONS), ADVANCES OR CAPITAL
CONTRIBUTIONS (EXCLUDING COMMISSION, TRAVEL AND SIMILAR ADVANCES TO OFFICERS AND
EMPLOYEES MADE IN THE ORDINARY COURSE OF BUSINESS), PURCHASES OR OTHER
ACQUISITIONS FOR CONSIDERATION OF INDEBTEDNESS, EQUITY INTERESTS OR OTHER
SECURITIES, TOGETHER WITH ALL ITEMS THAT ARE OR WOULD BE CLASSIFIED AS
INVESTMENTS ON A BALANCE SHEET PREPARED IN ACCORDANCE WITH GAAP. IF THE COMPANY
OR ANY RESTRICTED SUBSIDIARY OF THE COMPANY SELLS OR OTHERWISE DISPOSES OF ANY
EQUITY INTERESTS OF ANY DIRECT OR INDIRECT RESTRICTED SUBSIDIARY OF THE COMPANY
SUCH THAT, AFTER GIVING EFFECT TO ANY SUCH SALE OR DISPOSITION, SUCH PERSON IS
NO LONGER A RESTRICTED SUBSIDIARY OF THE COMPANY, THE COMPANY SHALL BE DEEMED TO
HAVE MADE AN INVESTMENT ON THE DATE OF ANY SUCH SALE OR DISPOSITION EQUAL TO THE
FAIR MARKET VALUE OF THE EQUITY INTERESTS OF SUCH RESTRICTED SUBSIDIARY NOT SOLD
OR DISPOSED OF IN AN AMOUNT DETERMINED AS PROVIDED IN THE FINAL PARAGRAPH OF
SECTION 4.07 HEREOF.
"LEGAL HOLIDAY" MEANS A SATURDAY, A SUNDAY OR A DAY ON WHICH BANKING
INSTITUTIONS IN THE CITY OF NEW YORK OR AT A PLACE OF PAYMENT ARE AUTHORIZED BY
LAW, REGULATION OR EXECUTIVE ORDER TO REMAIN CLOSED. IF A PAYMENT DATE IS A
LEGAL HOLIDAY AT A PLACE OF PAYMENT, PAYMENT MAY BE MADE AT THAT PLACE ON THE
NEXT SUCCEEDING DAY THAT IS NOT A LEGAL HOLIDAY, AND NO INTEREST SHALL ACCRUE ON
SUCH PAYMENT FOR THE INTERVENING PERIOD.
"LETTER OF TRANSMITTAL" MEANS THE LETTER OF TRANSMITTAL TO BE PREPARED
BY THE COMPANY AND SENT TO ALL HOLDERS OF THE NOTES FOR USE BY SUCH HOLDERS IN
CONNECTION WITH THE EXCHANGE OFFER.
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"LIEN" MEANS, WITH RESPECT TO ANY ASSET, ANY MORTGAGE, LIEN, PLEDGE,
CHARGE, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND IN RESPECT OF SUCH ASSET,
WHETHER OR NOT FILED, RECORDED OR OTHERWISE PERFECTED UNDER APPLICABLE LAW,
INCLUDING ANY CONDITIONAL SALE OR OTHER TITLE RETENTION AGREEMENT, ANY LEASE IN
THE NATURE THEREOF, ANY OPTION OR OTHER AGREEMENT TO SELL OR GIVE A SECURITY
INTEREST IN AND ANY FILING OF OR AGREEMENT TO GIVE ANY FINANCING STATEMENT UNDER
THE UNIFORM COMMERCIAL CODE (OR EQUIVALENT STATUTES) OF ANY JURISDICTION.
"LIQUIDATED DAMAGES" MEANS ALL LIQUIDATED DAMAGES OWING PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT.
"NET INCOME" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON, THE NET
INCOME (LOSS) OF SUCH PERSON, DETERMINED IN ACCORDANCE WITH GAAP AND BEFORE ANY
REDUCTION IN RESPECT OF PREFERRED STOCK DIVIDENDS, EXCLUDING, HOWEVER:
(1) ANY GAIN OR LOSS, TOGETHER WITH ANY RELATED PROVISION FOR
TAXES ON SUCH GAIN OR LOSS, REALIZED IN CONNECTION WITH: (A)
ANY ASSET SALE; OR (B) THE DISPOSITION OF ANY SECURITIES BY
SUCH PERSON OR ANY OF ITS RESTRICTED SUBSIDIARIES OR THE
EXTINGUISHMENT OF ANY INDEBTEDNESS OF SUCH PERSON OR ANY OF
ITS RESTRICTED SUBSIDIARIES; AND
(2) ANY EXTRAORDINARY GAIN OR LOSS, TOGETHER WITH ANY RELATED
PROVISION FOR TAXES ON SUCH EXTRAORDINARY GAIN OR LOSS.
"NET PROCEEDS" MEANS THE AGGREGATE CASH PROCEEDS RECEIVED BY THE
COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES IN RESPECT OF ANY ASSET SALE
(INCLUDING, WITHOUT LIMITATION, ANY CASH RECEIVED UPON THE SALE OR OTHER
DISPOSITION OF ANY NON-CASH CONSIDERATION RECEIVED IN ANY ASSET SALE), NET OF
THE DIRECT COSTS RELATING TO SUCH ASSET SALE, INCLUDING, WITHOUT LIMITATION,
LEGAL, ACCOUNTING AND INVESTMENT BANKING FEES, SALES COMMISSIONS, ANY RELOCATION
EXPENSES INCURRED AS A RESULT THEREOF, TAXES PAID OR PAYABLE AS A RESULT
THEREOF, IN EACH CASE, AFTER TAKING INTO ACCOUNT ANY AVAILABLE TAX CREDITS OR
DEDUCTIONS AND ANY TAX SHARING ARRANGEMENTS, AND AMOUNTS REQUIRED TO BE APPLIED
TO THE REPAYMENT OF INDEBTEDNESS, OTHER THAN THE CREDIT AGREEMENT OF THE COMPANY
OR A SUBSIDIARY GUARANTOR, SECURED BY A LIEN ON THE ASSET OR ASSETS THAT WERE
THE SUBJECT OF SUCH ASSET SALE IN EACH CASE AND ANY RESERVES FOR ADJUSTMENT IN
RESPECT OF THE SALE PRICE OF SUCH ASSET OR ASSETS OR FOR ANY INDEMNIFICATION
OBLIGATIONS ASSUMED IN CONNECTION WITH THE SALE OF SUCH ASSET OR ASSETS,
ESTABLISHED IN ACCORDANCE WITH GAAP; PROVIDED, HOWEVER, THAT THE REVERSAL OF ANY
SUCH RESERVE SHALL BE DEEMED A RECEIPT OF NET PROCEEDS BY THE COMPANY IN THE
AMOUNT AND ON THE DATE OF SUCH REVERSAL.
"NON-RECOURSE DEBT" MEANS INDEBTEDNESS:
(1) AS TO WHICH NEITHER THE COMPANY NOR ANY OF ITS RESTRICTED
SUBSIDIARIES (A) PROVIDES CREDIT SUPPORT OF ANY KIND
(INCLUDING ANY UNDERTAKING, AGREEMENT OR INSTRUMENT THAT WOULD
CONSTITUTE INDEBTEDNESS), (B) IS DIRECTLY OR INDIRECTLY LIABLE
AS A GUARANTOR OR OTHERWISE, OR (C) CONSTITUTES THE LENDER;
(2) NO DEFAULT WITH RESPECT TO WHICH (INCLUDING ANY RIGHTS THAT
THE HOLDERS THEREOF MAY HAVE TO TAKE ENFORCEMENT ACTION
AGAINST AN UNRESTRICTED SUBSIDIARY) WOULD PERMIT UPON NOTICE,
LAPSE OF TIME OR BOTH ANY HOLDER OF ANY OTHER INDEBTEDNESS OF
THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES TO DECLARE A
DEFAULT ON SUCH
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OTHER INDEBTEDNESS OR CAUSE THE PAYMENT THEREOF TO BE
ACCELERATED OR PAYABLE PRIOR TO ITS STATED MATURITY; AND
(3) AS TO WHICH THE LENDERS HAVE BEEN NOTIFIED IN WRITING THAT
THEY SHALL NOT HAVE ANY RECOURSE TO THE STOCK OR ASSETS OF THE
COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES.
"NON-U.S. PERSON" MEANS A PERSON WHO IS NOT A U.S. PERSON.
"NOTES" HAS THE MEANING ASSIGNED TO IT IN THE PREAMBLE TO THE
INDENTURE. THE INITIAL NOTES AND THE ADDITIONAL NOTES SHALL BE TREATED AS A
SINGLE CLASS FOR ALL PURPOSES UNDER THE INDENTURE.
"OBLIGATIONS" MEANS ANY PRINCIPAL, INTEREST, PENALTIES, FEES,
INDEMNIFICATIONS, REIMBURSEMENT OBLIGATIONS, DAMAGES AND OTHER LIABILITIES
PAYABLE UNDER THE DOCUMENTATION GOVERNING ANY INDEBTEDNESS.
"OFFERING" MEANS THE OFFERING OF THE NOTES BY THE COMPANY.
"OFFICER" MEANS, WITH RESPECT TO ANY PERSON, THE CHAIRMAN OF THE BOARD,
THE CHIEF EXECUTIVE OFFICER, THE PRESIDENT, THE CHIEF OPERATING OFFICER, THE
CHIEF FINANCIAL OFFICER, THE TREASURER, ANY ASSISTANT TREASURER, THE CONTROLLER,
THE SECRETARY OR ANY VICE-PRESIDENT OF SUCH PERSON.
"OFFICERS' CERTIFICATE" MEANS A CERTIFICATE SIGNED ON BEHALF OF THE
COMPANY BY AT LEAST TWO OFFICERS OF THE COMPANY, ONE OF WHOM MUST BE THE
PRINCIPAL EXECUTIVE OFFICER, THE PRINCIPAL FINANCIAL OFFICER, THE TREASURER OR
THE PRINCIPAL ACCOUNTING OFFICER OF THE COMPANY, THAT MEETS THE REQUIREMENTS OF
SECTION 12.05 HEREOF.
"OPINION OF COUNSEL" MEANS AN OPINION FROM LEGAL COUNSEL WHO IS
REASONABLY ACCEPTABLE TO THE TRUSTEE, THAT MEETS THE REQUIREMENTS OF SECTION
12.05 HEREOF. THE COUNSEL MAY BE AN EMPLOYEE OF OR COUNSEL TO THE COMPANY, ANY
SUBSIDIARY OF THE COMPANY OR THE TRUSTEE.
"PARTICIPANT" MEANS, WITH RESPECT TO THE DEPOSITARY, EUROCLEAR OR
CEDEL, A PERSON WHO HAS AN ACCOUNT WITH THE DEPOSITARY, EUROCLEAR OR CEDEL,
RESPECTIVELY (AND, WITH RESPECT TO DTC, SHALL INCLUDE EUROCLEAR AND CEDEL).
"PERMITTED BUSINESS" MEANS THE BUSINESS CONDUCTED BY THE COMPANY AND
ITS RESTRICTED SUBSIDIARIES ON THE DATE HEREOF AND BUSINESSES REASONABLY RELATED
THERETO OR SUPPORTIVE THEREOF.
"PERMITTED INVESTMENTS" MEANS:
(1) ANY INVESTMENT IN THE COMPANY OR IN A RESTRICTED SUBSIDIARY OF
THE COMPANY;
(2) ANY INVESTMENT IN CASH EQUIVALENTS;
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(3) ANY INVESTMENT BY THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
IN A PERSON, IF AS A RESULT OF SUCH INVESTMENT:
(A) SUCH PERSON BECOMES A RESTRICTED SUBSIDIARY OF THE
COMPANY; OR
(B) SUCH PERSON IS MERGED, CONSOLIDATED OR AMALGAMATED
WITH OR INTO, OR TRANSFERS OR CONVEYS SUBSTANTIALLY
ALL OF ITS ASSETS TO, OR IS LIQUIDATED INTO, THE
COMPANY OR A RESTRICTED SUBSIDIARY OF THE COMPANY;
(4) ANY INVESTMENT MADE AS A RESULT OF THE RECEIPT OF NON-CASH
CONSIDERATION FROM AN ASSET SALE THAT WAS MADE PURSUANT TO AND
IN COMPLIANCE WITH SECTION 4.10 HEREOF.
(5) ANY ACQUISITION OF ASSETS TO THE EXTENT ACQUIRED IN EXCHANGE
FOR THE ISSUANCE OF EQUITY INTERESTS (OTHER THAN DISQUALIFIED
STOCK) OF THE COMPANY;
(6) HEDGING OBLIGATIONS;
(7) OTHER INVESTMENTS IN ANY PERSON HAVING AN AGGREGATE FAIR
MARKET VALUE (MEASURED ON THE DATE EACH SUCH INVESTMENT WAS
MADE AND WITHOUT GIVING EFFECT TO SUBSEQUENT CHANGES IN
VALUE), WHEN TAKEN TOGETHER WITH ALL OTHER INVESTMENTS MADE
PURSUANT TO THIS CLAUSE (7) THAT ARE AT THE TIME OUTSTANDING
NOT TO EXCEED THE GREATER OF (A) $35.0 MILLION AND (B) 5% OF
TOTAL ASSETS;
(8) INVESTMENTS EXISTING ON THE DATE OF THE INDENTURE AND ANY
AMENDMENT, MODIFICATION, RESTATEMENT, SUPPLEMENT, EXTENSION,
RENEWAL, REFUNDING, REPLACEMENT, REFINANCING, IN WHOLE OR IN
PART, THEREOF;
(9) INVESTMENTS IN PERMITTED JOINT VENTURES IN AN AMOUNT AT ANY
ONE TIME OUTSTANDING NOT TO EXCEED THE GREATER OF 3% OF TOTAL
ASSETS OR $10.0 MILLION;
(10) INVESTMENTS IN UNRESTRICTED SUBSIDIARIES IN AN AMOUNT AT ANY
ONE TIME OUTSTANDING NOT TO EXCEED THE GREATER OF 3% OF TOTAL
ASSETS OR $10.0 MILLION;
(11) INVESTMENTS IN SECURITIES OF TRADE CREDITORS OR CUSTOMERS
RECEIVED PURSUANT TO A PLAN OF REORGANIZATION OR SIMILAR
ARRANGEMENT UPON THE BANKRUPTCY OR INSOLVENCY OF SUCH TRADE
CREDITORS OR CUSTOMERS;
(12) ANY INVESTMENT BY THE COMPANY OR A SUBSIDIARY OF THE COMPANY
IN A SECURITIZATION ENTITY OR ANY INVESTMENT BY A
SECURITIZATION ENTITY IN ANY OTHER PERSON IN CONNECTION WITH A
QUALIFIED SECURITIZATION TRANSACTION; PROVIDED THAT ANY
INVESTMENT IN A SECURITIZATION ENTITY IS IN THE FORM OF A
PURCHASE MONEY NOTE OR ANY EQUITY INTEREST;
(13) EXTENSIONS OF TRADE CREDIT IN THE ORDINARY COURSE OF BUSINESS;
AND
(14) LOANS OR ADVANCES TO EMPLOYEES OR CONSULTANTS IN THE ORDINARY
COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICES, WHICH
ARE APPROVED BY THE MAJORITY OF THE BOARD OF DIRECTORS IN GOOD
FAITH.
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"PERMITTED JOINT VENTURE" MEANS AN ENTITY CHARACTERIZED AS A JOINT
VENTURE (HOWEVER STRUCTURED) ENGAGED IN A PERMITTED BUSINESS AND IN WHICH THE
COMPANY OR A RESTRICTED SUBSIDIARY (A) OWNS AT LEAST 25% OF THE OWNERSHIP
INTEREST OR (B) HAS THE RIGHT TO RECEIVE AT LEAST 25% OF THE PROFITS OR
DISTRIBUTIONS; PROVIDED THAT SUCH JOINT VENTURE IS NOT A SUBSIDIARY.
"PERMITTED JUNIOR SECURITIES" MEANS: (1) DEBT SECURITIES OF THE COMPANY
AS REORGANIZED OR READJUSTED, IF APPLICABLE, AND GUARANTEED BY THE SUBSIDIARY
GUARANTORS, OR DEBT SECURITIES OF THE COMPANY (OR ANY OTHER COMPANY, TRUST OR
ORGANIZATION PROVIDED FOR BY A PLAN OF REORGANIZATION OR READJUSTMENT SUCCEEDING
TO THE ASSETS AND LIABILITIES OF THE COMPANY) AND GUARANTEED BY THE SUBSIDIARY
GUARANTORS, IN EACH OF THE FOREGOING CASES, WHICH SECURITIES AND GUARANTEES ARE
SUBORDINATED, TO AT LEAST THE SAME EXTENT AS THE NOTES AND THE SUBSIDIARY
GUARANTIES, TO THE PAYMENT OF ALL SENIOR DEBT AND GUARANTIES THEREOF THAT SHALL
BE OUTSTANDING AFTER GIVING EFFECT TO SUCH REORGANIZATION OR READJUSTMENT, IF
APPLICABLE, SO LONG AS (A) SUCH DEBT SECURITIES ARE NOT ENTITLED TO THE BENEFIT
OF COVENANTS OR DEFAULTS MORE BENEFICIAL TO THE HOLDERS OF SUCH DEBT SECURITIES
THAN THOSE IN EFFECT WITH RESPECT TO THE NOTES (OR THE SENIOR DEBT, AFTER GIVING
EFFECT TO SUCH REORGANIZATION OR READJUSTMENT, IF APPLICABLE), AND (B) SUCH DEBT
SECURITIES SHALL NOT PROVIDE FOR AMORTIZATION INCLUDING SINKING FUND AND
MANDATORY PREPAYMENT PROVISIONS (OTHER THAN A MANDATORY PREPAYMENT OF THE TYPE
DESCRIBED IN SECTION 4.15 HEREOF) COMMENCING PRIOR TO THE DATE WHICH IS ONE YEAR
AFTER THE FINAL SCHEDULED MATURITY DATE OF THE SENIOR DEBT (AS MODIFIED BY SUCH
REORGANIZATION OR READJUSTMENT, IF APPLICABLE), OR (2) EQUITY INTERESTS IN THE
COMPANY OR ANY SUBSIDIARY GUARANTOR; PROVIDED THAT IN EACH CASE WITH RESPECT TO
CLAUSE (1) OR (2) ABOVE (X) IF A NEW CORPORATION RESULTS FROM ANY SUCH
REORGANIZATION OR READJUSTMENT, SUCH CORPORATION ASSUMES ALL SENIOR DEBT THAT
SHALL BE OUTSTANDING AFTER GIVING EFFECT THERETO AND (Y) THE RIGHTS OF THE
HOLDERS OF SENIOR DEBT ARE NOT IMPAIRED.
"PERMITTED LIENS" MEANS:
(1) LIENS OF THE COMPANY AND ANY SUBSIDIARY GUARANTOR SECURING
INDEBTEDNESS AND OTHER OBLIGATIONS UNDER CREDIT FACILITIES
THAT WERE SENIOR DEBT THAT WAS PERMITTED BY THE TERMS OF THE
INDENTURE TO BE INCURRED;
(2) LIENS IN FAVOR OF THE COMPANY OR THE SUBSIDIARY GUARANTORS;
(3) LIENS ON PROPERTY OF A PERSON EXISTING AT THE TIME SUCH PERSON
IS MERGED WITH OR INTO OR CONSOLIDATED WITH THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY; PROVIDED THAT SUCH LIENS WERE IN
EXISTENCE PRIOR TO THE CONTEMPLATION OF SUCH MERGER OR
CONSOLIDATION AND DO NOT EXTEND TO ANY ASSETS OTHER THAN THOSE
OF THE PERSON MERGED INTO OR CONSOLIDATED WITH THE COMPANY OR
THE SUBSIDIARY;
(4) LIENS ON PROPERTY EXISTING AT THE TIME OF ACQUISITION THEREOF
BY THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY, PROVIDED THAT
SUCH LIENS WERE IN EXISTENCE PRIOR TO THE CONTEMPLATION OF
SUCH ACQUISITION;
(5) LIENS TO SECURE THE PERFORMANCE OF STATUTORY OBLIGATIONS,
SURETY OR APPEAL BONDS, PERFORMANCE BONDS OR OTHER OBLIGATIONS
OF A LIKE NATURE INCURRED IN THE ORDINARY COURSE OF BUSINESS;
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(6) LIENS TO SECURE INDEBTEDNESS (INCLUDING CAPITAL LEASE
OBLIGATIONS) PERMITTED BY CLAUSE (IV) OF THE SECOND PARAGRAPH
OF SECTION 4.09 HEREOF COVERING ONLY THE ASSETS ACQUIRED WITH
SUCH INDEBTEDNESS;
(7) LIENS EXISTING ON THE DATE OF THE INDENTURE;
(8) LIENS FOR TAXES, ASSESSMENTS OR GOVERNMENTAL CHARGES OR CLAIMS
THAT ARE NOT YET DELINQUENT OR THAT ARE BEING CONTESTED IN
GOOD FAITH BY APPROPRIATE PROCEEDINGS PROMPTLY INSTITUTED AND
DILIGENTLY CONCLUDED, PROVIDED THAT ANY RESERVE OR OTHER
APPROPRIATE PROVISION AS SHALL BE REQUIRED IN CONFORMITY WITH
GAAP SHALL HAVE BEEN MADE THEREFOR;
(9) LIENS (NOT OTHERWISE PERMITTED HEREUNDER) WITH RESPECT TO
OBLIGATIONS THAT DO NOT EXCEED $10.0 MILLION AT ANY ONE TIME
OUTSTANDING;
(10) LIENS ON ASSETS OF UNRESTRICTED SUBSIDIARIES THAT SECURE
NON-RECOURSE DEBT OF UNRESTRICTED SUBSIDIARIES;
(11) LIENS ON ASSETS OF A RESTRICTED SUBSIDIARY THAT IS NOT A
SUBSIDIARY GUARANTOR THAT SECURE INDEBTEDNESS (INCLUDING
ACQUIRED INDEBTEDNESS) INCURRED IN COMPLIANCE WITH THE
COVENANT DESCRIBED IN SECTION 4.17 HEREOF OR INDEBTEDNESS
INCURRED IN COMPLIANCE WITH CLAUSES (I) OR (II) OF SECTION
4.09 HEREOF;
(12) JUDGMENT LIENS NOT GIVING RISE TO AN EVENT OF DEFAULT;
(13) LIENS ENCUMBERING DEPOSITS MADE TO SECURE OBLIGATIONS ARISING
FROM STATUTORY, REGULATORY, CONTRACTUAL, OR WARRANTY
REQUIREMENTS OF THE COMPANY OR ANY OF ITS RESTRICTED
SUBSIDIARIES, INCLUDING RIGHTS OF OFFSET AND SET-OFF;
(14) LIENS IN FAVOR OF CUSTOMS AND REVENUE AUTHORITIES ARISING AS A
MATTER OF LAW TO SECURE PAYMENT OF CUSTOMER DUTIES IN
CONNECTION WITH THE IMPORTATION OF GOODS;
(15) LEASES OR SUBLEASES GRANTED TO OTHERS THAT DO NOT MATERIALLY
INTERFERE WITH THE ORDINARY COURSE OF BUSINESS OF THE COMPANY
AND ITS RESTRICTED SUBSIDIARIES;
(16) LIENS INCURRED OR DEPOSITS MADE IN THE ORDINARY COURSE OF
BUSINESS IN CONNECTION WITH WORKERS' COMPENSATION,
UNEMPLOYMENT INSURANCE AND OTHER TYPES OF SOCIAL SECURITY,
INCLUDING ANY LIEN SECURING LETTERS OF CREDIT ISSUED IN THE
ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE IN
CONNECTION THEREWITH, OR TO SECURE THE PERFORMANCE OF TENDERS,
STATUTORY OBLIGATIONS, SURETY AND APPEAL BONDS, BIDS, LEASES,
GOVERNMENT CONTRACTS, PERFORMANCE AND RETURN-OF-MONEY BONDS
AND OTHER SIMILAR OBLIGATIONS (EXCLUSIVE OF OBLIGATIONS FOR
THE PAYMENT OF BORROWED MONEY);
(17) LIENS IMPOSED BY LAW, SUCH AS CARRIERS', WAREHOUSEMAN'S AND
MECHANICS' LIENS IN EACH CASE FOR SUMS NOT YET DUE OR BEING
CONTESTED IN GOOD FAITH;
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(18) LIENS SECURING INDEBTEDNESS OR OTHER OBLIGATIONS OF A
RESTRICTED SUBSIDIARY OWING TO THE COMPANY OR ANY SUBSIDIARY
GUARANTOR TO THE EXTENT SUCH INDEBTEDNESS IS PERMITTED TO BE
INCURRED IN ACCORDANCE WITH SECTION 4.09 HEREOF;
(19) LIENS SECURING HEDGING OBLIGATIONS AS LONG AS THE RELATED
INDEBTEDNESS IS, AND IS PERMITTED TO BE UNDER THE INDENTURES
TO BE SECURED BY A LIEN ON THE SAME PROPERTY SECURING THE
HEDGING OBLIGATIONS;
(20) LIENS ON SPECIFIC ITEMS OF INVENTORY OR OTHER GOODS AND
PROCEEDS OF ANY PERSON SECURING SUCH PERSON'S OBLIGATIONS WITH
RESPECT OF BANKERS' ACCEPTANCES ISSUED OR CREATED FOR THE
ACCOUNT OF SUCH PERSON TO FACILITATE THE PURCHASE, SHIPMENT OR
STORAGE OF SUCH INVENTORY OR OTHER GOODS;
(21) LIENS ARISING FROM UNIFORM COMMERCIAL CODE FINANCING STATEMENT
FILINGS REGARDING OPERATING LEASES ENTERED INTO BY THE COMPANY
AND ITS RESTRICTED SUBSIDIARIES IN THE ORDINARY COURSE OF
BUSINESS; AND
(22) LIENS ON ASSETS TRANSFERRED TO A SECURITIZATION ENTITY OR ON
ASSETS OF A SECURITIZATION ENTITY, IN EITHER CASE INCURRED IN
CONNECTION WITH A QUALIFIED SECURITIZATION TRANSACTION.
"PERMITTED REFINANCING INDEBTEDNESS" MEANS ANY INDEBTEDNESS OF THE
COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES ISSUED IN EXCHANGE FOR, OR THE NET
PROCEEDS OF WHICH ARE USED TO EXTEND, REFINANCE, RENEW, REPLACE, DEFEASE OR
REFUND OTHER INDEBTEDNESS OF THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES
(OTHER THAN INTERCOMPANY INDEBTEDNESS); PROVIDED THAT:
(1) THE PRINCIPAL AMOUNT (OR ACCRETED VALUE, IF APPLICABLE) OF
SUCH PERMITTED REFINANCING INDEBTEDNESS DOES NOT EXCEED THE
PRINCIPAL AMOUNT (OR ACCRETED VALUE, IF APPLICABLE) OF THE
INDEBTEDNESS SO EXTENDED, REFINANCED, RENEWED, REPLACED,
DEFEASED OR REFUNDED (PLUS ALL ACCRUED INTEREST THEREON AND
THE AMOUNT OF ALL EXPENSES AND PREMIUMS INCURRED IN CONNECTION
THEREWITH);
(2) SUCH PERMITTED REFINANCING INDEBTEDNESS HAS A FINAL MATURITY
DATE LATER THAN THE FINAL MATURITY DATE OF, AND HAS A WEIGHTED
AVERAGE LIFE TO MATURITY EQUAL TO OR GREATER THAN THE WEIGHTED
AVERAGE LIFE TO MATURITY OF, THE INDEBTEDNESS BEING EXTENDED,
REFINANCED, RENEWED, REPLACED, DEFEASED OR REFUNDED;
(3) IF THE INDEBTEDNESS BEING EXTENDED, REFINANCED, RENEWED,
REPLACED, DEFEASED OR REFUNDED IS SUBORDINATED IN RIGHT OF
PAYMENT TO THE NOTES, SUCH PERMITTED REFINANCING INDEBTEDNESS
HAS A FINAL MATURITY DATE LATER THAN THE FINAL MATURITY DATE
OF, AND IS SUBORDINATED IN RIGHT OF PAYMENT TO, THE NOTES ON
TERMS AT LEAST AS FAVORABLE TO THE HOLDERS OF NOTES AS THOSE
CONTAINED IN THE DOCUMENTATION GOVERNING THE INDEBTEDNESS
BEING EXTENDED, REFINANCED, RENEWED, REPLACED, DEFEASED OR
REFUNDED; AND
(4) IF SUCH REFINANCED INDEBTEDNESS WAS INDEBTEDNESS OF THE
COMPANY OR A SUBSIDIARY GUARANTOR, SUCH INDEBTEDNESS IS
INCURRED EITHER BY THE COMPANY OR BY A SUBSIDIARY GUARANTOR.
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"PERSON" MEANS ANY INDIVIDUAL, CORPORATION, PARTNERSHIP, JOINT VENTURE,
ASSOCIATION, JOINT-STOCK COMPANY, TRUST, UNINCORPORATED ORGANIZATION, LIMITED
LIABILITY COMPANY OR GOVERNMENT OR OTHER ENTITY.
"PRINCIPALS" MEANS ONEX DHC LLC AND J2R CORPORATION.
"PRIVATE PLACEMENT LEGEND" MEANS THE LEGEND SET FORTH IN SECTION
2.06(G)(I) TO BE PLACED ON ALL NOTES ISSUED UNDER THIS INDENTURE EXCEPT WHERE
OTHERWISE PERMITTED BY THE PROVISIONS OF THIS INDENTURE.
"PRO FORMA COST SAVINGS" MEANS, WITH RESPECT TO ANY PERIOD, THE
REDUCTION IN COSTS THAT OCCURRED DURING THE FOUR-QUARTER PERIOD OR AFTER THE END
OF THE FOUR-QUARTER PERIOD AND ON OR PRIOR TO THE TRANSACTION DATE THAT WERE (I)
DIRECTLY ATTRIBUTABLE TO AN ASSET ACQUISITION AND CALCULATED ON A BASIS THAT IS
CONSISTENT WITH ARTICLE 11 OF REGULATION S-X UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE INDENTURE OR (II) IMPLEMENTED BY THE BUSINESS THAT WAS
THE SUBJECT OF ANY SUCH ASSET ACQUISITION WITHIN SIX MONTHS OF THE DATE OF THE
ASSET ACQUISITION, THAT ARE SUPPORTABLE AND QUANTIFIABLE BY THE UNDERLYING
ACCOUNTING RECORDS OF SUCH BUSINESS, AND ARE DESCRIBED, AS PROVIDED BELOW, IN AN
OFFICER'S CERTIFICATE, AS IF, IN THE CASE OF EACH OF CLAUSE (I) AND (II), ALL
SUCH REDUCTIONS IN COSTS HAD BEEN EFFECTED AS OF THE BEGINNING OF SUCH PERIOD.
PRO FORMA COST SAVINGS DESCRIBED IN CLAUSE (II) ABOVE SHALL BE SET FORTH IN
REASONABLE SPECIFICITY IN A CERTIFICATE DELIVERED TO THE TRUSTEE FROM THE
COMPANY'S CHIEF FINANCIAL OFFICER AND, IN THE CASE OF PRO FORMA COST SAVINGS IN
EXCESS OF $5.0 MILLION PER FOUR-QUARTER PERIOD, SUCH CERTIFICATE SHALL BE
ACCOMPANIED BY A SUPPORTING OPINION FROM AN ACCOUNTING FIRM OF NATIONAL
STANDING.
"PRODUCTIVE ASSETS" MEANS ASSETS THAT ARE USED OR USEFUL IN, OR CAPITAL
STOCK OF ANY PERSON ENGAGED IN, A PERMITTED BUSINESS.
"QIB" MEANS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A.
"QUALIFIED SECURITIZATION TRANSACTION" MEANS ANY TRANSACTION OR SERIES
OF TRANSACTIONS PURSUANT TO WHICH THE COMPANY OR ANY OF ITS RESTRICTED
SUBSIDIARIES MAY SELL, CONVEY OR OTHERWISE TRANSFER TO (A) A SECURITIZATION
ENTITY (IN THE CASE OF A TRANSFER BY THE COMPANY OR ANY OF ITS RESTRICTED
SUBSIDIARIES) AND (B) ANY OTHER PERSON (IN CASE OF A TRANSFER BY A
SECURITIZATION ENTITY), OR MAY GRANT A SECURITY INTEREST IN, ANY ACCOUNTS
RECEIVABLE (WHETHER NOW EXISTING OR ARISING OR ACQUIRED IN THE FUTURE) OF THE
COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES, AND ANY ASSETS RELATED THERETO
INCLUDING, WITHOUT LIMITATION, ALL COLLATERAL SECURING SUCH ACCOUNTS RECEIVABLE
AND OTHER ASSETS (INCLUDING CONTRACT RIGHTS) AND ALL GUARANTEES OR OTHER
OBLIGATIONS IN RESPECT TO SUCH ACCOUNTS RECEIVABLE, PROCEEDS OF SUCH ACCOUNTS
RECEIVABLE AND OTHER ASSETS (INCLUDING CONTRACT RIGHTS) WHICH ARE CUSTOMARILY
TRANSFERRED OR IN RESPECT OF WHICH SECURITY INTERESTS ARE CUSTOMARILY GRANTED IN
CONNECTION WITH ASSET SECURITIZATION TRANSACTIONS INVOLVING ACCOUNTS RECEIVABLE
ALL OF THE FOREGOING FOR THE PURPOSE OF PROVIDING WORKING CAPITAL FINANCING ON
TERMS THAT ARE MORE FAVORABLE TO THE COMPANY AND ITS RESTRICTED SUBSIDIARY THAN
WOULD OTHERWISE BE AVAILABLE AT THAT TIME.
"RECAPITALIZATION" MEANS THE TRANSACTIONS CONTEMPLATED BY THE
RECAPITALIZATION AGREEMENT DATED MARCH 29, 1999 BY AND AMONG THE COMPANY, JLF
ACQUISITION LLC AND THE OTHER PERSONS LISTED ON THE SIGNATURE PAGES THERETO.
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"REGISTRATION RIGHTS AGREEMENT" MEANS THE REGISTRATION RIGHTS
AGREEMENT, DATED AS OF MAY 28, 1999, BY AND AMONG THE COMPANY AND OTHER PARTIES
NAMED ON THE SIGNATURE PAGES THEREOF, AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED
OR SUPPLEMENTED FROM TIME TO TIME AND, WITH RESPECT TO ANY ADDITIONAL NOTES, ONE
OR MORE REGISTRATION RIGHTS AGREEMENTS BETWEEN THE COMPANY AND THE OTHER PARTIES
THERETO, AS SUCH AGREEMENT(S) MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME
TO TIME, RELATING TO RIGHTS GIVEN BY THE COMPANY TO THE PURCHASERS OF ADDITIONAL
NOTES TO REGISTER SUCH ADDITIONAL NOTES UNDER THE SECURITIES ACT."
"REGULATION S" MEANS REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
"REGULATION S GLOBAL NOTE" MEANS A REGULATION S TEMPORARY GLOBAL NOTE
OR REGULATION S PERMANENT GLOBAL NOTE, AS APPROPRIATE.
"REGULATION S PERMANENT GLOBAL NOTE" MEANS A PERMANENT GLOBAL NOTE IN
THE FORM OF EXHIBIT A1 HERETO BEARING THE GLOBAL NOTE LEGEND AND THE PRIVATE
PLACEMENT LEGEND AND DEPOSITED WITH OR ON BEHALF OF AND REGISTERED IN THE NAME
OF THE DEPOSITARY OR ITS NOMINEE, ISSUED IN A DENOMINATION EQUAL TO THE
OUTSTANDING PRINCIPAL AMOUNT OF THE REGULATION S TEMPORARY GLOBAL NOTE UPON
EXPIRATION OF THE RESTRICTED PERIOD.
"REGULATION S TEMPORARY GLOBAL NOTE" MEANS A TEMPORARY GLOBAL NOTE IN
THE FORM OF EXHIBIT A2 HERETO BEARING THE GLOBAL NOTE LEGEND, THE PRIVATE
PLACEMENT LEGEND AND THE TEMPORARY REGULATION S LEGEND AND DEPOSITED WITH OR ON
BEHALF OF AND REGISTERED IN THE NAME OF THE DEPOSITARY OR ITS NOMINEE, ISSUED IN
A DENOMINATION EQUAL TO THE OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES INITIALLY
SOLD IN RELIANCE ON RULE 903 OF REGULATION S.
"RELATED PARTY" MEANS:
(1) ANY CONTROLLING STOCKHOLDER, 80% (OR MORE) OWNED SUBSIDIARY,
OR IMMEDIATE FAMILY MEMBER (IN THE CASE OF AN INDIVIDUAL) OF
ANY PRINCIPAL; OR
(2) ANY TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY, THE
BENEFICIARIES, STOCKHOLDERS, PARTNERS, OWNERS OR PERSONS
BENEFICIALLY HOLDING AN 80% OR MORE CONTROLLING INTEREST OF
WHICH CONSIST OF ANY ONE OR MORE PRINCIPALS AND/OR SUCH OTHER
PERSONS REFERRED TO IN THE IMMEDIATELY PRECEDING CLAUSE (1).
"REPRESENTATIVE" MEANS THE INDENTURE TRUSTEE OR OTHER TRUSTEE, AGENT OR
REPRESENTATIVE FOR ANY SENIOR DEBT.
"RESPONSIBLE OFFICER," WHEN USED WITH RESPECT TO THE TRUSTEE, MEANS ANY
OFFICER WITHIN THE CORPORATE TRUST ADMINISTRATION OF THE TRUSTEE (OR ANY
SUCCESSOR GROUP OF THE TRUSTEE) OR ANY OTHER OFFICER OF THE TRUSTEE CUSTOMARILY
PERFORMING FUNCTIONS SIMILAR TO THOSE PERFORMED BY ANY OF THE ABOVE DESIGNATED
OFFICERS AND ALSO MEANS, WITH RESPECT TO A PARTICULAR CORPORATE TRUST MATTER,
ANY OTHER OFFICER TO WHOM SUCH MATTER IS REFERRED BECAUSE OF HIS KNOWLEDGE OF
AND FAMILIARITY WITH THE PARTICULAR SUBJECT.
"RESTRICTED DEFINITIVE NOTE" MEANS A DEFINITIVE NOTE BEARING THE
PRIVATE PLACEMENT LEGEND.
"RESTRICTED GLOBAL NOTE" MEANS A GLOBAL NOTE BEARING THE PRIVATE
PLACEMENT LEGEND.
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"RESTRICTED INVESTMENT" MEANS AN INVESTMENT OTHER THAN A PERMITTED
INVESTMENT.
"RESTRICTED SUBSIDIARY" OF A PERSON MEANS ANY SUBSIDIARY OF THE
REFERENT PERSON THAT IS NOT AN UNRESTRICTED SUBSIDIARY.
"RULE 144" MEANS RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
"RULE 144A" MEANS RULE 144A PROMULGATED UNDER THE SECURITIES ACT.
"RULE 903" MEANS RULE 903 PROMULGATED UNDER THE SECURITIES ACT.
"RULE 904" MEANS RULE 904 PROMULGATED THE SECURITIES ACT.
"SEC" MEANS THE SECURITIES AND EXCHANGE COMMISSION.
"SECURITIES ACT" MEANS THE SECURITIES ACT OF 1933, AS AMENDED.
"SECURITIZATION ENTITY" MEANS A WHOLLY OWNED SUBSIDIARY OF THE COMPANY
(OR ANOTHER PERSON IN WHICH THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY MAKES
AN INVESTMENT AND TO WHICH THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
TRANSFERS ACCOUNTS RECEIVABLE OR EQUIPMENT AND RELATED ASSETS) THAT ENGAGES IN
NO ACTIVITIES OTHER THAN IN CONNECTION WITH THE FINANCING OF ACCOUNTS RECEIVABLE
AND THAT IS DESIGNATED BY THE BOARD OF DIRECTORS OF THE COMPANY (AS PROVIDED
BELOW) AS A SECURITIZATION ENTITY (A) NO PORTION OF THE INDEBTEDNESS OR ANY
OTHER OBLIGATIONS (CONTINGENT OR OTHERWISE) OF WHICH (I) IS GUARANTEED BY THE
COMPANY OR ANY OTHER RESTRICTED SUBSIDIARY (EXCLUDING GUARANTEES OF OBLIGATIONS
(OTHER THAN THE PRINCIPAL OF, AND INTEREST ON, INDEBTEDNESS)) PURSUANT TO
STANDARD SECURITIZATION UNDERTAKINGS, (II) IS RECOURSE TO OR OBLIGATES THE
COMPANY OR ANY RESTRICTED SUBSIDIARY IN ANY WAY OTHER THAN PURSUANT TO STANDARD
SECURITIZATION UNDERTAKINGS, (B) WITH WHICH NEITHER THE COMPANY NOR ANY
RESTRICTED SUBSIDIARY HAS ANY MATERIAL CONTRACT, AGREEMENT, ARRANGEMENT OR
UNDERSTANDING OTHER THAN ON TERMS NO LESS FAVORABLE TO THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY THAN THOSE THAT MIGHT BE OBTAINED AT THE TIME FROM PERSONS
THAT ARE NOT AFFILIATES OF THE COMPANY, OTHER THAN FEES PAYABLE IN THE ORDINARY
COURSE OF BUSINESS IN CONNECTION WITH SERVICING RECEIVABLES OF SUCH ENTITY, AND
(C) TO WHICH NEITHER THE COMPANY NOR ANY RESTRICTED SUBSIDIARY HAS ANY
OBLIGATION TO MAINTAIN OR PRESERVE SUCH ENTITY'S FINANCIAL CONDITION OR CAUSE
SUCH ENTITY TO ACHIEVE CERTAIN LEVELS OF OPERATING RESULTS. ANY SUCH DESIGNATION
BY THE BOARD OF DIRECTORS SHALL BE EVIDENCED TO EACH OF THE TRUSTEES BY FILING
WITH THE TRUSTEES A CERTIFIED COPY OF THE RESOLUTION OF THE BOARD OF DIRECTORS
GIVING EFFECT TO SUCH DESIGNATION AND AN OFFICERS' CERTIFICATE CERTIFYING THAT
SUCH DESIGNATION COMPLIED WITH THE FOREGOING CONDITIONS.
"SENIOR DEBT" MEANS:
(1) ALL INDEBTEDNESS OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR
OUTSTANDING UNDER CREDIT FACILITIES AND ALL HEDGING
OBLIGATIONS WITH RESPECT THERETO;
(2) ANY OTHER INDEBTEDNESS OF THE COMPANY OR ANY SUBSIDIARY
GUARANTOR PERMITTED TO BE INCURRED UNDER THE TERMS OF THE
INDENTURE, UNLESS THE INSTRUMENT UNDER WHICH SUCH INDEBTEDNESS
IS INCURRED EXPRESSLY PROVIDES THAT IT IS ON A PARITY WITH
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OR SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES OR ANY
SUBSIDIARY GUARANTY, AS THE CASE MAY BE; AND
(3) ALL OBLIGATIONS WITH RESPECT TO THE ITEMS LISTED IN THE
PRECEDING CLAUSES (1) AND (2).
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PRECEDING, SENIOR DEBT
SHALL NOT INCLUDE:
(1) ANY LIABILITY FOR FEDERAL, STATE, LOCAL OR OTHER TAXES
OWED OR OWING BY THE COMPANY OR THE SUBSIDIARY GUARANTORS;
(2) ANY INDEBTEDNESS OF THE COMPANY TO ANY OF ITS SUBSIDIARIES OR
OTHER AFFILIATES;
(3) ANY TRADE PAYABLES; OR
(4) ANY INDEBTEDNESS THAT IS INCURRED IN VIOLATION OF THE
INDENTURE.
"SENIOR GUARANTIES" MEANS THE GUARANTIES BY THE SUBSIDIARY GUARANTORS
OF OBLIGATIONS UNDER THE CREDIT AGREEMENT.
"SHELF REGISTRATION STATEMENT" MEANS THE SHELF REGISTRATION STATEMENT
DEFINED IN THE REGISTRATION RIGHTS AGREEMENT.
"SIGNIFICANT SUBSIDIARY" MEANS ANY SUBSIDIARY THAT WOULD BE A
"SIGNIFICANT SUBSIDIARY" AS DEFINED IN ARTICLE 1, RULE 1-02 OF REGULATION S-X,
PROMULGATED PURSUANT TO THE SECURITIES ACT, AS SUCH REGULATION IS IN EFFECT ON
THE DATE HEREOF.
"STANDARD SECURITIZATION UNDERTAKINGS" MEANS REPRESENTATIONS,
WARRANTIES, COVENANTS AND INDEMNITIES ENTERED INTO BY THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY THAT ARE REASONABLY CUSTOMARY IN AN ACCOUNTS
RECEIVABLE SECURITIZATION TRANSACTION.
"STATED MATURITY" MEANS, WITH RESPECT TO ANY INSTALLMENT OF INTEREST OR
PRINCIPAL ON ANY SERIES OF INDEBTEDNESS, THE DATE ON WHICH SUCH PAYMENT OF
INTEREST OR PRINCIPAL WAS SCHEDULED TO BE PAID IN THE ORIGINAL DOCUMENTATION
GOVERNING SUCH INDEBTEDNESS, AND SHALL NOT INCLUDE ANY CONTINGENT OBLIGATIONS TO
REPAY, REDEEM OR REPURCHASE ANY SUCH INTEREST OR PRINCIPAL PRIOR TO THE DATE
ORIGINALLY SCHEDULED FOR THE PAYMENT THEREOF.
"SUBORDINATED CREDIT FACILITY" MEANS THE BRIDGE LOAN AGREEMENT DATED AS
OF APRIL 21, 1999 BY AND AMONG THE COMPANY, THE SUBSIDIARY GUARANTORS, THE
LENDERS NAMED THEREIN, BANC OF AMERICA SECURITIES LLC AND CHASE SECURITIES INC.,
AS ARRANGERS, NATIONSBRIDGE, L.L.C. AND THE CHASE MANHATTAN BANK, AS CO-AGENTS,
AND NATIONSBRIDGE, L.L.C., AS ADMINISTRATIVE AGENT.
"SUBSIDIARY" MEANS, WITH RESPECT TO ANY SPECIFIED PERSON:
(1) ANY CORPORATION, ASSOCIATION OR OTHER BUSINESS ENTITY OF WHICH
MORE THAN 50% OF THE TOTAL VOTING POWER OF SHARES OF CAPITAL
STOCK ENTITLED (WITHOUT REGARD TO THE OCCURRENCE OF ANY
CONTINGENCY) TO VOTE IN THE ELECTION OF DIRECTORS, MANAGERS OR
TRUSTEES THEREOF IS AT THE TIME OWNED OR CONTROLLED, DIRECTLY
OR
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INDIRECTLY, BY SUCH PERSON OR ONE OR MORE OF THE OTHER
SUBSIDIARIES OF THAT PERSON (OR A COMBINATION THEREOF); AND
(2) ANY PARTNERSHIP (A) THE SOLE GENERAL PARTNER OR THE MANAGING
GENERAL PARTNER OF WHICH IS SUCH PERSON OR A SUBSIDIARY OF
SUCH PERSON OR (B) THE ONLY GENERAL PARTNERS OF WHICH ARE SUCH
PERSON OR ONE OR MORE SUBSIDIARIES OF SUCH PERSON (OR ANY
COMBINATION THEREOF).
"SUBSIDIARY GUARANTORS" MEANS:
(1) EACH DOMESTIC SUBSIDIARY OF THE COMPANY EXISTING ON THE DATE
OF THE INDENTURE; AND
(2) ANY OTHER SUBSIDIARY THAT EXECUTES A SUBSIDIARY GUARANTY IN
ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE;
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
"SUBSIDIARY GUARANTY" MEANS A GUARANTY OF THE COMPANY'S OBLIGATIONS
WITH RESPECT TO THE NOTES BY ANY SUBSIDIARY GUARANTOR OR ANY RESTRICTED
SUBSIDIARY OF THE COMPANY THAT EXECUTES A SUPPLEMENTAL INDENTURE SUBSTANTIALLY
IN THE FORM OF EXHIBIT F HERETO.
"TIA" MEANS THE TRUST INDENTURE ACT OF 1939 (15
U.S.C. Sections 77AAA-77BBBB) AS IN EFFECT ON THE DATE ON WHICH THIS INDENTURE
IS QUALIFIED UNDER THE TIA.
"TOTAL ASSETS" MEANS THE TOTAL ASSETS OF THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES ON A CONSOLIDATED BASIS DETERMINED IN ACCORDANCE WITH GAAP, AS
SHOWN ON THE MOST RECENTLY AVAILABLE CONSOLIDATED BALANCE SHEET OF THE COMPANY
AND ITS RESTRICTED SUBSIDIARIES.
"TRUSTEE" MEANS THE PARTY NAMED AS SUCH ABOVE UNTIL A SUCCESSOR
REPLACES IT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THIS INDENTURE AND
THEREAFTER MEANS THE SUCCESSOR SERVING HEREUNDER.
"UNRESTRICTED DEFINITIVE NOTE" MEANS ONE OR MORE DEFINITIVE NOTES THAT
DO NOT BEAR AND ARE NOT REQUIRED TO BEAR THE PRIVATE PLACEMENT LEGEND.
"UNRESTRICTED GLOBAL NOTE" MEANS A PERMANENT GLOBAL NOTE SUBSTANTIALLY
IN THE FORM OF EXHIBIT A1 ATTACHED HERETO THAT BEARS THE GLOBAL NOTE LEGEND AND
THAT HAS THE "SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE" ATTACHED
THERETO, AND THAT IS DEPOSITED WITH OR ON BEHALF OF AND REGISTERED IN THE NAME
OF THE DEPOSITARY, REPRESENTING A SERIES OF NOTES THAT DO NOT BEAR THE PRIVATE
PLACEMENT LEGEND.
"UNRESTRICTED SUBSIDIARY" MEANS ANY SUBSIDIARY OF THE COMPANY THAT IS
DESIGNATED BY THE BOARD OF DIRECTORS AS AN UNRESTRICTED SUBSIDIARY PURSUANT TO A
BOARD RESOLUTION, BUT ONLY TO THE EXTENT THAT SUCH SUBSIDIARY:
(1) HAS NO INDEBTEDNESS OTHER THAN NON-RECOURSE DEBT:
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(2) IS NOT PARTY TO ANY AGREEMENT, CONTRACT, ARRANGEMENT OR
UNDERSTANDING WITH THE COMPANY OR ANY RESTRICTED SUBSIDIARY OF
THE COMPANY UNLESS THE TERMS OF ANY SUCH AGREEMENT, CONTRACT,
ARRANGEMENT OR UNDERSTANDING ARE NO LESS FAVORABLE TO THE
COMPANY OR SUCH RESTRICTED SUBSIDIARY THAN THOSE THAT MIGHT BE
OBTAINED AT THE TIME FROM PERSONS WHO ARE NOT AFFILIATES OF
THE COMPANY;
(3) IS A PERSON WITH RESPECT TO WHICH NEITHER THE COMPANY NOR ANY
OF ITS RESTRICTED SUBSIDIARIES HAS ANY DIRECT OR INDIRECT
OBLIGATION (A) TO SUBSCRIBE FOR ADDITIONAL EQUITY INTERESTS OR
(B) TO MAINTAIN OR PRESERVE SUCH PERSON'S FINANCIAL CONDITION
OR TO CAUSE SUCH PERSON TO ACHIEVE ANY SPECIFIED LEVELS OF
OPERATING RESULTS; AND
(4) HAS NOT GUARANTEED OR OTHERWISE DIRECTLY OR INDIRECTLY
PROVIDED CREDIT SUPPORT FOR ANY INDEBTEDNESS OF THE COMPANY OR
ANY OF ITS RESTRICTED SUBSIDIARIES.
ANY DESIGNATION OF A SUBSIDIARY OF THE COMPANY AS AN UNRESTRICTED
SUBSIDIARY SHALL BE EVIDENCED TO THE TRUSTEE BY FILING WITH THE TRUSTEE A
CERTIFIED COPY OF THE BOARD RESOLUTION GIVING EFFECT TO SUCH DESIGNATION AND AN
OFFICERS' CERTIFICATE CERTIFYING THAT SUCH DESIGNATION COMPLIED WITH THE
PRECEDING CONDITIONS AND WAS PERMITTED BY SECTION 4.07 HEREOF. IF, AT ANY TIME,
ANY UNRESTRICTED SUBSIDIARY WOULD FAIL TO MEET THE PRECEDING REQUIREMENTS AS AN
UNRESTRICTED SUBSIDIARY, IT SHALL THEREAFTER CEASE TO BE AN UNRESTRICTED
SUBSIDIARY FOR PURPOSES OF THE INDENTURE AND ANY INDEBTEDNESS OF SUCH SUBSIDIARY
SHALL BE DEEMED TO BE INCURRED BY A RESTRICTED SUBSIDIARY OF THE COMPANY AS OF
SUCH DATE AND, IF SUCH INDEBTEDNESS IS NOT PERMITTED TO BE INCURRED AS OF SUCH
DATE UNDER THE COVENANT DESCRIBED IN SECTION 4.09 HEREOF THE COMPANY SHALL BE IN
DEFAULT OF SUCH COVENANT. THE BOARD OF DIRECTORS OF THE COMPANY MAY AT ANY TIME
DESIGNATE ANY UNRESTRICTED SUBSIDIARY TO BE A RESTRICTED SUBSIDIARY; PROVIDED
THAT SUCH DESIGNATION SHALL BE DEEMED TO BE AN INCURRENCE OF INDEBTEDNESS BY A
RESTRICTED SUBSIDIARY OF THE COMPANY OF ANY OUTSTANDING INDEBTEDNESS OF SUCH
UNRESTRICTED SUBSIDIARY AND SUCH DESIGNATION SHALL ONLY BE PERMITTED IF (1) SUCH
INDEBTEDNESS IS PERMITTED UNDER THE COVENANT DESCRIBED UNDER THE CAPTION IN
SECTION 4.09 HEREOF CALCULATED ON A PRO FORMA BASIS AS IF SUCH DESIGNATION HAD
OCCURRED AT THE BEGINNING OF THE FOUR-QUARTER REFERENCE PERIOD; AND (2) NO
DEFAULT OR EVENT OF DEFAULT WOULD BE IN EXISTENCE FOLLOWING SUCH DESIGNATION.
"U.S. PERSON" MEANS A U.S. PERSON AS DEFINED IN RULE 902(O) UNDER THE
SECURITIES ACT.
"VOTING STOCK" OF ANY PERSON AS OF ANY DATE MEANS THE CAPITAL STOCK OF
SUCH PERSON THAT IS AT THE TIME ENTITLED TO VOTE IN THE ELECTION OF THE BOARD OF
DIRECTORS OF SUCH PERSON.
"WEIGHTED AVERAGE LIFE TO MATURITY" MEANS, WHEN APPLIED TO ANY
INDEBTEDNESS AT ANY DATE, THE NUMBER OF YEARS OBTAINED BY DIVIDING:
(1) THE SUM OF THE PRODUCTS OBTAINED BY MULTIPLYING (A) THE AMOUNT
OF EACH THEN REMAINING INSTALLMENT, SINKING FUND, SERIAL
MATURITY OR OTHER REQUIRED PAYMENTS OF PRINCIPAL, INCLUDING
PAYMENT AT FINAL MATURITY, IN RESPECT THEREOF, BY (B) THE
NUMBER OF YEARS (CALCULATED TO THE NEAREST ONE-TWELFTH) THAT
WILL ELAPSE BETWEEN SUCH DATE AND THE MAKING OF SUCH PAYMENT;
BY
(2) THE THEN OUTSTANDING PRINCIPAL AMOUNT OF SUCH INDEBTEDNESS.
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"WHOLLY OWNED RESTRICTED SUBSIDIARY" OF ANY SPECIFIED PERSON MEANS A
RESTRICTED SUBSIDIARY OF SUCH PERSON ALL OF THE OUTSTANDING CAPITAL STOCK OR
OTHER OWNERSHIP INTERESTS OF WHICH (OTHER THAN DIRECTORS' QUALIFYING SHARES)
SHALL AT THE TIME BE OWNED BY SUCH PERSON AND/OR BY ONE OR MORE WHOLLY OWNED
RESTRICTED SUBSIDIARIES OF SUCH PERSON.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
- ---- -------
"AFFILIATE TRANSACTION" .....................................4.11
"ASSET SALE OFFER" ..........................................3.09
"AUTHENTICATION ORDER" ......................................2.02
"CHANGE OF CONTROL OFFER" ...................................4.15
"CHANGE OF CONTROL PAYMENT" .................................4.15
"CHANGE OF CONTROL PAYMENT DATE" ............................4.15
"COVENANT DEFEASANCE" .......................................8.03
"EVENT OF DEFAULT" ..........................................6.01
"EXCESS PROCEEDS" ...........................................4.10
"INCUR" .....................................................4.09
"LEGAL DEFEASANCE" ..........................................8.02
"OFFER AMOUNT" ..............................................3.09
"OFFER PERIOD" ..............................................3.09
"PAYMENT BLOCKAGE NOTICE ...................................10.03
"PAYMENT DEFAULT" ...........................................6.01
"PAYING AGENT" ..............................................2.03
"PERMITTED DEBT" ............................................4.09
"PURCHASE DATE" .............................................3.09
"REGISTRAR" .................................................2.03
"RESTRICTED PAYMENTS" .......................................4.07
SECTION 1.03.INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
WHENEVER THIS INDENTURE REFERS TO A PROVISION OF THE TIA, THE
PROVISION IS INCORPORATED BY REFERENCE IN AND MADE A PART OF THIS INDENTURE.
THE FOLLOWING TIA TERMS USED IN THIS INDENTURE HAVE THE FOLLOWING
MEANINGS:
"INDENTURE SECURITIES" MEANS THE NOTES;
"INDENTURE SECURITY HOLDER" MEANS A HOLDER OF A NOTE;
"INDENTURE TO BE QUALIFIED" MEANS THIS INDENTURE;
"INDENTURE TRUSTEE" OR "INSTITUTIONAL TRUSTEE" MEANS THE TRUSTEE; AND
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"OBLIGOR" ON THE NOTES AND THE SUBSIDIARY GUARANTIES MEANS THE
COMPANY AND THE SUBSIDIARY GUARANTORS AND ANY SUCCESSOR OBLIGOR UPON THE NOTES
AND THE SUBSIDIARY GUARANTIES RESPECTIVELY.
ALL OTHER TERMS USED IN THIS INDENTURE THAT ARE DEFINED BY THE TIA,
DEFINED BY TIA REFERENCE TO ANOTHER STATUTE OR DEFINED BY SEC RULE UNDER THE TIA
HAVE THE MEANINGS SO ASSIGNED TO THEM.
SECTION 1.04. RULES OF CONSTRUCTION.
UNLESS THE CONTEXT OTHERWISE REQUIRES:
(A) A TERM HAS THE MEANING ASSIGNED TO IT;
(B) AN ACCOUNTING TERM NOT OTHERWISE DEFINED HAS THE MEANING ASSIGNED
TO IT IN ACCORDANCE WITH GAAP;
(C) "OR" IS NOT EXCLUSIVE;
(D) WORDS IN THE SINGULAR INCLUDE THE PLURAL, AND IN THE PLURAL
INCLUDE THE SINGULAR;
(E) PROVISIONS APPLY TO SUCCESSIVE EVENTS AND TRANSACTIONS; AND
(F) REFERENCES TO SECTIONS OF OR RULES UNDER THE SECURITIES ACT SHALL
BE DEEMED TO INCLUDE SUBSTITUTE, REPLACEMENT OF SUCCESSOR SECTIONS OR RULES
ADOPTED BY THE SEC FROM TIME TO TIME.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
(A) GENERAL. THE NOTES AND THE TRUSTEE'S CERTIFICATE OF
AUTHENTICATION SHALL BE SUBSTANTIALLY IN THE FORM OF EXHIBIT A1 HERETO. THE
NOTES MAY HAVE NOTATIONS, LEGENDS OR ENDORSEMENTS REQUIRED BY LAW, STOCK
EXCHANGE RULE OR USAGE. EACH NOTE SHALL BE DATED THE DATE OF ITS AUTHENTICATION.
THE NOTES SHALL BE IN DENOMINATIONS OF $1,000 AND INTEGRAL MULTIPLES THEREOF.
THE TERMS AND PROVISIONS CONTAINED IN THE NOTES SHALL CONSTITUTE, AND
ARE HEREBY EXPRESSLY MADE, A PART OF THIS INDENTURE AND THE COMPANY, THE
SUBSIDIARY GUARANTORS AND THE TRUSTEE, BY THEIR EXECUTION AND DELIVERY OF THIS
INDENTURE, EXPRESSLY AGREE TO SUCH TERMS AND PROVISIONS AND TO BE BOUND THEREBY.
HOWEVER, TO THE EXTENT ANY PROVISION OF ANY NOTE CONFLICTS WITH THE EXPRESS
PROVISIONS OF THIS INDENTURE, THE PROVISIONS OF THIS INDENTURE SHALL GOVERN AND
BE CONTROLLING.
(B) GLOBAL NOTES. NOTES ISSUED IN GLOBAL FORM SHALL BE SUBSTANTIALLY
IN THE FORM OF EXHIBIT A1 OR A2 ATTACHED HERETO (INCLUDING THE GLOBAL NOTE
LEGEND THEREON AND THE "SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE"
ATTACHED THERETO). NOTES ISSUED IN DEFINITIVE FORM SHALL BE SUBSTANTIALLY IN THE
FORM OF EXHIBIT A1 ATTACHED HERETO (BUT
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WITHOUT THE GLOBAL NOTE LEGEND THEREON AND WITHOUT THE "SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE" ATTACHED THERETO). EACH GLOBAL NOTE SHALL
REPRESENT SUCH OF THE OUTSTANDING NOTES AS SHALL BE SPECIFIED THEREIN AND EACH
SHALL PROVIDE THAT IT SHALL REPRESENT THE AGGREGATE PRINCIPAL AMOUNT OF
OUTSTANDING NOTES FROM TIME TO TIME ENDORSED THEREON AND THAT THE AGGREGATE
PRINCIPAL AMOUNT OF OUTSTANDING NOTES REPRESENTED THEREBY MAY FROM TIME TO TIME
BE REDUCED OR INCREASED, AS APPROPRIATE, TO REFLECT EXCHANGES AND REDEMPTIONS.
ANY ENDORSEMENT OF A GLOBAL NOTE TO REFLECT THE AMOUNT OF ANY INCREASE OR
DECREASE IN THE AGGREGATE PRINCIPAL AMOUNT OF OUTSTANDING NOTES REPRESENTED
THEREBY SHALL BE MADE BY THE TRUSTEE OR THE CUSTODIAN, AT THE DIRECTION OF THE
TRUSTEE, IN ACCORDANCE WITH INSTRUCTIONS GIVEN BY THE HOLDER THEREOF AS REQUIRED
BY SECTION 2.06 HEREOF.
(C) TEMPORARY GLOBAL NOTES. NOTES OFFERED AND SOLD IN RELIANCE ON
REGULATION S SHALL BE ISSUED INITIALLY IN THE FORM OF THE REGULATION S TEMPORARY
GLOBAL NOTE, WHICH SHALL BE DEPOSITED ON BEHALF OF THE PURCHASERS OF THE NOTES
REPRESENTED THEREBY WITH THE TRUSTEE, AS CUSTODIAN FOR THE DEPOSITARY, AND
REGISTERED IN THE NAME OF THE DEPOSITARY OR THE NOMINEE OF THE DEPOSITARY FOR
THE ACCOUNTS OF DESIGNATED AGENTS HOLDING ON BEHALF OF EUROCLEAR OR CEDELBANK,
DULY EXECUTED BY THE COMPANY AND AUTHENTICATED BY THE TRUSTEE AS HEREINAFTER
PROVIDED. THE RESTRICTED PERIOD SHALL BE TERMINATED UPON THE RECEIPT BY THE
TRUSTEE OF (I) A WRITTEN CERTIFICATE FROM EUROCLEAR AND CEDELBANK CERTIFYING
THAT THEY HAVE RECEIVED CERTIFICATION OF NON-UNITED STATES BENEFICIAL OWNERSHIP
OF 100% OF THE AGGREGATE PRINCIPAL AMOUNT OF THE REGULATION S TEMPORARY GLOBAL
NOTE (EXCEPT TO THE EXTENT OF ANY BENEFICIAL OWNERS THEREOF WHO ACQUIRED AN
INTEREST THEREIN DURING THE RESTRICTED PERIOD PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND WHO WILL TAKE DELIVERY OF A BENEFICIAL
OWNERSHIP INTEREST IN A 144A GLOBAL NOTE OR AN IAI GLOBAL NOTE BEARING A PRIVATE
PLACEMENT LEGEND, ALL AS CONTEMPLATED BY SECTION 2.06(A)(II) HEREOF), AND (II)
AN OFFICERS' CERTIFICATE FROM THE COMPANY. FOLLOWING THE TERMINATION OF THE
RESTRICTED PERIOD, BENEFICIAL INTERESTS IN THE REGULATION S TEMPORARY GLOBAL
NOTE SHALL BE EXCHANGED FOR BENEFICIAL INTERESTS IN REGULATION S PERMANENT
GLOBAL NOTES PURSUANT TO THE APPLICABLE PROCEDURES. SIMULTANEOUSLY WITH THE
AUTHENTICATION OF REGULATION S PERMANENT GLOBAL NOTES, THE TRUSTEE SHALL CANCEL
THE REGULATION S TEMPORARY GLOBAL NOTE. THE AGGREGATE PRINCIPAL AMOUNT OF THE
REGULATION S TEMPORARY GLOBAL NOTE AND THE REGULATION S PERMANENT GLOBAL NOTES
MAY FROM TIME TO TIME BE INCREASED OR DECREASED BY ADJUSTMENTS MADE ON THE
RECORDS OF THE TRUSTEE AND THE DEPOSITARY OR ITS NOMINEE, AS THE CASE MAY BE, IN
CONNECTION WITH TRANSFERS OF INTEREST AS HEREINAFTER PROVIDED.
(D) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. THE BOOK-ENTRY SYSTEMS
AND PROCEDURES OF EUROCLEAR AND CEDELBANK SHALL BE APPLICABLE TO TRANSFERS OF
BENEFICIAL INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE AND THE
REGULATION S PERMANENT GLOBAL NOTES THAT ARE HELD BY PARTICIPANTS THROUGH
EUROCLEAR OR CEDELBANK.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
TWO OFFICERS SHALL SIGN THE NOTES FOR THE COMPANY BY MANUAL OR
FACSIMILE SIGNATURE.
IF AN OFFICER WHOSE SIGNATURE IS ON A NOTE NO LONGER HOLDS THAT
OFFICE AT THE TIME A NOTE IS AUTHENTICATED, THE NOTE SHALL NEVERTHELESS BE
VALID.
A NOTE SHALL NOT BE VALID UNTIL AUTHENTICATED BY THE MANUAL SIGNATURE
OF THE TRUSTEE. THE SIGNATURE SHALL BE CONCLUSIVE EVIDENCE THAT THE NOTE HAS
BEEN AUTHENTICATED UNDER THIS INDENTURE.
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THE TRUSTEE SHALL, UPON A WRITTEN ORDER OF THE COMPANY SIGNED BY TWO
OFFICERS (AN "AUTHENTICATION ORDER") AUTHENTICATE NOTES FOR ORIGINAL ISSUE UP TO
THE AGGREGATE PRINCIPAL AMOUNT OF UP TO $275.0 MILLION. THE AGGREGATE PRINCIPAL
AMOUNT OF NOTES OUTSTANDING AT ANY TIME MAY NOT EXCEED $275.0 MILLION EXCEPT AS
PROVIDED IN SECTION 2.07 HEREOF.
THE TRUSTEE MAY APPOINT AN AUTHENTICATING AGENT ACCEPTABLE TO THE
COMPANY TO AUTHENTICATE NOTES. AN AUTHENTICATING AGENT MAY AUTHENTICATE NOTES
WHENEVER THE TRUSTEE MAY DO SO. EACH REFERENCE IN THIS INDENTURE TO
AUTHENTICATION BY THE TRUSTEE INCLUDES AUTHENTICATION BY SUCH AGENT. AN
AUTHENTICATING AGENT HAS THE SAME RIGHTS AS AN AGENT TO DEAL WITH HOLDERS OR AN
AFFILIATE OF THE COMPANY.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
THE COMPANY SHALL MAINTAIN AN OFFICE OR AGENCY WHERE NOTES MAY BE
PRESENTED FOR REGISTRATION OF TRANSFER OR FOR EXCHANGE ("REGISTRAR") AND AN
OFFICE OR AGENCY WHERE NOTES MAY BE PRESENTED FOR PAYMENT ("PAYING AGENT"). THE
REGISTRAR SHALL KEEP A REGISTER OF THE NOTES AND OF THEIR TRANSFER AND EXCHANGE.
THE COMPANY MAY APPOINT ONE OR MORE CO-REGISTRARS AND ONE OR MORE ADDITIONAL
PAYING AGENTS. THE TERM "REGISTRAR" INCLUDES ANY CO-REGISTRAR AND THE TERM
"PAYING AGENT" INCLUDES ANY ADDITIONAL PAYING AGENT. THE COMPANY MAY CHANGE ANY
PAYING AGENT OR REGISTRAR WITHOUT NOTICE TO ANY HOLDER. THE COMPANY SHALL NOTIFY
THE TRUSTEE IN WRITING OF THE NAME AND ADDRESS OF ANY AGENT NOT A PARTY TO THIS
INDENTURE. IF THE COMPANY FAILS TO APPOINT OR MAINTAIN ANOTHER ENTITY AS
REGISTRAR OR PAYING AGENT, THE TRUSTEE SHALL ACT AS SUCH. THE COMPANY OR ANY OF
ITS SUBSIDIARIES MAY ACT AS PAYING AGENT OR REGISTRAR.
THE COMPANY INITIALLY APPOINTS THE DEPOSITORY TRUST COMPANY ("DTC")
TO ACT AS DEPOSITARY WITH RESPECT TO THE GLOBAL NOTES.
THE COMPANY INITIALLY APPOINTS THE TRUSTEE TO ACT AS THE REGISTRAR
AND PAYING AGENT AND TO ACT AS CUSTODIAN WITH RESPECT TO THE GLOBAL NOTES.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
THE COMPANY SHALL REQUIRE EACH PAYING AGENT OTHER THAN THE TRUSTEE TO
AGREE IN WRITING THAT THE PAYING AGENT SHALL HOLD IN TRUST FOR THE BENEFIT OF
HOLDERS OR THE TRUSTEE ALL MONEY HELD BY THE PAYING AGENT FOR THE PAYMENT OF
PRINCIPAL, PREMIUM OR LIQUIDATED DAMAGES, IF ANY, OR INTEREST ON THE NOTES, AND
SHALL NOTIFY THE TRUSTEE OF ANY DEFAULT BY THE COMPANY IN MAKING ANY SUCH
PAYMENT. WHILE ANY SUCH DEFAULT CONTINUES, THE TRUSTEE MAY REQUIRE A PAYING
AGENT TO PAY ALL MONEY HELD BY IT TO THE TRUSTEE. THE COMPANY AT ANY TIME MAY
REQUIRE A PAYING AGENT TO PAY ALL MONEY HELD BY IT TO THE TRUSTEE. UPON PAYMENT
OVER TO THE TRUSTEE, THE PAYING AGENT (IF OTHER THAN THE COMPANY OR A
SUBSIDIARY) SHALL HAVE NO FURTHER LIABILITY FOR THE MONEY. IF THE COMPANY OR A
SUBSIDIARY ACTS AS PAYING AGENT, IT SHALL SEGREGATE AND HOLD IN A SEPARATE TRUST
FUND FOR THE BENEFIT OF THE HOLDERS ALL MONEY HELD BY IT AS PAYING AGENT. UPON
ANY BANKRUPTCY OR REORGANIZATION PROCEEDINGS RELATING TO THE COMPANY, THE
TRUSTEE SHALL SERVE AS PAYING AGENT FOR THE NOTES.
SECTION 2.05. HOLDER LISTS.
THE TRUSTEE SHALL PRESERVE IN AS CURRENT A FORM AS IS REASONABLY
PRACTICABLE THE MOST RECENT LIST AVAILABLE TO IT OF THE NAMES AND ADDRESSES OF
ALL HOLDERS AND SHALL OTHERWISE COMPLY WITH TIA SS. 312(A). IF THE TRUSTEE IS
NOT THE REGISTRAR, THE COMPANY SHALL
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FURNISH TO THE TRUSTEE AT LEAST SEVEN BUSINESS DAYS BEFORE EACH INTEREST PAYMENT
DATE AND AT SUCH OTHER TIMES AS THE TRUSTEE MAY REQUEST IN WRITING, A LIST IN
SUCH FORM AND AS OF SUCH DATE AS THE TRUSTEE MAY REASONABLY REQUIRE OF THE NAMES
AND ADDRESSES OF THE HOLDERS OF NOTES AND THE COMPANY SHALL OTHERWISE COMPLY
WITH TIA Section. 312(A).
SECTION 2.06. TRANSFER AND EXCHANGE.
(A) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A GLOBAL NOTE MAY NOT BE
TRANSFERRED AS A WHOLE EXCEPT BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY,
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR TO ANOTHER NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. ALL GLOBAL NOTES SHALL BE EXCHANGED
BY FOR CERTIFICATED NOTES IF (I) THE COMPANY DELIVERS TO THE TRUSTEE NOTICE FROM
THE DEPOSITARY THAT IT IS UNWILLING OR UNABLE TO CONTINUE TO ACT AS DEPOSITARY
OR THAT IT IS NO LONGER A CLEARING AGENCY REGISTERED UNDER THE EXCHANGE ACT AND,
IN EITHER CASE, A SUCCESSOR DEPOSITARY IS NOT APPOINTED BY THE COMPANY WITHIN
120 DAYS AFTER THE DATE OF SUCH NOTICE FROM THE DEPOSITARY OR (II) THE COMPANY
IN ITS SOLE DISCRETION DETERMINES THAT THE GLOBAL NOTES (IN WHOLE BUT NOT IN
PART) SHOULD BE EXCHANGED FOR CERTIFICATED NOTES AND DELIVERS A WRITTEN NOTICE
TO SUCH EFFECT TO THE TRUSTEE; PROVIDED THAT IN NO EVENT SHALL THE REGULATION S
TEMPORARY GLOBAL NOTE BE EXCHANGED BY THE COMPANY FOR CERTIFICATED NOTES PRIOR
TO (X) THE EXPIRATION OF THE RESTRICTED PERIOD AND (Y) THE RECEIPT BY THE
REGISTRAR OF ANY CERTIFICATES REQUIRED PURSUANT TO RULE 903(B)(3)(II)(B) UNDER
THE SECURITIES ACT. UPON THE OCCURRENCE OF EITHER OF THE PRECEDING EVENTS IN (I)
OR (II) ABOVE, CERTIFICATED NOTES SHALL BE ISSUED IN SUCH NAMES AS THE
DEPOSITARY SHALL INSTRUCT THE TRUSTEE. GLOBAL NOTES ALSO MAY BE EXCHANGED OR
REPLACED, IN WHOLE OR IN PART, AS PROVIDED IN SECTIONS 2.07 AND 2.10 HEREOF.
EVERY NOTE AUTHENTICATED AND DELIVERED IN EXCHANGE FOR, OR IN LIEU OF, A GLOBAL
NOTE OR ANY PORTION THEREOF, PURSUANT TO THIS SECTION 2.06 OR SECTION 2.07 OR
2.10 HEREOF, SHALL BE AUTHENTICATED AND DELIVERED IN THE FORM OF, AND SHALL BE,
A GLOBAL NOTE. A GLOBAL NOTE MAY NOT BE EXCHANGED FOR ANOTHER NOTE OTHER THAN AS
PROVIDED IN THIS SECTION 2.06(A), HOWEVER, BENEFICIAL INTERESTS IN A GLOBAL NOTE
MAY BE TRANSFERRED AND EXCHANGED AS PROVIDED IN SECTION 2.06(B), (C) OR (F)
HEREOF.
(B) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL
NOTES. THE TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES
SHALL BE EFFECTED THROUGH THE DEPOSITARY, IN ACCORDANCE WITH THE PROVISIONS OF
THIS INDENTURE AND THE APPLICABLE PROCEDURES. BENEFICIAL INTERESTS IN THE
RESTRICTED GLOBAL NOTES SHALL BE SUBJECT TO RESTRICTIONS ON TRANSFER COMPARABLE
TO THOSE SET FORTH HEREIN TO THE EXTENT REQUIRED BY THE SECURITIES ACT.
TRANSFERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES ALSO SHALL REQUIRE
COMPLIANCE WITH EITHER SUBPARAGRAPH (I) OR (II) BELOW, AS APPLICABLE, AS WELL AS
ONE OR MORE OF THE OTHER FOLLOWING SUBPARAGRAPHS, AS APPLICABLE:
(I) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE.
BENEFICIAL INTERESTS IN ANY RESTRICTED GLOBAL NOTE MAY BE TRANSFERRED TO
PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN
THE SAME RESTRICTED GLOBAL NOTE IN ACCORDANCE WITH THE TRANSFER
RESTRICTIONS SET FORTH IN THE PRIVATE PLACEMENT LEGEND; PROVIDED, HOWEVER,
THAT PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, TRANSFERS OF
BENEFICIAL INTERESTS IN THE TEMPORARY REGULATION S GLOBAL NOTE MAY NOT BE
MADE TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
(OTHER THAN AN INITIAL PURCHASER). BENEFICIAL INTERESTS IN ANY
UNRESTRICTED GLOBAL NOTE MAY BE TRANSFERRED TO PERSONS WHO TAKE DELIVERY
THEREOF IN THE FORM OF A BENEFICIAL INTEREST
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IN AN UNRESTRICTED GLOBAL NOTE. NO WRITTEN ORDERS OR INSTRUCTIONS SHALL
BE REQUIRED TO BE DELIVERED TO THE REGISTRAR TO EFFECT THE TRANSFERS
DESCRIBED IN THIS SECTION 2.06(B)(I).
(II) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN GLOBAL
NOTES. IN CONNECTION WITH ALL TRANSFERS AND EXCHANGES OF BENEFICIAL
INTERESTS THAT ARE NOT SUBJECT TO SECTION 2.06(B)(I) ABOVE, THE TRANSFEROR
OF SUCH BENEFICIAL INTEREST MUST DELIVER TO THE REGISTRAR EITHER (A) (1) A
WRITTEN ORDER FROM A PARTICIPANT OR AN INDIRECT PARTICIPANT GIVEN TO THE
DEPOSITARY IN ACCORDANCE WITH THE APPLICABLE PROCEDURES DIRECTING THE
DEPOSITARY TO CREDIT OR CAUSE TO BE CREDITED A BENEFICIAL INTEREST IN
ANOTHER GLOBAL NOTE IN AN AMOUNT EQUAL TO THE BENEFICIAL INTEREST TO BE
TRANSFERRED OR EXCHANGED AND (2) INSTRUCTIONS GIVEN IN ACCORDANCE WITH THE
APPLICABLE PROCEDURES CONTAINING INFORMATION REGARDING THE PARTICIPANT
ACCOUNT TO BE CREDITED WITH SUCH INCREASE OR (B) (1) A WRITTEN ORDER FROM
A PARTICIPANT OR AN INDIRECT PARTICIPANT GIVEN TO THE DEPOSITARY IN
ACCORDANCE WITH THE APPLICABLE PROCEDURES DIRECTING THE DEPOSITARY TO
CAUSE TO BE ISSUED A DEFINITIVE NOTE IN AN AMOUNT EQUAL TO THE BENEFICIAL
INTEREST TO BE TRANSFERRED OR EXCHANGED AND (2) INSTRUCTIONS GIVEN BY THE
DEPOSITARY TO THE REGISTRAR CONTAINING INFORMATION REGARDING THE PERSON IN
WHOSE NAME SUCH DEFINITIVE NOTE SHALL BE REGISTERED TO EFFECT THE TRANSFER
OR EXCHANGE REFERRED TO IN (1) ABOVE; PROVIDED THAT IN NO EVENT SHALL
CERTIFICATED NOTES BE ISSUED UPON THE TRANSFER OR EXCHANGE OF BENEFICIAL
INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE PRIOR TO (X) THE
EXPIRATION OF THE RESTRICTED PERIOD AND (Y) THE RECEIPT BY THE REGISTRAR
OF ANY CERTIFICATES REQUIRED PURSUANT TO RULE 903 UNDER THE SECURITIES
ACT. UPON CONSUMMATION OF AN EXCHANGE OFFER BY THE COMPANY IN ACCORDANCE
WITH SECTION 2.06(F) HEREOF, THE REQUIREMENTS OF THIS SECTION 2.06(B)(II)
SHALL BE DEEMED TO HAVE BEEN SATISFIED UPON RECEIPT BY THE REGISTRAR OF
THE INSTRUCTIONS CONTAINED IN THE LETTER OF TRANSMITTAL DELIVERED BY THE
HOLDER OF SUCH BENEFICIAL INTERESTS IN THE RESTRICTED GLOBAL NOTES. UPON
SATISFACTION OF ALL OF THE REQUIREMENTS FOR TRANSFER OR EXCHANGE OF
BENEFICIAL INTERESTS IN GLOBAL NOTES CONTAINED IN THIS INDENTURE AND THE
NOTES OR OTHERWISE APPLICABLE UNDER THE SECURITIES ACT, THE TRUSTEE SHALL
ADJUST THE PRINCIPAL AMOUNT OF THE RELEVANT GLOBAL NOTE(S) PURSUANT TO
SECTION 2.06(H) HEREOF.
(III) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED
GLOBAL NOTE. A BENEFICIAL INTEREST IN ANY RESTRICTED GLOBAL NOTE MAY BE
TRANSFERRED TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF A
BENEFICIAL INTEREST IN ANOTHER RESTRICTED GLOBAL NOTE IF THE TRANSFER
COMPLIES WITH THE REQUIREMENTS OF SECTION 2.06(B)(II) ABOVE AND THE
REGISTRAR RECEIVES THE FOLLOWING:
(A) IF THE TRANSFEREE SHALL TAKE DELIVERY IN THE FORM OF A
BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE, THEN THE TRANSFEROR MUST
DELIVER A CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE
CERTIFICATIONS IN ITEM (1) THEREOF;
(B) IF THE TRANSFEREE SHALL TAKE DELIVERY IN THE FORM OF A
BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE OR
REGULATION S GLOBAL NOTE, THEN THE TRANSFEROR MUST DELIVER A
CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE
CERTIFICATIONS IN ITEM (2) THEREOF; AND
(C) IF THE TRANSFEREE SHALL TAKE DELIVERY IN THE FORM OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE, THEN THE TRANSFEROR MUST
DELIVER A CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE
CERTIFICATIONS AND CERTIFICATES AND
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OPINION OF COUNSEL REQUIRED BY ITEM (3) THEREOF, IF APPLICABLE.
(IV) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL
NOTE. A BENEFICIAL INTEREST IN ANY RESTRICTED GLOBAL NOTE MAY BE EXCHANGED
BY ANY HOLDER THEREOF FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE OR TRANSFERRED TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF
A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE IF THE EXCHANGE OR
TRANSFER COMPLIES WITH THE REQUIREMENTS OF SECTION 2.06(B)(II) ABOVE AND:
(A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE
EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT
AND THE HOLDER OF THE BENEFICIAL INTEREST TO BE TRANSFERRED, IN THE
CASE OF AN EXCHANGE, OR THE TRANSFEREE, IN THE CASE OF A TRANSFER,
CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL THAT IT IS NOT (1)
A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE DISTRIBUTION OF
THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN AFFILIATE (AS DEFINED IN
RULE 144) OF THE COMPANY;
(B) SUCH TRANSFER IS EFFECTED PURSUANT TO THE SHELF
REGISTRATION STATEMENT IN ACCORDANCE WITH THE REGISTRATION RIGHTS
AGREEMENT;
(C) SUCH TRANSFER IS EFFECTED BY A BROKER-DEALER PURSUANT
TO THE EXCHANGE OFFER REGISTRATION STATEMENT IN ACCORDANCE WITH THE
REGISTRATION RIGHTS AGREEMENT; OR
(D) THE REGISTRAR RECEIVES THE FOLLOWING:
(1) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL
INTEREST FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C
HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(A) THEREOF; OR
(2) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO TRANSFER SUCH BENEFICIAL
INTEREST TO A PERSON WHO SHALL TAKE DELIVERY THEREOF IN THE
FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE, A
CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT B HERETO,
INCLUDING THE CERTIFICATIONS IN ITEM (4) THEREOF;
AND, IN EACH SUCH CASE SET FORTH IN THIS SUBPARAGRAPH (D),
IF THE REGISTRAR SO REQUESTS OR IF THE APPLICABLE PROCEDURES SO
REQUIRE, AN OPINION OF COUNSEL IN FORM REASONABLY ACCEPTABLE TO THE
REGISTRAR TO THE EFFECT THAT SUCH EXCHANGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND THAT THE RESTRICTIONS ON
TRANSFER CONTAINED HEREIN AND IN THE PRIVATE PLACEMENT LEGEND ARE NO
LONGER REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES
ACT.
IF ANY SUCH TRANSFER IS EFFECTED PURSUANT TO SUBPARAGRAPH (B)
OR (D) ABOVE AT A TIME WHEN AN UNRESTRICTED GLOBAL NOTE HAS NOT YET BEEN
ISSUED, THE COMPANY SHALL ISSUE AND, UPON RECEIPT OF AN AUTHENTICATION
ORDER IN ACCORDANCE WITH SECTION 2.02 HEREOF, THE TRUSTEE SHALL
AUTHENTICATE ONE OR MORE UNRESTRICTED GLOBAL NOTES IN AN AGGREGATE
PRINCIPAL AMOUNT EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT OF BENEFICIAL
INTERESTS TRANSFERRED PURSUANT TO SUBPARAGRAPH (B) OR (D) ABOVE.
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BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE CANNOT BE
EXCHANGED FOR, OR TRANSFERRED TO PERSONS WHO TAKE DELIVERY THEREOF IN THE
FORM OF, A BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.
(C) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR CERTIFICATED
NOTES.
(I) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO
RESTRICTED DEFINITIVE NOTES. IF ANY HOLDER OF A BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST FOR A
RESTRICTED DEFINITIVE NOTE OR TO TRANSFER SUCH BENEFICIAL INTEREST TO A
PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF A RESTRICTED DEFINITIVE
NOTE, THEN, UPON RECEIPT BY THE REGISTRAR OF THE FOLLOWING DOCUMENTATION:
(A) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST
FOR A RESTRICTED DEFINITIVE NOTE, A CERTIFICATE FROM SUCH HOLDER IN
THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM
(2)(A) THEREOF;
(B) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED TO A
QIB IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT, A
CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING
THE CERTIFICATIONS IN ITEM (1) THEREOF;
(C) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED TO A
NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
903 OR RULE 904 UNDER THE SECURITIES ACT, A CERTIFICATE TO THE EFFECT
SET FORTH IN EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM
(2) THEREOF;
(D) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT,
A CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING
THE CERTIFICATIONS IN ITEM (3)(A) THEREOF;
(E) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN RELIANCE ON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OTHER THAN THOSE
LISTED IN SUBPARAGRAPHS (B) THROUGH (D) ABOVE, A CERTIFICATE TO THE
EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS,
CERTIFICATES AND OPINION OF COUNSEL REQUIRED BY ITEM (3) THEREOF, IF
APPLICABLE;
(F) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED TO
THE COMPANY OR ANY OF ITS SUBSIDIARIES, A CERTIFICATE TO THE EFFECT
SET FORTH IN EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM
(3)(B) THEREOF; OR
(G) IF SUCH BENEFICIAL INTEREST IS BEING TRANSFERRED
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, A CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B HERETO,
INCLUDING THE CERTIFICATIONS IN ITEM (3)(C) THEREOF,
THE TRUSTEE SHALL CAUSE THE AGGREGATE PRINCIPAL AMOUNT OF THE
APPLICABLE GLOBAL NOTE TO BE REDUCED ACCORDINGLY PURSUANT TO SECTION 2.06(H)
HEREOF, AND THE COMPANY SHALL EXECUTE AND THE TRUSTEE SHALL AUTHENTICATE AND
DELIVER TO THE PERSON DESIGNATED IN
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<PAGE>
THE INSTRUCTIONS A DEFINITIVE NOTE IN THE APPROPRIATE PRINCIPAL AMOUNT. ANY
DEFINITIVE NOTE ISSUED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE PURSUANT TO THIS SECTION 2.06(C) SHALL BE REGISTERED IN SUCH NAME OR
NAMES AND IN SUCH AUTHORIZED DENOMINATION OR DENOMINATIONS AS THE HOLDER OF SUCH
BENEFICIAL INTEREST SHALL INSTRUCT THE REGISTRAR THROUGH INSTRUCTIONS FROM THE
DEPOSITARY AND THE PARTICIPANT OR INDIRECT PARTICIPANT. THE TRUSTEE SHALL
DELIVER SUCH CERTIFICATED NOTES TO THE PERSONS IN WHOSE NAMES SUCH NOTES ARE SO
REGISTERED. ANY DEFINITIVE NOTE ISSUED IN EXCHANGE FOR A BENEFICIAL INTEREST IN
A RESTRICTED GLOBAL NOTE PURSUANT TO THIS SECTION 2.06(C)(I) SHALL BEAR THE
PRIVATE PLACEMENT LEGEND AND SHALL BE SUBJECT TO ALL RESTRICTIONS ON TRANSFER
CONTAINED THEREIN.
(II) BENEFICIAL INTERESTS IN REGULATION S TEMPORARY GLOBAL
NOTE TO DEFINITIVE NOTES. NOTWITHSTANDING SECTIONS 2.06(C)(I)(A) AND (C)
HEREOF, A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE
MAY NOT BE EXCHANGED FOR A DEFINITIVE NOTE OR TRANSFERRED TO A PERSON WHO
TAKES DELIVERY THEREOF IN THE FORM OF A DEFINITIVE NOTE PRIOR TO (X) THE
EXPIRATION OF THE RESTRICTED PERIOD AND (Y) THE RECEIPT BY THE REGISTRAR
OF ANY CERTIFICATES REQUIRED PURSUANT TO RULE 903(B)(3)(II)(B) UNDER THE
SECURITIES ACT, EXCEPT IN THE CASE OF A TRANSFER PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OTHER THAN RULE
903 OR RULE 904.
(III) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO
UNRESTRICTED DEFINITIVE NOTES. A HOLDER OF A BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE MAY EXCHANGE SUCH BENEFICIAL INTEREST FOR AN
UNRESTRICTED DEFINITIVE NOTE OR MAY TRANSFER SUCH BENEFICIAL INTEREST TO A
PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF AN UNRESTRICTED
DEFINITIVE NOTE ONLY IF:
(A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE
EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT
AND THE HOLDER OF SUCH BENEFICIAL INTEREST, IN THE CASE OF AN
EXCHANGE, OR THE TRANSFEREE, IN THE CASE OF A TRANSFER, CERTIFIES IN
THE APPLICABLE LETTER OF TRANSMITTAL THAT IT IS NOT (1) A
BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE DISTRIBUTION OF THE
EXCHANGE NOTES OR (3) A PERSON WHO IS AN AFFILIATE (AS DEFINED IN
RULE 144) OF THE COMPANY;
(B) SUCH TRANSFER IS EFFECTED PURSUANT TO THE SHELF
REGISTRATION STATEMENT IN ACCORDANCE WITH THE REGISTRATION RIGHTS
AGREEMENT;
(C) SUCH TRANSFER IS EFFECTED BY A BROKER-DEALER PURSUANT
TO THE EXCHANGE OFFER REGISTRATION STATEMENT IN ACCORDANCE WITH THE
REGISTRATION RIGHTS AGREEMENT; OR
(D) THE REGISTRAR RECEIVES THE FOLLOWING:
(1) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL
INTEREST FOR A DEFINITIVE NOTE THAT DOES NOT BEAR THE PRIVATE
PLACEMENT LEGEND, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF
EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(B)
THEREOF; OR
(2) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE PROPOSES TO TRANSFER SUCH BENEFICIAL
INTEREST TO A PERSON WHO SHALL TAKE DELIVERY THEREOF IN THE
FORM OF A DEFINITIVE NOTE THAT DOES NOT BEAR THE
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<PAGE>
PRIVATE PLACEMENT LEGEND, A CERTIFICATE FROM SUCH HOLDER IN
THE FORM OF EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN
ITEM (4) THEREOF;
AND, IN EACH SUCH CASE SET FORTH IN THIS SUBPARAGRAPH (D),
IF THE REGISTRAR SO REQUESTS OR IF THE APPLICABLE PROCEDURES SO
REQUIRE, AN OPINION OF COUNSEL IN FORM REASONABLY ACCEPTABLE TO THE
REGISTRAR TO THE EFFECT THAT SUCH EXCHANGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND THAT THE RESTRICTIONS ON
TRANSFER CONTAINED HEREIN AND IN THE PRIVATE PLACEMENT LEGEND ARE NO
LONGER REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES
ACT.
(IV) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES TO
UNRESTRICTED DEFINITIVE NOTES. IF ANY HOLDER OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST
FOR A DEFINITIVE NOTE OR TO TRANSFER SUCH BENEFICIAL INTEREST TO A PERSON
WHO TAKES DELIVERY THEREOF IN THE FORM OF A DEFINITIVE NOTE, THEN, UPON
SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 2.06(B)(II) HEREOF,
THE TRUSTEE SHALL CAUSE THE AGGREGATE PRINCIPAL AMOUNT OF THE APPLICABLE
GLOBAL NOTE TO BE REDUCED ACCORDINGLY PURSUANT TO SECTION 2.06(H) HEREOF,
AND THE COMPANY SHALL EXECUTE AND THE TRUSTEE SHALL AUTHENTICATE AND
DELIVER TO THE PERSON DESIGNATED IN THE INSTRUCTIONS A DEFINITIVE NOTE IN
THE APPROPRIATE PRINCIPAL AMOUNT. ANY DEFINITIVE NOTE ISSUED IN EXCHANGE
FOR A BENEFICIAL INTEREST PURSUANT TO THIS SECTION 2.06(C)(IV) SHALL BE
REGISTERED IN SUCH NAME OR NAMES AND IN SUCH AUTHORIZED DENOMINATION OR
DENOMINATIONS AS THE HOLDER OF SUCH BENEFICIAL INTEREST SHALL INSTRUCT THE
REGISTRAR THROUGH INSTRUCTIONS FROM THE DEPOSITARY AND THE PARTICIPANT OR
INDIRECT PARTICIPANT. THE TRUSTEE SHALL DELIVER SUCH DEFINITIVE NOTES TO
THE PERSONS IN WHOSE NAMES SUCH NOTES ARE SO REGISTERED. ANY DEFINITIVE
NOTE ISSUED IN EXCHANGE FOR A BENEFICIAL INTEREST PURSUANT TO THIS SECTION
2.06(C)(IV) SHALL NOT BEAR THE PRIVATE PLACEMENT LEGEND.
(D) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR BENEFICIAL
INTERESTS.
(I) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES. IF ANY HOLDER OF A RESTRICTED DEFINITIVE NOTE
PROPOSES TO EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE OR TO TRANSFER SUCH RESTRICTED DEFINITIVE NOTES TO A PERSON
WHO TAKES DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE, THEN, UPON RECEIPT BY THE REGISTRAR OF THE
FOLLOWING DOCUMENTATION:
(A) IF THE HOLDER OF SUCH RESTRICTED DEFINITIVE NOTE
PROPOSES TO EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF
EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (2)(B)
THEREOF;
(B) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED TO A QIB IN ACCORDANCE WITH RULE 144A UNDER THE
SECURITIES ACT, A CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B
HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1) THEREOF;
(C) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, A
CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING
THE CERTIFICATIONS IN ITEM (2) THEREOF;
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<PAGE>
(D) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 UNDER
THE SECURITIES ACT, A CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT
B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (3)(A) THEREOF;
(E) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED TO AN INSTITUTIONAL ACCREDITED INVESTOR IN RELIANCE ON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OTHER THAN THOSE LISTED IN SUBPARAGRAPHS (B) THROUGH (D) ABOVE, A
CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING
THE CERTIFICATIONS, CERTIFICATES AND OPINION OF COUNSEL REQUIRED BY
ITEM (3) THEREOF, IF APPLICABLE;
(F) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, A CERTIFICATE
TO THE EFFECT SET FORTH IN EXHIBIT B HERETO, INCLUDING THE
CERTIFICATIONS IN ITEM (3)(B) THEREOF; OR
(G) IF SUCH RESTRICTED DEFINITIVE NOTE IS BEING
TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, A CERTIFICATE TO THE EFFECT SET FORTH IN EXHIBIT B
HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (3)(C) THEREOF,
THE TRUSTEE SHALL CANCEL THE RESTRICTED DEFINITIVE NOTE,
INCREASE OR CAUSE TO BE INCREASED THE AGGREGATE PRINCIPAL AMOUNT OF, IN
THE CASE OF CLAUSE (A) ABOVE, THE APPROPRIATE RESTRICTED GLOBAL NOTE, IN
THE CASE OF CLAUSE (B) ABOVE, THE 144A GLOBAL NOTE, IN THE CASE OF CLAUSE
(C) ABOVE, THE REGULATION S GLOBAL NOTE, AND IN ALL OTHER CASES, THE IAI
GLOBAL NOTE.
(II)RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL NOTES. A HOLDER OF A RESTRICTED DEFINITIVE NOTE MAY
EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE OR TRANSFER SUCH RESTRICTED DEFINITIVE NOTE TO A PERSON WHO TAKES
DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED
GLOBAL NOTE ONLY IF:
(A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE
EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT
AND THE HOLDER, IN THE CASE OF AN EXCHANGE, OR THE TRANSFEREE, IN THE
CASE OF A TRANSFER, CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL
THAT IT IS NOT (1) A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE
DISTRIBUTION OF THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN
AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY;
(B) SUCH TRANSFER IS EFFECTED PURSUANT TO THE SHELF
REGISTRATION STATEMENT IN ACCORDANCE WITH THE REGISTRATION RIGHTS
AGREEMENT;
(C) SUCH TRANSFER IS EFFECTED BY A BROKER-DEALER PURSUANT
TO THE EXCHANGE OFFER REGISTRATION STATEMENT IN ACCORDANCE WITH THE
REGISTRATION RIGHTS AGREEMENT; OR
(D) THE REGISTRAR RECEIVES THE FOLLOWING:
(1) IF THE HOLDER OF SUCH DEFINITIVE NOTES PROPOSES
TO EXCHANGE SUCH NOTES FOR A BENEFICIAL INTEREST IN THE
UNRESTRICTED GLOBAL NOTE, A
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<PAGE>
CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO,
INCLUDING THE CERTIFICATIONS IN ITEM (1)(C) THEREOF; OR
(2) IF THE HOLDER OF SUCH DEFINITIVE NOTES PROPOSES
TO TRANSFER SUCH NOTES TO A PERSON WHO SHALL TAKE DELIVERY
THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN THE
UNRESTRICTED GLOBAL NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE
FORM OF EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM
(4) THEREOF;
AND, IN EACH SUCH CASE SET FORTH IN THIS SUBPARAGRAPH (D),
IF THE REGISTRAR SO REQUESTS OR IF THE APPLICABLE PROCEDURES SO
REQUIRE, AN OPINION OF COUNSEL IN FORM REASONABLY ACCEPTABLE TO THE
REGISTRAR TO THE EFFECT THAT SUCH EXCHANGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND THAT THE RESTRICTIONS ON
TRANSFER CONTAINED HEREIN AND IN THE PRIVATE PLACEMENT LEGEND ARE NO
LONGER REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES
ACT.
UPON SATISFACTION OF THE CONDITIONS OF ANY OF THE SUBPARAGRAPHS
IN THIS SECTION 2.06(D)(II), THE TRUSTEE SHALL CANCEL THE DEFINITIVE NOTES
AND INCREASE OR CAUSE TO BE INCREASED THE AGGREGATE PRINCIPAL AMOUNT OF
THE UNRESTRICTED GLOBAL NOTE.
(III) UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL NOTES. A HOLDER OF AN UNRESTRICTED DEFINITIVE NOTE MAY
EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE OR TRANSFER SUCH DEFINITIVE NOTES TO A PERSON WHO TAKES DELIVERY
THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE AT ANY TIME. UPON RECEIPT OF A REQUEST FOR SUCH AN EXCHANGE OR
TRANSFER, THE TRUSTEE SHALL CANCEL THE APPLICABLE UNRESTRICTED DEFINITIVE
NOTE AND INCREASE OR CAUSE TO BE INCREASED THE AGGREGATE PRINCIPAL AMOUNT
OF ONE OF THE UNRESTRICTED GLOBAL NOTES.
IF ANY SUCH EXCHANGE OR TRANSFER FROM A DEFINITIVE NOTE TO A
BENEFICIAL INTEREST IS EFFECTED PURSUANT TO SUBPARAGRAPHS (II)(B), (II)(D)
OR (III) ABOVE AT A TIME WHEN AN UNRESTRICTED GLOBAL NOTE HAS NOT YET BEEN
ISSUED, THE COMPANY SHALL ISSUE AND, UPON RECEIPT OF AN AUTHENTICATION
ORDER IN ACCORDANCE WITH SECTION 2.02 HEREOF, THE TRUSTEE SHALL
AUTHENTICATE ONE OR MORE UNRESTRICTED GLOBAL NOTES IN AN AGGREGATE
PRINCIPAL AMOUNT EQUAL TO THE PRINCIPAL AMOUNT OF DEFINITIVE NOTES SO
TRANSFERRED.
(E) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES.
UPON REQUEST BY A HOLDER OF DEFINITIVE NOTES AND SUCH HOLDER'S COMPLIANCE WITH
THE PROVISIONS OF THIS SECTION 2.06(E), THE REGISTRAR SHALL REGISTER THE
TRANSFER OR EXCHANGE OF DEFINITIVE NOTES. PRIOR TO SUCH REGISTRATION OF TRANSFER
OR EXCHANGE, THE REQUESTING HOLDER SHALL PRESENT OR SURRENDER TO THE REGISTRAR
THE DEFINITIVE NOTES DULY ENDORSED OR ACCOMPANIED BY A WRITTEN INSTRUCTION OF
TRANSFER IN FORM SATISFACTORY TO THE REGISTRAR DULY EXECUTED BY SUCH HOLDER OR
BY ITS ATTORNEY, DULY AUTHORIZED IN WRITING. IN ADDITION, THE REQUESTING HOLDER
SHALL PROVIDE ANY ADDITIONAL CERTIFICATIONS, DOCUMENTS AND INFORMATION, AS
APPLICABLE, REQUIRED PURSUANT TO THE FOLLOWING PROVISIONS OF THIS SECTION
2.06(E).
(I) RESTRICTED DEFINITIVE NOTES TO RESTRICTED DEFINITIVE NOTES.
ANY RESTRICTED DEFINITIVE NOTE MAY BE TRANSFERRED TO AND REGISTERED IN THE
NAME OF PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF A RESTRICTED
DEFINITIVE NOTE IF THE REGISTRAR RECEIVES THE FOLLOWING:
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<PAGE>
(A) IF THE TRANSFER WILL BE MADE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, THEN THE TRANSFEROR MUST DELIVER A
CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE
CERTIFICATIONS IN ITEM (1) THEREOF;
(B) IF THE TRANSFER WILL BE MADE PURSUANT TO RULE 903 OR
RULE 904, THEN THE TRANSFEROR MUST DELIVER A CERTIFICATE IN THE FORM
OF EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (2)
THEREOF; AND
(C) IF THE TRANSFER WILL BE MADE PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
THEN THE TRANSFEROR MUST DELIVER A CERTIFICATE IN THE FORM OF EXHIBIT
B HERETO, INCLUDING THE CERTIFICATIONS, CERTIFICATES AND OPINION OF
COUNSEL REQUIRED BY ITEM (3) THEREOF, IF APPLICABLE.
(II) RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE
NOTES. ANY RESTRICTED DEFINITIVE NOTE MAY BE EXCHANGED BY THE HOLDER
THEREOF FOR AN UNRESTRICTED DEFINITIVE NOTE OR TRANSFERRED TO A PERSON OR
PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF AN UNRESTRICTED
DEFINITIVE NOTE IF:
(A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE
EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT
AND THE HOLDER, IN THE CASE OF AN EXCHANGE, OR THE TRANSFEREE, IN THE
CASE OF A TRANSFER, CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL
THAT IT IS NOT (1) A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE
DISTRIBUTION OF THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN
AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY;
(B) ANY SUCH TRANSFER IS EFFECTED PURSUANT TO THE SHELF
REGISTRATION STATEMENT IN ACCORDANCE WITH THE REGISTRATION RIGHTS
AGREEMENT;
(C) ANY SUCH TRANSFER IS EFFECTED BY A BROKER-DEALER
PURSUANT TO THE EXCHANGE OFFER REGISTRATION STATEMENT IN ACCORDANCE
WITH THE REGISTRATION RIGHTS AGREEMENT; OR
(D) THE REGISTRAR RECEIVES THE FOLLOWING:
(1) IF THE HOLDER OF SUCH RESTRICTED DEFINITIVE
NOTES PROPOSES TO EXCHANGE SUCH NOTES FOR AN UNRESTRICTED
DEFINITIVE NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF
EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(D)
THEREOF; OR
(2) IF THE HOLDER OF SUCH RESTRICTED DEFINITIVE
NOTES PROPOSES TO TRANSFER SUCH NOTES TO A PERSON WHO SHALL
TAKE DELIVERY THEREOF IN THE FORM OF AN UNRESTRICTED DEFINITIVE
NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT B
HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (4) THEREOF;
AND, IN EACH SUCH CASE SET FORTH IN THIS SUBPARAGRAPH (D),
IF THE REGISTRAR SO REQUESTS, AN OPINION OF COUNSEL IN FORM
REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH EXCHANGE
OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND THAT THE
RESTRICTIONS ON TRANSFER CONTAINED HEREIN AND IN THE PRIVATE
PLACEMENT LEGEND ARE NO LONGER REQUIRED IN ORDER TO MAINTAIN
COMPLIANCE WITH THE SECURITIES ACT.
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(III) UNRESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE
NOTES. A HOLDER OF UNRESTRICTED DEFINITIVE NOTES MAY TRANSFER SUCH NOTES
TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF AN UNRESTRICTED
DEFINITIVE NOTE. UPON RECEIPT OF A REQUEST TO REGISTER SUCH A TRANSFER,
THE REGISTRAR SHALL REGISTER THE UNRESTRICTED DEFINITIVE NOTES PURSUANT TO
THE INSTRUCTIONS FROM THE HOLDER THEREOF.
(F) EXCHANGE OFFER. UPON THE OCCURRENCE OF THE EXCHANGE OFFER IN
ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT, THE COMPANY SHALL ISSUE AND,
UPON RECEIPT OF AN AUTHENTICATION ORDER IN ACCORDANCE WITH SECTION 2.02, THE
TRUSTEE SHALL AUTHENTICATE (I) ONE OR MORE UNRESTRICTED GLOBAL NOTES IN AN
AGGREGATE PRINCIPAL AMOUNT EQUAL TO THE PRINCIPAL AMOUNT OF THE BENEFICIAL
INTERESTS IN THE RESTRICTED GLOBAL NOTES TENDERED FOR ACCEPTANCE BY PERSONS THAT
CERTIFY IN THE APPLICABLE LETTERS OF TRANSMITTAL THAT (X) THEY ARE NOT
BROKER-DEALERS, (Y) THEY ARE NOT PARTICIPATING IN A DISTRIBUTION OF THE EXCHANGE
NOTES AND (Z) THEY ARE NOT AFFILIATES (AS DEFINED IN RULE 144) OF THE COMPANY,
AND ACCEPTED FOR EXCHANGE IN THE EXCHANGE OFFER AND (II) DEFINITIVE NOTES IN AN
AGGREGATE PRINCIPAL AMOUNT EQUAL TO THE PRINCIPAL AMOUNT OF THE RESTRICTED
DEFINITIVE NOTES ACCEPTED FOR EXCHANGE IN THE EXCHANGE OFFER. CONCURRENTLY WITH
THE ISSUANCE OF SUCH NOTES, THE TRUSTEE SHALL CAUSE THE AGGREGATE PRINCIPAL
AMOUNT OF THE APPLICABLE RESTRICTED GLOBAL NOTES TO BE REDUCED ACCORDINGLY, AND
THE COMPANY SHALL EXECUTE AND THE TRUSTEE SHALL AUTHENTICATE AND DELIVER TO THE
PERSONS DESIGNATED BY THE HOLDERS OF DEFINITIVE NOTES SO ACCEPTED DEFINITIVE
NOTES IN THE APPROPRIATE PRINCIPAL AMOUNT.
(G) LEGENDS. THE FOLLOWING LEGENDS SHALL APPEAR ON THE FACE OF ALL
GLOBAL NOTES AND DEFINITIVE NOTES ISSUED UNDER THIS INDENTURE UNLESS
SPECIFICALLY STATED OTHERWISE IN THE APPLICABLE PROVISIONS OF THIS INDENTURE.
(I) PRIVATE PLACEMENT LEGEND.
(A) EXCEPT AS PERMITTED BY SUBPARAGRAPH (B) BELOW, EACH
GLOBAL NOTE AND EACH DEFINITIVE NOTE (AND ALL NOTES ISSUED IN
EXCHANGE THEREFOR OR SUBSTITUTION THEREOF) SHALL BEAR THE LEGEND IN
SUBSTANTIALLY THE FOLLOWING FORM:
"THE NOTE (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE NOTE EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) (A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
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FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE NOTES (THE FORM OF SUCH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) OR (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED THAT IN THE CASE OF A TRANSFER
PURSUANT TO CLAUSE (E) SUCH TRANSFER IS EFFECTED BY THE DELIVERY TO THE
TRANSFEREE OF DEFINITIVE SECURITIES REGISTERED IN ITS NAME (OR ITS NOMINEES
NAME) IN THE BOOKS MAINTAINED BY THE REGISTRAR, AND IS SUBJECT TO THE RECEIPT BY
THE REGISTRAR (AND THE COMPANY, IF IT SO REQUESTS) OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (II) TO THE COMPANY OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) NOTWITHSTANDING THE FOREGOING, ANY GLOBAL NOTE OR
DEFINITIVE NOTE ISSUED PURSUANT TO SUBPARAGRAPHS (B)(IV), (C)(III),
(C)(IV), (D)(II), (D)(III), (E)(II), (E)(III) OR (F) TO THIS SECTION
2.06 (AND ALL NOTES ISSUED IN EXCHANGE THEREFOR OR SUBSTITUTION
THEREOF) SHALL NOT BEAR THE PRIVATE PLACEMENT LEGEND.
(II) GLOBAL NOTE LEGEND. EACH GLOBAL NOTE SHALL BEAR A LEGEND
IN SUBSTANTIALLY THE FOLLOWING FORM:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(A) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(III) REGULATION S TEMPORARY GLOBAL NOTE LEGEND. THE REGULATION
S TEMPORARY GLOBAL NOTE SHALL BEAR A LEGEND IN SUBSTANTIALLY THE FOLLOWING
FORM:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(I) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. AT SUCH TIME AS
ALL BENEFICIAL INTERESTS IN A PARTICULAR GLOBAL NOTE HAVE BEEN EXCHANGED FOR
DEFINITIVE NOTES OR A PARTICULAR GLOBAL NOTE HAS BEEN REDEEMED, REPURCHASED OR
CANCELED IN WHOLE AND NOT IN PART, EACH SUCH GLOBAL NOTE SHALL BE RETURNED TO OR
RETAINED AND CANCELED BY THE TRUSTEE IN ACCORDANCE WITH SECTION 2.11 HEREOF. AT
ANY TIME PRIOR TO SUCH CANCELLATION, IF
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ANY BENEFICIAL INTEREST IN A GLOBAL NOTE IS EXCHANGED FOR OR TRANSFERRED TO A
PERSON WHO WILL TAKE DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN
ANOTHER GLOBAL NOTE OR FOR DEFINITIVE NOTES, THE PRINCIPAL AMOUNT OF NOTES
REPRESENTED BY SUCH GLOBAL NOTE SHALL BE REDUCED ACCORDINGLY AND AN ENDORSEMENT
SHALL BE MADE ON SUCH GLOBAL NOTE BY THE TRUSTEE OR BY THE DEPOSITARY AT THE
DIRECTION OF THE TRUSTEE TO REFLECT SUCH REDUCTION; AND IF THE BENEFICIAL
INTEREST IS BEING EXCHANGED FOR OR TRANSFERRED TO A PERSON WHO WILL TAKE
DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN ANOTHER GLOBAL NOTE,
SUCH OTHER GLOBAL NOTE SHALL BE INCREASED ACCORDINGLY AND AN ENDORSEMENT SHALL
BE MADE ON SUCH GLOBAL NOTE BY THE TRUSTEE OR BY THE DEPOSITARY AT THE DIRECTION
OF THE TRUSTEE TO REFLECT SUCH INCREASE.
(J) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(I) TO PERMIT REGISTRATIONS OF TRANSFERS AND EXCHANGES, THE
COMPANY SHALL EXECUTE AND THE TRUSTEE SHALL AUTHENTICATE GLOBAL NOTES AND
DEFINITIVE NOTES UPON THE COMPANY'S ORDER OR AT THE REGISTRAR'S REQUEST.
(II) NO SERVICE CHARGE SHALL BE MADE TO A HOLDER OF A
BENEFICIAL INTEREST IN A GLOBAL NOTE OR TO A HOLDER OF A DEFINITIVE NOTE
FOR ANY REGISTRATION OF TRANSFER OR EXCHANGE, BUT THE COMPANY MAY REQUIRE
PAYMENT OF A SUM SUFFICIENT TO COVER ANY TRANSFER TAX OR SIMILAR
GOVERNMENTAL CHARGE PAYABLE IN CONNECTION THEREWITH (OTHER THAN ANY SUCH
TRANSFER TAXES OR SIMILAR GOVERNMENTAL CHARGE PAYABLE UPON EXCHANGE OR
TRANSFER PURSUANT TO SECTIONS 2.10, 3.06, 3.09, 4.10, 4.15 AND 9.05
HEREOF).
(III) THE REGISTRAR SHALL NOT BE REQUIRED TO REGISTER THE
TRANSFER OF OR EXCHANGE ANY NOTE SELECTED FOR REDEMPTION IN WHOLE OR IN
PART, EXCEPT THE UNREDEEMED PORTION OF ANY NOTE BEING REDEEMED IN PART.
(IV) ALL GLOBAL NOTES AND DEFINITIVE NOTES ISSUED UPON ANY
REGISTRATION OF TRANSFER OR EXCHANGE OF GLOBAL NOTES OR DEFINITIVE NOTES
SHALL BE THE VALID OBLIGATIONS OF THE COMPANY, EVIDENCING THE SAME DEBT,
AND ENTITLED TO THE SAME BENEFITS UNDER THIS INDENTURE, AS THE GLOBAL
NOTES OR DEFINITIVE NOTES SURRENDERED UPON SUCH REGISTRATION OF TRANSFER
OR EXCHANGE.
(V) THE COMPANY SHALL NOT BE REQUIRED (A) TO ISSUE, TO REGISTER
THE TRANSFER OF OR TO EXCHANGE ANY NOTES DURING A PERIOD BEGINNING AT THE
OPENING OF BUSINESS 15 DAYS BEFORE THE DAY OF ANY SELECTION OF NOTES FOR
REDEMPTION UNDER SECTION 3.02 HEREOF AND ENDING AT THE CLOSE OF BUSINESS
ON THE DAY OF SELECTION, (B) TO REGISTER THE TRANSFER OF OR TO EXCHANGE
ANY NOTE SO SELECTED FOR REDEMPTION IN WHOLE OR IN PART, EXCEPT THE
UNREDEEMED PORTION OF ANY NOTE BEING REDEEMED IN PART OR (C) TO REGISTER
THE TRANSFER OF OR TO EXCHANGE A NOTE BETWEEN A RECORD DATE AND THE NEXT
SUCCEEDING INTEREST PAYMENT DATE.
(VI) PRIOR TO DUE PRESENTMENT FOR THE REGISTRATION OF A
TRANSFER OF ANY NOTE, THE TRUSTEE, ANY AGENT AND THE COMPANY MAY DEEM AND
TREAT THE PERSON IN WHOSE NAME ANY NOTE IS REGISTERED AS THE ABSOLUTE
OWNER OF SUCH NOTE FOR THE PURPOSE OF RECEIVING PAYMENT OF PRINCIPAL OF
AND INTEREST ON SUCH NOTES AND FOR ALL OTHER PURPOSES, AND NONE OF THE
TRUSTEE, ANY AGENT OR THE COMPANY SHALL BE AFFECTED BY NOTICE TO THE
CONTRARY.
(VII) THE TRUSTEE SHALL AUTHENTICATE GLOBAL NOTES AND
DEFINITIVE NOTES IN
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ACCORDANCE WITH THE PROVISIONS OF SECTION 2.02 HEREOF.
(VIII) ALL CERTIFICATIONS, CERTIFICATES AND OPINIONS OF COUNSEL
REQUIRED TO BE SUBMITTED TO THE REGISTRAR PURSUANT TO THIS SECTION 2.06 TO
EFFECT A REGISTRATION OF TRANSFER OR EXCHANGE MAY BE SUBMITTED BY
FACSIMILE.
SECTION 2.07. REPLACEMENT NOTES.
IF ANY MUTILATED NOTE IS SURRENDERED TO THE TRUSTEE OR THE COMPANY
AND THE TRUSTEE RECEIVES EVIDENCE TO ITS SATISFACTION OF THE DESTRUCTION, LOSS
OR THEFT OF ANY NOTE, THE COMPANY SHALL ISSUE AND THE TRUSTEE, UPON RECEIPT OF
AN AUTHENTICATION ORDER, SHALL AUTHENTICATE A REPLACEMENT NOTE IF THE TRUSTEE'S
REQUIREMENTS ARE MET. IF REQUIRED BY THE TRUSTEE OR THE COMPANY, AN INDEMNITY
BOND MUST BE SUPPLIED BY THE HOLDER THAT IS SUFFICIENT IN THE JUDGMENT OF THE
TRUSTEE AND THE COMPANY TO PROTECT THE COMPANY, THE TRUSTEE, ANY AGENT AND ANY
AUTHENTICATING AGENT FROM ANY LOSS THAT ANY OF THEM MAY SUFFER IF A NOTE IS
REPLACED. THE COMPANY MAY CHARGE FOR ITS EXPENSES IN REPLACING A NOTE.
EVERY REPLACEMENT NOTE IS AN ADDITIONAL OBLIGATION OF THE COMPANY AND
SHALL BE ENTITLED TO ALL OF THE BENEFITS OF THIS INDENTURE EQUALLY AND
PROPORTIONATELY WITH ALL OTHER NOTES DULY ISSUED HEREUNDER.
SECTION 2.08. OUTSTANDING NOTES.
THE NOTES OUTSTANDING AT ANY TIME ARE ALL THE NOTES AUTHENTICATED BY
THE TRUSTEE EXCEPT FOR THOSE CANCELED BY IT, THOSE DELIVERED TO IT FOR
CANCELLATION, THOSE REDUCTIONS IN THE INTEREST IN A GLOBAL NOTE EFFECTED BY THE
TRUSTEE IN ACCORDANCE WITH THE PROVISIONS HEREOF, AND THOSE DESCRIBED IN THIS
SECTION AS NOT OUTSTANDING. EXCEPT AS SET FORTH IN SECTION 2.09 HEREOF, A NOTE
DOES NOT CEASE TO BE OUTSTANDING BECAUSE THE COMPANY OR AN AFFILIATE OF THE
COMPANY HOLDS THE NOTE; HOWEVER, NOTES HELD BY THE COMPANY OR A SUBSIDIARY OF
THE COMPANY SHALL NOT BE DEEMED TO BE OUTSTANDING FOR PURPOSES OF SECTION
3.07(B) HEREOF.
IF A NOTE IS REPLACED PURSUANT TO SECTION 2.07 HEREOF, IT CEASES TO
BE OUTSTANDING UNLESS THE TRUSTEE RECEIVES PROOF SATISFACTORY TO IT THAT THE
REPLACED NOTE IS HELD BY A BONA FIDE PURCHASER.
IF THE PRINCIPAL AMOUNT OF ANY NOTE IS CONSIDERED PAID UNDER SECTION
4.01 HEREOF, IT CEASES TO BE OUTSTANDING AND INTEREST ON IT CEASES TO ACCRUE.
IF THE PAYING AGENT (OTHER THAN THE COMPANY, A SUBSIDIARY OR AN
AFFILIATE OF ANY THEREOF) HOLDS, ON A REDEMPTION DATE OR MATURITY DATE, MONEY
SUFFICIENT TO PAY NOTES PAYABLE ON THAT DATE, THEN ON AND AFTER THAT DATE SUCH
NOTES SHALL BE DEEMED TO BE NO LONGER OUTSTANDING AND SHALL CEASE TO ACCRUE
INTEREST.
SECTION 2.09. TREASURY NOTES.
IN DETERMINING WHETHER THE HOLDERS OF THE REQUIRED PRINCIPAL AMOUNT
OF NOTES HAVE CONCURRED IN ANY DIRECTION, WAIVER OR CONSENT, NOTES OWNED BY THE
COMPANY, OR BY ANY PERSON DIRECTLY OR INDIRECTLY CONTROLLING OR CONTROLLED BY OR
UNDER DIRECT OR INDIRECT COMMON CONTROL WITH THE COMPANY, SHALL BE CONSIDERED AS
THOUGH NOT OUTSTANDING, EXCEPT THAT FOR THE PURPOSES OF DETERMINING WHETHER THE
TRUSTEE SHALL BE
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PROTECTED IN RELYING ON ANY SUCH DIRECTION, WAIVER OR CONSENT,
ONLY NOTES THAT THE TRUSTEE KNOWS ARE SO OWNED SHALL BE SO DISREGARDED.
SECTION 2.10. TEMPORARY NOTES.
UNTIL CERTIFICATES REPRESENTING NOTES ARE READY FOR DELIVERY, THE
COMPANY MAY PREPARE AND THE TRUSTEE, UPON RECEIPT OF AN AUTHENTICATION ORDER,
SHALL AUTHENTICATE TEMPORARY NOTES. TEMPORARY NOTES SHALL BE SUBSTANTIALLY IN
THE FORM OF CERTIFICATED NOTES BUT MAY HAVE VARIATIONS THAT THE COMPANY
CONSIDERS APPROPRIATE FOR TEMPORARY NOTES AND AS SHALL BE REASONABLY ACCEPTABLE
TO THE TRUSTEE. WITHOUT UNREASONABLE DELAY, THE COMPANY SHALL PREPARE AND THE
TRUSTEE SHALL AUTHENTICATE DEFINITIVE NOTES IN EXCHANGE FOR TEMPORARY NOTES.
HOLDERS OF TEMPORARY NOTES SHALL BE ENTITLED TO ALL OF THE BENEFITS
OF THIS INDENTURE.
SECTION 2.11. CANCELLATION.
THE COMPANY AT ANY TIME MAY DELIVER NOTES TO THE TRUSTEE FOR
CANCELLATION. THE REGISTRAR AND PAYING AGENT SHALL FORWARD TO THE TRUSTEE ANY
NOTES SURRENDERED TO THEM FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT. THE
TRUSTEE AND NO ONE ELSE SHALL CANCEL ALL NOTES SURRENDERED FOR REGISTRATION OF
TRANSFER, EXCHANGE, PAYMENT, REPLACEMENT OR CANCELLATION AND SHALL DESTROY
CANCELED NOTES (SUBJECT TO THE RECORD RETENTION REQUIREMENT OF THE EXCHANGE
ACT). CERTIFICATION OF THE DESTRUCTION OF ALL CANCELED NOTES SHALL BE DELIVERED
TO THE COMPANY. THE COMPANY MAY NOT ISSUE NEW NOTES TO REPLACE NOTES THAT IT HAS
PAID OR THAT HAVE BEEN DELIVERED TO THE TRUSTEE FOR CANCELLATION.
SECTION 2.12. DEFAULTED INTEREST.
IF THE COMPANY DEFAULTS IN A PAYMENT OF INTEREST ON THE NOTES, IT
SHALL PAY THE DEFAULTED INTEREST IN ANY LAWFUL MANNER PLUS, TO THE EXTENT
LAWFUL, INTEREST PAYABLE ON THE DEFAULTED INTEREST, TO THE PERSONS WHO ARE
HOLDERS ON A SUBSEQUENT SPECIAL RECORD DATE, IN EACH CASE AT THE RATE PROVIDED
IN THE NOTES AND IN SECTION 4.01 HEREOF. THE COMPANY SHALL NOTIFY THE TRUSTEE IN
WRITING OF THE AMOUNT OF DEFAULTED INTEREST PROPOSED TO BE PAID ON EACH NOTE AND
THE DATE OF THE PROPOSED PAYMENT. THE COMPANY SHALL FIX OR CAUSE TO BE FIXED
EACH SUCH SPECIAL RECORD DATE AND PAYMENT DATE, PROVIDED THAT NO SUCH SPECIAL
RECORD DATE SHALL BE LESS THAN 10 DAYS PRIOR TO THE RELATED PAYMENT DATE FOR
SUCH DEFAULTED INTEREST. AT LEAST 15 DAYS BEFORE THE SPECIAL RECORD DATE, THE
COMPANY (OR, UPON THE WRITTEN REQUEST OF THE COMPANY, THE TRUSTEE IN THE NAME
AND AT THE EXPENSE OF THE COMPANY) SHALL MAIL OR CAUSE TO BE MAILED TO HOLDERS A
NOTICE THAT STATES THE SPECIAL RECORD DATE, THE RELATED PAYMENT DATE AND THE
AMOUNT OF SUCH INTEREST TO BE PAID.
SECTION 2.13. CUSIP NUMBERS.
PURSUANT TO A RECOMMENDATION PROMULGATED BY THE COMMITTEE ON UNIFORM
SECURITY IDENTIFICATION PROCEDURES, THE COMPANY HAS CAUSED CUSIP NUMBERS TO BE
PRINTED ON THE NOTES AND THE TRUSTEE MAY USE CUSIP NUMBERS IN NOTICES OF
REDEMPTION AS A CONVENIENCE TO HOLDERS. NO REPRESENTATION IS MADE AS TO THE
ACCURACY OF SUCH NUMBERS EITHER AS PRINTED ON THE NOTES OR AS CONTAINED IN ANY
NOTICE OF REDEMPTION AND RELIANCE MAY BE PLACED ONLY ON THE OTHER IDENTIFICATION
NUMBERS PLACED THEREON.
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ARTICLE 3 REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
IF THE COMPANY ELECTS TO REDEEM NOTES PURSUANT TO THE OPTIONAL
REDEMPTION PROVISIONS OF SECTION 3.07 HEREOF, IT SHALL FURNISH TO THE TRUSTEE,
AT LEAST 30 DAYS BUT NOT MORE THAN 60 DAYS BEFORE A REDEMPTION DATE, AN
OFFICERS' CERTIFICATE SETTING FORTH (I) THE CLAUSE OF THIS INDENTURE PURSUANT TO
WHICH THE REDEMPTION SHALL OCCUR, (II) THE REDEMPTION DATE, (III) THE PRINCIPAL
AMOUNT OF NOTES TO BE REDEEMED AND (IV) THE REDEMPTION PRICE.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
IF LESS THAN ALL OF THE NOTES ARE TO BE REDEEMED OR PURCHASED IN AN
OFFER TO PURCHASE AT ANY TIME, THE TRUSTEE SHALL SELECT THE NOTES TO BE REDEEMED
OR PURCHASED AMONG THE HOLDERS OF THE NOTES IN COMPLIANCE WITH THE REQUIREMENTS
OF THE PRINCIPAL NATIONAL SECURITIES EXCHANGE, IF ANY, ON WHICH THE NOTES ARE
LISTED OR, IF THE NOTES ARE NOT SO LISTED, ON A PRO RATA BASIS, BY LOT OR IN
ACCORDANCE WITH ANY OTHER METHOD THE TRUSTEE CONSIDERS FAIR AND APPROPRIATE. IN
THE EVENT OF PARTIAL REDEMPTION BY LOT, THE PARTICULAR NOTES TO BE REDEEMED
SHALL BE SELECTED, UNLESS OTHERWISE PROVIDED HEREIN, NOT LESS THAN 30 NOR MORE
THAN 60 DAYS PRIOR TO THE REDEMPTION DATE BY THE TRUSTEE FROM THE OUTSTANDING
NOTES NOT PREVIOUSLY CALLED FOR REDEMPTION.
THE TRUSTEE SHALL PROMPTLY NOTIFY THE COMPANY IN WRITING OF THE NOTES
SELECTED FOR REDEMPTION AND, IN THE CASE OF ANY NOTE SELECTED FOR PARTIAL
REDEMPTION, THE PRINCIPAL AMOUNT THEREOF TO BE REDEEMED. NOTES AND PORTIONS OF
NOTES SELECTED SHALL BE IN AMOUNTS OF $1,000 OR WHOLE MULTIPLES OF $1,000;
EXCEPT THAT IF ALL OF THE NOTES OF A HOLDER ARE TO BE REDEEMED, THE ENTIRE
OUTSTANDING AMOUNT OF NOTES HELD BY SUCH HOLDER, EVEN IF NOT A MULTIPLE OF
$1,000, SHALL BE REDEEMED. EXCEPT AS PROVIDED IN THE PRECEDING SENTENCE,
PROVISIONS OF THIS INDENTURE THAT APPLY TO NOTES CALLED FOR REDEMPTION ALSO
APPLY TO PORTIONS OF NOTES CALLED FOR REDEMPTION.
SECTION 3.03. NOTICE OF REDEMPTION.
SUBJECT TO THE PROVISIONS OF SECTION 3.09 HEREOF, AT LEAST 30 DAYS
BUT NOT MORE THAN 60 DAYS BEFORE A REDEMPTION DATE, THE COMPANY SHALL MAIL OR
CAUSE TO BE MAILED, BY FIRST CLASS MAIL, A NOTICE OF REDEMPTION TO EACH HOLDER
WHOSE NOTES ARE TO BE REDEEMED AT ITS REGISTERED ADDRESS.
THE NOTICE SHALL IDENTIFY THE NOTES TO BE REDEEMED AND SHALL STATE:
(A) THE REDEMPTION DATE;
(B) THE REDEMPTION PRICE;
(C) IF ANY NOTE IS BEING REDEEMED IN PART, THE PORTION OF THE
PRINCIPAL AMOUNT OF SUCH NOTE TO BE REDEEMED AND THAT, AFTER THE REDEMPTION DATE
UPON SURRENDER OF SUCH NOTE, A NEW NOTE OR NOTES IN PRINCIPAL AMOUNT EQUAL TO
THE UNREDEEMED PORTION SHALL BE
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ISSUED UPON CANCELLATION OF THE ORIGINAL NOTE;
(D) THE NAME AND ADDRESS OF THE PAYING AGENT;
(E) THAT NOTES CALLED FOR REDEMPTION MUST BE SURRENDERED TO THE
PAYING AGENT TO COLLECT THE REDEMPTION PRICE;
(F) THAT, UNLESS THE COMPANY DEFAULTS IN MAKING SUCH REDEMPTION
PAYMENT, INTEREST ON NOTES CALLED FOR REDEMPTION CEASES TO ACCRUE ON AND AFTER
THE REDEMPTION DATE;
(G) THE PARAGRAPH OF THE NOTES AND/OR SECTION OF THIS INDENTURE
PURSUANT TO WHICH THE NOTES CALLED FOR REDEMPTION ARE BEING REDEEMED; AND
(H) THAT NO REPRESENTATION IS MADE AS TO THE CORRECTNESS OR ACCURACY
OF THE CUSIP NUMBER, IF ANY, LISTED IN SUCH NOTICE OR PRINTED ON THE NOTES.
AT THE COMPANY'S REQUEST, THE TRUSTEE SHALL GIVE THE NOTICE OF
REDEMPTION IN THE COMPANY'S NAME AND AT ITS EXPENSE; PROVIDED, HOWEVER, THAT THE
COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE, AT LEAST 45 DAYS PRIOR TO THE
REDEMPTION DATE, AN OFFICERS' CERTIFICATE REQUESTING THAT THE TRUSTEE GIVE SUCH
NOTICE AND SETTING FORTH THE INFORMATION TO BE STATED IN SUCH NOTICE AS PROVIDED
IN THE PRECEDING PARAGRAPH.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
ONCE NOTICE OF REDEMPTION IS MAILED IN ACCORDANCE WITH SECTION 3.03
HEREOF, NOTES CALLED FOR REDEMPTION BECOME IRREVOCABLY DUE AND PAYABLE ON THE
REDEMPTION DATE AT THE REDEMPTION PRICE. A NOTICE OF REDEMPTION MAY NOT BE
CONDITIONAL.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
ONE BUSINESS DAY PRIOR TO THE REDEMPTION DATE, THE COMPANY SHALL
DEPOSIT WITH THE TRUSTEE OR WITH THE PAYING AGENT MONEY SUFFICIENT TO PAY THE
REDEMPTION PRICE OF AND ACCRUED INTEREST ON ALL NOTES TO BE REDEEMED ON THAT
DATE. THE TRUSTEE OR THE PAYING AGENT SHALL PROMPTLY RETURN TO THE COMPANY ANY
MONEY DEPOSITED WITH THE TRUSTEE OR THE PAYING AGENT BY THE COMPANY IN EXCESS OF
THE AMOUNTS NECESSARY TO PAY THE REDEMPTION PRICE OF, AND ACCRUED INTEREST ON,
ALL NOTES TO BE REDEEMED.
IF THE COMPANY COMPLIES WITH THE PROVISIONS OF THE PRECEDING
PARAGRAPH, ON AND AFTER THE REDEMPTION DATE, INTEREST SHALL CEASE TO ACCRUE ON
THE NOTES OR THE PORTIONS OF NOTES CALLED FOR REDEMPTION. IF A NOTE IS REDEEMED
ON OR AFTER AN INTEREST RECORD DATE BUT ON OR PRIOR TO THE RELATED INTEREST
PAYMENT DATE, THEN ANY ACCRUED AND UNPAID INTEREST SHALL BE PAID TO THE PERSON
IN WHOSE NAME SUCH NOTE WAS REGISTERED AT THE CLOSE OF BUSINESS ON SUCH RECORD
DATE. IF ANY NOTE CALLED FOR REDEMPTION SHALL NOT BE SO PAID UPON SURRENDER FOR
REDEMPTION BECAUSE OF THE FAILURE OF THE COMPANY TO COMPLY WITH THE PRECEDING
PARAGRAPH, INTEREST SHALL BE PAID ON THE UNPAID PRINCIPAL, FROM THE REDEMPTION
DATE UNTIL SUCH PRINCIPAL IS PAID, AND TO THE EXTENT LAWFUL ON ANY INTEREST NOT
PAID ON SUCH UNPAID PRINCIPAL, IN EACH CASE AT THE RATE PROVIDED IN THE NOTES
AND IN SECTION 4.01 HEREOF.
SECTION 3.06. NOTES REDEEMED IN PART.
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UPON SURRENDER OF A NOTE THAT IS REDEEMED IN PART, THE COMPANY SHALL
ISSUE AND, UPON THE COMPANY'S WRITTEN REQUEST, THE TRUSTEE SHALL AUTHENTICATE
FOR THE HOLDER AT THE EXPENSE OF THE COMPANY A NEW NOTE EQUAL IN PRINCIPAL
AMOUNT TO THE UNREDEEMED PORTION OF THE NOTE SURRENDERED.
SECTION 3.07. OPTIONAL REDEMPTION.
(A) EXCEPT AS SET FORTH IN CLAUSE (B) OF THIS SECTION 3.07, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE NOTES PURSUANT TO THIS SECTION
3.07 PRIOR TO JUNE 1, 2004. THEREAFTER, THE COMPANY SHALL HAVE THE OPTION TO
REDEEM THE NOTES UPON NOT LESS THAN 30 NOR MORE THAN 60 DAYS' NOTICE, IN WHOLE
OR IN PART, AT THE REDEMPTION PRICES (EXPRESSED AS PERCENTAGES OF PRINCIPAL
AMOUNT) SET FORTH BELOW PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES,
IF ANY, THEREON, TO THE APPLICABLE REDEMPTION DATE, IF REDEEMED DURING THE
TWELVE-MONTH PERIOD BEGINNING ON JUNE 1 OF THE YEARS INDICATED BELOW:
YEAR PERCENTAGE
- ---- ----------
2004......................................................105.7500%
2005......................................................103.8333%
2006......................................................101.9167%
2007 AND THEREAFTER.......................................100.0000%
(B) NOTWITHSTANDING THE PROVISIONS OF CLAUSE (A) OF THIS SECTION
3.07, AT ANY TIME PRIOR TO JUNE 1, 2002, THE COMPANY MAY REDEEM UP TO 35% OF THE
AGGREGATE PRINCIPAL AMOUNT OF NOTES ORIGINALLY ISSUED UNDER THE INDENTURE AT A
REDEMPTION PRICE OF 111.50% OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF, PLUS
ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES, IF ANY, TO THE REDEMPTION
DATE, WITH THE NET CASH PROCEEDS OF ONE OR MORE EQUITY OFFERINGS; PROVIDED THAT
AT LEAST 65% OF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES REMAINS OUTSTANDING
IMMEDIATELY AFTER THE OCCURRENCE OF SUCH REDEMPTION (EXCLUDING NOTES HELD BY THE
COMPANY AND ITS SUBSIDIARIES) AND THE REDEMPTION OCCURS WITHIN 90 DAYS OF THE
DATE OF THE CLOSING OF SUCH EQUITY OFFERING.
(C) ANY REDEMPTION PURSUANT TO THIS SECTION 3.07 SHALL BE MADE
PURSUANT TO THE PROVISIONS OF SECTION 3.01 THROUGH 3.06 HEREOF.
SECTION 3.08. MANDATORY REDEMPTION.
THE COMPANY SHALL NOT BE REQUIRED TO MAKE MANDATORY REDEMPTION OR
SINKING FUND PAYMENTS WITH RESPECT TO THE NOTES.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
IN THE EVENT THAT, PURSUANT TO SECTION 4.10 HEREOF, THE COMPANY SHALL
BE REQUIRED TO COMMENCE AN OFFER TO ALL HOLDERS TO PURCHASE NOTES (AN "ASSET
SALE OFFER"), IT SHALL FOLLOW THE PROCEDURES SPECIFIED BELOW.
THE ASSET SALE OFFER SHALL REMAIN OPEN FOR A PERIOD OF 20 BUSINESS
DAYS FOLLOWING ITS COMMENCEMENT AND NO LONGER, EXCEPT TO THE EXTENT THAT A
LONGER PERIOD IS REQUIRED BY APPLICABLE LAW (THE "OFFER PERIOD"). NO LATER THAN
FIVE BUSINESS DAYS AFTER THE TERMINATION OF THE OFFER PERIOD (THE "PURCHASE
DATE"), THE COMPANY SHALL PURCHASE THE PRINCIPAL AMOUNT OF NOTES REQUIRED TO BE
PURCHASED PURSUANT TO SECTION 4.10 HEREOF (THE "OFFER AMOUNT") OR, IF LESS THAN
THE OFFER AMOUNT HAS BEEN TENDERED, ALL NOTES TENDERED
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IN RESPONSE TO THE ASSET SALE OFFER. PAYMENT FOR ANY NOTES SO PURCHASED SHALL BE
MADE IN THE SAME MANNER AS INTEREST PAYMENTS ARE MADE.
IF THE PURCHASE DATE IS ON OR AFTER AN INTEREST RECORD DATE AND ON OR
BEFORE THE RELATED INTEREST PAYMENT DATE, ANY ACCRUED AND UNPAID INTEREST SHALL
BE PAID TO THE PERSON IN WHOSE NAME A NOTE IS REGISTERED AT THE CLOSE OF
BUSINESS ON SUCH RECORD DATE, AND NO ADDITIONAL INTEREST SHALL BE PAYABLE TO
HOLDERS WHO TENDER NOTES PURSUANT TO THE ASSET SALE OFFER.
UPON THE COMMENCEMENT OF AN ASSET SALE OFFER, THE COMPANY SHALL SEND,
BY FIRST CLASS MAIL, A NOTICE TO THE TRUSTEE AND EACH OF THE HOLDERS, WITH A
COPY TO THE TRUSTEE. THE NOTICE SHALL CONTAIN ALL INSTRUCTIONS AND MATERIALS
NECESSARY TO ENABLE SUCH HOLDERS TO TENDER NOTES PURSUANT TO THE ASSET SALE
OFFER. THE ASSET SALE OFFER SHALL BE MADE TO ALL HOLDERS. THE NOTICE, WHICH
SHALL GOVERN THE TERMS OF THE ASSET SALE OFFER, SHALL STATE:
(A) THAT THE ASSET SALE OFFER IS BEING MADE PURSUANT TO THIS SECTION
3.09 AND SECTION 4.10 HEREOF AND THE LENGTH OF TIME THE ASSET SALE OFFER SHALL
REMAIN OPEN;
(B) THE OFFER AMOUNT, THE PURCHASE PRICE AND THE PURCHASE DATE;
(C) THAT ANY NOTE NOT TENDERED OR ACCEPTED FOR PAYMENT SHALL CONTINUE
TO ACCRETE OR ACCRUE INTEREST;
(D) THAT, UNLESS THE COMPANY DEFAULTS IN MAKING SUCH PAYMENT, ANY
NOTE OR PORTION THEREOF ACCEPTED FOR PAYMENT PURSUANT TO THE ASSET SALE OFFER
SHALL CEASE TO ACCRETE OR ACCRUE INTEREST AFTER THE PURCHASE DATE;
(E) THAT HOLDERS ELECTING TO HAVE A NOTE PURCHASED PURSUANT TO AN
ASSET SALE OFFER MAY ELECT TO HAVE NOTES PURCHASED IN INTEGRAL MULTIPLES OF
$1,000 ONLY;
(F) THAT HOLDERS ELECTING TO HAVE A NOTE PURCHASED PURSUANT TO ANY
ASSET SALE OFFER SHALL BE REQUIRED TO SURRENDER THE NOTE, WITH THE FORM ENTITLED
"OPTION OF HOLDER TO ELECT PURCHASE" ON THE REVERSE OF THE NOTE COMPLETED, OR
TRANSFER BY BOOK-ENTRY TRANSFER, TO THE COMPANY, A DEPOSITARY, IF APPOINTED BY
THE COMPANY, OR A PAYING AGENT AT THE ADDRESS SPECIFIED IN THE NOTICE AT LEAST
THREE DAYS BEFORE THE PURCHASE DATE;
(G) THAT HOLDERS SHALL BE ENTITLED TO WITHDRAW THEIR ELECTION IF THE
COMPANY, THE DEPOSITARY OR THE PAYING AGENT, AS THE CASE MAY BE, RECEIVES, NOT
LATER THAN THE EXPIRATION OF THE OFFER PERIOD, A TELEGRAM, TELEX, FACSIMILE
TRANSMISSION OR LETTER SETTING FORTH THE NAME OF THE HOLDER, THE PRINCIPAL
AMOUNT OF THE NOTE THE HOLDER DELIVERED FOR PURCHASE AND A STATEMENT THAT SUCH
HOLDER IS WITHDRAWING HIS ELECTION TO HAVE SUCH NOTE PURCHASED;
(H) THAT, IF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES SURRENDERED BY
HOLDERS EXCEEDS THE OFFER AMOUNT, THE COMPANY SHALL SELECT THE NOTES TO BE
PURCHASED ON A PRO RATA BASIS (WITH SUCH ADJUSTMENTS AS MAY BE DEEMED
APPROPRIATE BY THE COMPANY SO THAT ONLY NOTES IN DENOMINATIONS OF $1,000, OR
INTEGRAL MULTIPLES THEREOF, SHALL BE PURCHASED); AND
(I) THAT HOLDERS WHOSE NOTES WERE PURCHASED ONLY IN PART SHALL BE
ISSUED NEW
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NOTES EQUAL IN PRINCIPAL AMOUNT TO THE UNPURCHASED PORTION OF THE NOTES
SURRENDERED (OR TRANSFERRED BY BOOK-ENTRY TRANSFER).
ON OR BEFORE THE PURCHASE DATE, THE COMPANY SHALL, TO THE EXTENT
LAWFUL, ACCEPT FOR PAYMENT, ON A PRO RATA BASIS TO THE EXTENT NECESSARY, THE
OFFER AMOUNT OF NOTES OR PORTIONS THEREOF TENDERED PURSUANT TO THE ASSET SALE
OFFER, OR IF LESS THAN THE OFFER AMOUNT HAS BEEN TENDERED, ALL NOTES TENDERED,
AND SHALL DELIVER TO THE TRUSTEE AN OFFICERS' CERTIFICATE STATING THAT SUCH
NOTES OR PORTIONS THEREOF WERE ACCEPTED FOR PAYMENT BY THE COMPANY IN ACCORDANCE
WITH THE TERMS OF THIS SECTION 3.09. THE COMPANY, THE DEPOSITARY OR THE PAYING
AGENT, AS THE CASE MAY BE, SHALL PROMPTLY (BUT IN ANY CASE NOT LATER THAN FIVE
DAYS AFTER THE PURCHASE DATE) MAIL OR DELIVER TO EACH TENDERING HOLDER AN AMOUNT
EQUAL TO THE PURCHASE PRICE OF THE NOTES TENDERED BY SUCH HOLDER AND ACCEPTED BY
THE COMPANY FOR PURCHASE, AND THE COMPANY SHALL PROMPTLY ISSUE A NEW NOTE, AND
THE TRUSTEE, UPON WRITTEN REQUEST FROM THE COMPANY SHALL AUTHENTICATE AND MAIL
OR DELIVER SUCH NEW NOTE TO SUCH HOLDER, IN A PRINCIPAL AMOUNT EQUAL TO ANY
UNPURCHASED PORTION OF THE NOTE SURRENDERED. ANY NOTE NOT SO ACCEPTED SHALL BE
PROMPTLY MAILED OR DELIVERED BY THE COMPANY TO THE HOLDER THEREOF. THE COMPANY
SHALL PUBLICLY ANNOUNCE THE RESULTS OF THE ASSET SALE OFFER ON THE PURCHASE
DATE.
OTHER THAN AS SPECIFICALLY PROVIDED IN THIS SECTION 3.09, ANY
PURCHASE PURSUANT TO THIS SECTION 3.09 SHALL BE MADE PURSUANT TO THE PROVISIONS
OF SECTIONS 3.01 THROUGH 3.06 HEREOF.
ARTICLE 4 COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
THE COMPANY SHALL PAY OR CAUSE TO BE PAID THE PRINCIPAL OF, PREMIUM,
IF ANY, AND INTEREST ON THE NOTES ON THE DATES AND IN THE MANNER PROVIDED IN THE
NOTES. PRINCIPAL, PREMIUM, IF ANY, AND INTEREST SHALL BE CONSIDERED PAID ON THE
DATE DUE IF THE PAYING AGENT, IF OTHER THAN THE COMPANY OR A SUBSIDIARY THEREOF,
HOLDS AS OF 10:00 A.M. EASTERN TIME ON THE DUE DATE MONEY DEPOSITED BY THE
COMPANY IN IMMEDIATELY AVAILABLE FUNDS AND DESIGNATED FOR AND SUFFICIENT TO PAY
ALL PRINCIPAL, PREMIUM, IF ANY, AND INTEREST THEN DUE. THE COMPANY SHALL PAY ALL
LIQUIDATED DAMAGES, IF ANY, IN THE SAME MANNER ON THE DATES AND IN THE AMOUNTS
SET FORTH IN THE REGISTRATION RIGHTS AGREEMENT.
THE COMPANY SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN
ANY PROCEEDING UNDER ANY BANKRUPTCY LAW) ON OVERDUE PRINCIPAL AT THE RATE EQUAL
TO 1% PER ANNUM IN EXCESS OF THE THEN APPLICABLE INTEREST RATE ON THE NOTES TO
THE EXTENT LAWFUL; IT SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN
ANY PROCEEDING UNDER ANY BANKRUPTCY LAW) ON OVERDUE INSTALLMENTS OF INTEREST,
AND LIQUIDATED DAMAGES (WITHOUT REGARD TO ANY APPLICABLE GRACE PERIOD) AT THE
SAME RATE TO THE EXTENT LAWFUL.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
THE COMPANY SHALL MAINTAIN IN THE BOROUGH OF MANHATTAN, THE CITY OF
NEW YORK, AN OFFICE OR AGENCY (WHICH MAY BE AN OFFICE OF THE TRUSTEE OR AN AGENT
OF THE TRUSTEE, REGISTRAR OR CO-REGISTRAR) WHERE NOTES MAY BE SURRENDERED FOR
REGISTRATION OF TRANSFER OR FOR EXCHANGE AND WHERE NOTICES AND DEMANDS TO OR
UPON THE COMPANY IN RESPECT OF THE
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NOTES AND THIS INDENTURE MAY BE SERVED. THE COMPANY SHALL GIVE PROMPT WRITTEN
NOTICE TO THE TRUSTEE OF THE LOCATION, AND ANY CHANGE IN THE LOCATION, OF SUCH
OFFICE OR AGENCY. IF AT ANY TIME THE COMPANY SHALL FAIL TO MAINTAIN ANY SUCH
REQUIRED OFFICE OR AGENCY OR SHALL FAIL TO FURNISH THE TRUSTEE WITH THE ADDRESS
THEREOF, SUCH PRESENTATIONS, SURRENDERS, NOTICES AND DEMANDS MAY BE MADE OR
SERVED AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
THE COMPANY MAY ALSO FROM TIME TO TIME DESIGNATE ONE OR MORE OTHER
OFFICES OR AGENCIES WHERE THE NOTES MAY BE PRESENTED OR SURRENDERED FOR ANY OR
ALL SUCH PURPOSES AND MAY FROM TIME TO TIME RESCIND SUCH DESIGNATIONS; PROVIDED,
HOWEVER, THAT NO SUCH DESIGNATION OR RESCISSION SHALL IN ANY MANNER RELIEVE THE
COMPANY OF ITS OBLIGATION TO MAINTAIN AN OFFICE OR AGENCY IN THE BOROUGH OF
MANHATTAN, THE CITY OF NEW YORK FOR SUCH PURPOSES. THE COMPANY SHALL GIVE PROMPT
WRITTEN NOTICE TO THE TRUSTEE OF ANY SUCH DESIGNATION OR RESCISSION AND OF ANY
CHANGE IN THE LOCATION OF ANY SUCH OTHER OFFICE OR AGENCY.
THE COMPANY HEREBY DESIGNATES THE CORPORATE TRUST OFFICE OF THE
TRUSTEE AS ONE SUCH OFFICE OR AGENCY OF THE COMPANY IN ACCORDANCE WITH SECTION
2.03.
SECTION 4.03. REPORTS.
(A) WHETHER OR NOT REQUIRED BY THE RULES AND REGULATIONS OF THE SEC,
SO LONG AS ANY NOTES ARE OUTSTANDING, THE COMPANY SHALL FURNISH TO THE HOLDERS
OF NOTES, ON OR BEFORE THE FIFTH DAY FOLLOWING THE DATE ON WHICH SUCH REPORTS
ARE OR WOULD BE DUE UNDER THE SEC'S RULES AND REGULATIONS (I) ALL QUARTERLY AND
ANNUAL FINANCIAL INFORMATION THAT WOULD BE REQUIRED TO BE CONTAINED IN A FILING
WITH THE SEC ON FORMS 10-Q AND 10-K IF THE COMPANY WERE REQUIRED TO FILE SUCH
FORMS, INCLUDING A "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" AND, WITH RESPECT TO THE ANNUAL INFORMATION ONLY, A
REPORT THEREON BY THE COMPANY'S CERTIFIED INDEPENDENT ACCOUNTANTS AND (II) ALL
CURRENT REPORTS THAT WOULD BE REQUIRED TO BE FILED WITH THE SEC ON FORM 8-K IF
THE COMPANY WERE REQUIRED TO FILE SUCH REPORTS. THE QUARTERLY AND ANNUAL
FINANCIAL INFORMATION REQUIRED BY THIS PARAGRAPH SHALL SEPARATELY INCLUDE A
REASONABLY DETAILED PRESENTATION, EITHER ON THE FACE OF THE FINANCIAL STATEMENTS
OR IN THE FOOTNOTES THERETO, OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE NON-GUARANTOR SUBSIDIARIES OF THE COMPANY. IN ADDITION,
FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER CONTEMPLATED BY THE REGISTRATION
RIGHTS AGREEMENT, WHETHER OR NOT REQUIRED BY THE RULES AND REGULATIONS OF THE
SEC, THE COMPANY SHALL FILE A COPY OF ALL SUCH INFORMATION AND REPORTS REFERRED
TO IN CLAUSES (I) AND (II) OF THIS PARAGRAPH WITH THE SEC FOR PUBLIC
AVAILABILITY WITHIN THE TIME PERIODS SPECIFIED IN THE SEC'S RULES AND
REGULATIONS (UNLESS THE SEC WILL NOT ACCEPT SUCH A FILING) AND MAKE SUCH
INFORMATION AVAILABLE TO SECURITIES ANALYSTS AND PROSPECTIVE INVESTORS UPON
REQUEST. THE COMPANY SHALL AT ALL TIMES COMPLY WITH TIA SS. 314(A).
(B) FOR SO LONG AS ANY NOTES REMAIN OUTSTANDING, THE COMPANY SHALL
FURNISH TO THE HOLDERS AND TO SECURITIES ANALYSTS AND PROSPECTIVE INVESTORS,
UPON THEIR REQUEST, THE INFORMATION REQUIRED TO BE DELIVERED PURSUANT TO RULE
144A(D)(4) UNDER THE SECURITIES ACT.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(A) THE COMPANY AND EACH SUBSIDIARY GUARANTOR (TO THE EXTENT SUCH
SUBSIDIARY
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GUARANTOR IS SO REQUIRED UNDER THE TIA) SHALL DELIVER TO THE TRUSTEE, WITHIN 90
DAYS AFTER THE END OF EACH FISCAL YEAR, AN OFFICERS' CERTIFICATE STATING THAT A
REVIEW OF THE ACTIVITIES OF THE COMPANY AND ITS SUBSIDIARIES DURING THE
PRECEDING FISCAL YEAR HAS BEEN MADE UNDER THE SUPERVISION OF THE SIGNING
OFFICERS WITH A VIEW TO DETERMINING WHETHER THE COMPANY HAS KEPT, OBSERVED,
PERFORMED AND FULFILLED ITS OBLIGATIONS UNDER THIS INDENTURE, AND FURTHER
STATING, AS TO EACH SUCH OFFICER SIGNING SUCH CERTIFICATE, THAT TO THE BEST OF
HIS OR HER KNOWLEDGE THE COMPANY HAS KEPT, OBSERVED, PERFORMED AND FULFILLED
EACH AND EVERY COVENANT CONTAINED IN THIS INDENTURE AND IS NOT IN DEFAULT IN THE
PERFORMANCE OR OBSERVANCE OF ANY OF THE TERMS, PROVISIONS AND CONDITIONS OF THIS
INDENTURE (OR, IF A DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED, DESCRIBING
ALL SUCH DEFAULTS OR EVENTS OF DEFAULT OF WHICH HE OR SHE MAY HAVE KNOWLEDGE AND
WHAT ACTION THE COMPANY IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO) AND
THAT TO THE BEST OF HIS OR HER KNOWLEDGE NO EVENT HAS OCCURRED AND REMAINS IN
EXISTENCE BY REASON OF WHICH PAYMENTS ON ACCOUNT OF THE PRINCIPAL OF OR
INTEREST, IF ANY, ON THE NOTES IS PROHIBITED OR IF SUCH EVENT HAS OCCURRED, A
DESCRIPTION OF THE EVENT AND WHAT ACTION THE COMPANY IS TAKING OR PROPOSES TO
TAKE WITH RESPECT THERETO.
(B) SO LONG AS NOT CONTRARY TO THE THEN CURRENT RECOMMENDATIONS OF
THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, THE YEAR-END FINANCIAL
STATEMENTS DELIVERED PURSUANT TO SECTION 4.03(A) ABOVE SHALL BE ACCOMPANIED BY A
WRITTEN STATEMENT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS (WHO SHALL BE
A FIRM OF ESTABLISHED NATIONAL REPUTATION) THAT IN MAKING THE EXAMINATION
NECESSARY FOR CERTIFICATION OF SUCH FINANCIAL STATEMENTS, NOTHING HAS COME TO
THEIR ATTENTION THAT WOULD LEAD THEM TO BELIEVE THAT THE COMPANY HAS VIOLATED
ANY PROVISIONS OF ARTICLE 4 OR ARTICLE 5 HEREOF OR, IF ANY SUCH VIOLATION HAS
OCCURRED, SPECIFYING THE NATURE AND PERIOD OF EXISTENCE THEREOF, IT BEING
UNDERSTOOD THAT SUCH ACCOUNTANTS SHALL NOT BE LIABLE DIRECTLY OR INDIRECTLY TO
ANY PERSON FOR ANY FAILURE TO OBTAIN KNOWLEDGE OF ANY SUCH VIOLATION.
(C) THE COMPANY SHALL, SO LONG AS ANY OF THE NOTES ARE OUTSTANDING,
DELIVER TO THE TRUSTEE, FORTHWITH UPON ANY OFFICER BECOMING AWARE OF ANY DEFAULT
OR EVENT OF DEFAULT, AN OFFICERS' CERTIFICATE SPECIFYING SUCH DEFAULT OR EVENT
OF DEFAULT AND WHAT ACTION THE COMPANY IS TAKING OR PROPOSES TO TAKE WITH
RESPECT THERETO.
SECTION 4.05. TAXES.
THE COMPANY SHALL PAY, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES TO
PAY, PRIOR TO DELINQUENCY, ALL MATERIAL TAXES, ASSESSMENTS, AND GOVERNMENTAL
LEVIES EXCEPT SUCH AS ARE CONTESTED IN GOOD FAITH AND BY APPROPRIATE PROCEEDINGS
OR WHERE THE FAILURE TO EFFECT SUCH PAYMENT IS NOT ADVERSE IN ANY MATERIAL
RESPECT TO THE HOLDERS OF THE NOTES.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
THE COMPANY AND EACH OF THE SUBSIDIARY GUARANTORS COVENANTS (TO THE
EXTENT THAT IT MAY LAWFULLY DO SO) THAT IT SHALL NOT AT ANY TIME INSIST UPON,
PLEAD, OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF,
ANY STAY, EXTENSION OR USURY LAW WHEREVER ENACTED, NOW OR AT ANY TIME HEREAFTER
IN FORCE, THAT MAY AFFECT THE COVENANTS OR THE PERFORMANCE OF THIS INDENTURE;
AND THE COMPANY AND EACH OF THE SUBSIDIARY GUARANTORS (TO THE EXTENT THAT IT MAY
LAWFULLY DO SO) HEREBY EXPRESSLY WAIVES ALL BENEFIT OR ADVANTAGE OF ANY SUCH
LAW, AND COVENANTS THAT IT SHALL NOT, BY RESORT TO ANY SUCH LAW, HINDER, DELAY
OR IMPEDE THE EXECUTION OF ANY POWER HEREIN GRANTED TO THE TRUSTEE, BUT SHALL
SUFFER AND PERMIT THE EXECUTION OF EVERY SUCH POWER AS
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THOUGH NO SUCH LAW HAS BEEN ENACTED.
SECTION 4.07. RESTRICTED PAYMENTS.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY: (1) DECLARE OR PAY ANY DIVIDEND OR MAKE
ANY OTHER PAYMENT OR DISTRIBUTION ON ACCOUNT OF THE COMPANY'S OR ANY OF ITS
RESTRICTED SUBSIDIARIES' EQUITY INTERESTS (INCLUDING, WITHOUT LIMITATION, ANY
PAYMENT IN CONNECTION WITH ANY MERGER OR CONSOLIDATION INVOLVING THE COMPANY OR
ANY OF ITS RESTRICTED SUBSIDIARIES) OR TO THE DIRECT OR INDIRECT HOLDERS OF THE
COMPANY'S OR ANY OF ITS RESTRICTED SUBSIDIARIES' EQUITY INTERESTS IN THEIR
CAPACITY AS SUCH (OTHER THAN DIVIDENDS OR DISTRIBUTIONS PAYABLE IN EQUITY
INTERESTS (OTHER THAN DISQUALIFIED STOCK) OF THE COMPANY OR TO THE COMPANY OR A
RESTRICTED SUBSIDIARY OF THE COMPANY); (2) PURCHASE, REDEEM OR OTHERWISE ACQUIRE
OR RETIRE FOR VALUE (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY
MERGER OR CONSOLIDATION INVOLVING THE COMPANY) ANY EQUITY INTERESTS OF THE
COMPANY OR ANY DIRECT OR INDIRECT PARENT OF THE COMPANY; (3) MAKE ANY PAYMENT ON
OR WITH RESPECT TO, OR PURCHASE, REDEEM, DEFEASE OR OTHERWISE ACQUIRE OR RETIRE
FOR VALUE ANY INDEBTEDNESS THAT IS BY ITS TERMS SUBORDINATED TO THE NOTES OR THE
SUBSIDIARY GUARANTIES, EXCEPT A PAYMENT OF INTEREST OR PRINCIPAL AT THE STATED
MATURITY THEREOF; OR (4) MAKE ANY RESTRICTED INVESTMENT (ALL SUCH PAYMENTS AND
OTHER ACTIONS SET FORTH IN CLAUSES (1) THROUGH (4) ABOVE BEING COLLECTIVELY
REFERRED TO AS "RESTRICTED PAYMENTS"), UNLESS, AT THE TIME OF AND AFTER GIVING
EFFECT TO SUCH RESTRICTED PAYMENT:
(A) NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING OR WOULD OCCUR AS A CONSEQUENCE THEREOF; AND
(B) THE COMPANY WOULD, AT THE TIME OF SUCH RESTRICTED PAYMENT AND
AFTER GIVING PRO FORMA EFFECT THERETO AS IF SUCH RESTRICTED PAYMENT HAD BEEN
MADE AT THE BEGINNING OF THE APPLICABLE FOUR-QUARTER PERIOD, HAVE BEEN PERMITTED
TO INCUR AT LEAST $1.00 OF ADDITIONAL INDEBTEDNESS PURSUANT TO THE FIXED CHARGE
COVERAGE RATIO TEST SET FORTH IN THE FIRST PARAGRAPH OF SECTION 4.09 HEREOF; AND
(C) SUCH RESTRICTED PAYMENT, TOGETHER WITH THE AGGREGATE AMOUNT OF
ALL OTHER RESTRICTED PAYMENTS MADE BY THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES AFTER THE DATE OF THE INDENTURE (EXCLUDING RESTRICTED PAYMENTS
PERMITTED BY CLAUSES (II), (III), (IV), (V), (VII) AND (VIII) OF THE NEXT
SUCCEEDING PARAGRAPH), IS LESS THAN THE SUM, WITHOUT DUPLICATION, OF (I) 50% OF
THE CONSOLIDATED NET INCOME OF THE COMPANY FOR THE PERIOD (TAKEN AS ONE
ACCOUNTING PERIOD) FROM MARCH 31, 1999 TO THE END OF THE COMPANY'S MOST RECENTLY
ENDED FISCAL QUARTER FOR WHICH INTERNAL FINANCIAL STATEMENTS ARE AVAILABLE AT
THE TIME OF SUCH RESTRICTED PAYMENT (OR, IF SUCH CONSOLIDATED NET INCOME FOR
SUCH PERIOD IS A DEFICIT, LESS 100% OF SUCH DEFICIT), PLUS (II) 100% OF THE
AGGREGATE NET CASH PROCEEDS OR FAIR MARKET VALUE OF PRODUCTIVE ASSETS RECEIVED
BY THE COMPANY SINCE THE DATE OF THE INDENTURE AS A CONTRIBUTION TO ITS COMMON
EQUITY CAPITAL OR FROM THE ISSUE OR SALE OF EQUITY INTERESTS OF THE COMPANY
(OTHER THAN DISQUALIFIED STOCK OR DESIGNATED PREFERRED STOCK) OR FROM THE ISSUE
OR SALE OF CONVERTIBLE OR EXCHANGEABLE DISQUALIFIED STOCK OR CONVERTIBLE OR
EXCHANGEABLE DEBT SECURITIES OF THE COMPANY THAT HAVE BEEN CONVERTED INTO OR
EXCHANGED FOR SUCH EQUITY INTERESTS (OTHER THAN EQUITY INTERESTS (OR
DISQUALIFIED STOCK OR DESIGNATED PREFERRED STOCK OR DEBT SECURITIES) SOLD TO A
SUBSIDIARY OF THE COMPANY), PLUS (III) 100% OF THE AGGREGATE NET CASH PROCEEDS
OR FAIR MARKET VALUE OF PRODUCTIVE ASSETS RECEIVED FROM THE DISPOSITION OR SALE
OF ANY RESTRICTED INVESTMENT THAT WAS MADE AFTER THE DATE OF THE INDENTURE LESS,
IN EACH CASE, THE COST OF SUCH DISPOSITION OR SALE, PLUS (IV)
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100% OF THE AMOUNT OF ANY DIVIDENDS PAID IN CASH OR THE FAIR MARKET VALUE (AS
DETERMINED ABOVE) OF ANY PRODUCTIVE ASSETS RECEIVED BY THE COMPANY OR ANY
RESTRICTED SUBSIDIARY AFTER THE DATE OF THE INDENTURE FROM AN UNRESTRICTED
SUBSIDIARY OF THE COMPANY, TO THE EXTENT SUCH DIVIDENDS WERE NOT OTHERWISE
INCLUDED IN CONSOLIDATED NET INCOME OF THE COMPANY FOR SUCH PERIOD, PLUS (V) TO
THE EXTENT THAT ANY UNRESTRICTED SUBSIDIARY OF THE COMPANY IS REDESIGNATED AS A
RESTRICTED SUBSIDIARY AFTER THE DATE OF THE INDENTURE, THE FAIR MARKET VALUE OF
THE COMPANY'S INVESTMENT IN SUCH SUBSIDIARY AS OF THE DATE OF SUCH SUBSIDIARY'S
REDESIGNATION AS A RESTRICTED SUBSIDIARY, PLUS (VI) WITHOUT DUPLICATION OF ANY
AMOUNTS INCLUDED IN CLAUSE (II) ABOVE, 100% OF THE AGGREGATE NET CASH PROCEEDS
OR THE FAIR MARKET VALUE OF PRODUCTIVE ASSETS RECEIVED BY THE COMPANY AS EQUITY
CONTRIBUTIONS (OTHER THAN DISQUALIFIED STOCK OR DESIGNATED PREFERRED STOCK) BY A
HOLDER OF THE EQUITY INTERESTS OF THE COMPANY (EXCLUDING ANY NET CASH PROCEEDS
FROM AN EQUITY CONTRIBUTION WHICH HAS BEEN FINANCED, DIRECTLY OR INDIRECTLY
USING FUNDS (1) BORROWED FROM THE COMPANY OR ANY OF ITS SUBSIDIARIES, UNLESS AND
UNTIL AND TO THE EXTENT SUCH BORROWING IS REPAID OR (2) CONTRIBUTED, EXTENDED,
GUARANTEED OR ADVANCED BY THE COMPANY OR BY ANY OF ITS SUBSIDIARIES).
SO LONG AS NO PAYMENT DEFAULT HAS OCCURRED AND IS CONTINUING OR WOULD
BE CAUSED THEREBY, THE PRECEDING PROVISIONS SHALL NOT PROHIBIT: (I) THE PAYMENT
OF ANY DIVIDEND WITHIN 60 DAYS AFTER THE DATE OF DECLARATION THEREOF, IF AT SAID
DATE OF DECLARATION SUCH PAYMENT WOULD HAVE COMPLIED WITH THE PROVISIONS OF THE
INDENTURE; (II) THE REDEMPTION, REPURCHASE, RETIREMENT, DEFEASANCE OR OTHER
ACQUISITION OF ANY SUBORDINATED INDEBTEDNESS OF THE COMPANY OR ANY RESTRICTED
SUBSIDIARY OR OF ANY EQUITY INTERESTS OF THE COMPANY OR ANY RESTRICTED
SUBSIDIARY IN EXCHANGE FOR, OR OUT OF THE NET CASH PROCEEDS OF THE SUBSTANTIALLY
CONCURRENT SALE (OTHER THAN TO A SUBSIDIARY OF THE COMPANY) OF, EQUITY INTERESTS
OF THE COMPANY (OTHER THAN DISQUALIFIED STOCK), PROVIDED THAT THE AMOUNT OF ANY
SUCH NET CASH PROCEEDS THAT ARE UTILIZED FOR ANY SUCH REDEMPTION, REPURCHASE,
RETIREMENT, DEFEASANCE OR OTHER ACQUISITION SHALL BE EXCLUDED FROM CLAUSE (3)(B)
OF THE PRECEDING PARAGRAPH; (III) THE DEFEASANCE, REDEMPTION, REPURCHASE OR
OTHER ACQUISITION OF SUBORDINATED INDEBTEDNESS OF THE COMPANY OR ANY RESTRICTED
SUBSIDIARY WITH THE NET CASH PROCEEDS FROM AN INCURRENCE OF PERMITTED
REFINANCING INDEBTEDNESS; (IV) THE PAYMENT OF ANY DIVIDEND BY A RESTRICTED
SUBSIDIARY OF THE COMPANY TO THE HOLDERS OF ITS CAPITAL STOCK ON A PRO RATA
BASIS; (V) THE REPURCHASE, REDEMPTION OR OTHER ACQUISITION OR RETIREMENT FOR
VALUE OF ANY EQUITY INTERESTS OF THE COMPANY OR ANY RESTRICTED SUBSIDIARY OF THE
COMPANY HELD BY ANY CURRENT OR FORMER EMPLOYEE, OFFICER OR DIRECTOR OF THE
COMPANY (OR ANY OF ITS RESTRICTED SUBSIDIARIES) PURSUANT TO ANY MANAGEMENT
EQUITY SUBSCRIPTION AGREEMENT, STOCK OPTION AGREEMENT OR OTHER EMPLOYEE PLAN OR
AGREEMENT OR EMPLOYMENT BENEFIT PLAN; PROVIDED THAT THE AGGREGATE PRICE PAID FOR
ALL SUCH REPURCHASED, REDEEMED, ACQUIRED OR RETIRED EQUITY INTERESTS SHALL NOT
EXCEED $2.5 MILLION IN ANY CALENDAR YEAR (PROVIDED THAT IN ANY CALENDAR YEAR
SUCH AMOUNT SHALL BE INCREASED BY THE AMOUNT AVAILABLE FOR USE, BUT NOT USED,
UNDER THIS CLAUSE (V) IN THE IMMEDIATELY PRECEDING YEAR) AND $10.0 MILLION SINCE
THE DATE OF THE INDENTURE; (VI) THE DECLARATION AND PAYMENT OF DIVIDENDS TO
HOLDERS OF ANY CLASS OR SERIES OF DESIGNATED PREFERRED STOCK (OTHER THAN
DISQUALIFIED CAPITAL STOCK) ISSUED AFTER THE DATE OF THE INDENTURE; PROVIDED
THAT, AT THE TIME OF SUCH ISSUANCE, THE COMPANY, AFTER GIVING EFFECT TO SUCH
ISSUANCE ON A PRO FORMA BASIS, WOULD HAVE HAD A FIXED COVERAGE RATIO OF AT LEAST
2.0 TO 1.0; (VII) REPURCHASES OF CAPITAL STOCK DEEMED TO OCCUR UPON THE EXERCISE
OF STOCK OPTIONS IF SUCH CAPITAL STOCK REPRESENTS A PORTION OF THE EXERCISE
PRICE THEREOF; AND (VIII) SO LONG AS NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING OR WOULD OCCUR AS A CONSEQUENCE THEREOF, OTHER
RESTRICTED PAYMENTS IN AN AGGREGATE AMOUNT NOT TO EXCEED $10.0 MILLION SINCE THE
DATE OF THE INDENTURE.
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THE AMOUNT OF ALL RESTRICTED PAYMENTS (OTHER THAN CASH) SHALL BE THE
FAIR MARKET VALUE ON THE DATE OF THE RESTRICTED PAYMENT OF THE ASSET(S) OR
SECURITIES PROPOSED TO BE TRANSFERRED OR ISSUED TO OR BY THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY, AS THE CASE MAY BE, PURSUANT TO THE RESTRICTED PAYMENT.
THE FAIR MARKET VALUE OF ANY ASSETS OR SECURITIES THAT ARE REQUIRED TO BE VALUED
BY THIS COVENANT SHALL BE DETERMINED BY THE BOARD OF DIRECTORS WHOSE RESOLUTION
WITH RESPECT THERETO SHALL BE DELIVERED TO THE TRUSTEE. THE BOARD OF DIRECTORS'
DETERMINATION MUST BE BASED UPON AN OPINION OR APPRAISAL ISSUED BY AN
ACCOUNTING, APPRAISAL OR INVESTMENT BANKING FIRM OF NATIONAL STANDING IF THE
FAIR MARKET VALUE EXCEEDS THE GREATER OF 3.0% OF TOTAL ASSETS OR $5.0 MILLION.
NOT LATER THAN THE DATE OF MAKING ANY RESTRICTED PAYMENT, THE COMPANY SHALL
DELIVER TO THE TRUSTEE AN OFFICERS' CERTIFICATE STATING THAT SUCH RESTRICTED
PAYMENT IS PERMITTED AND SETTING FORTH THE BASIS UPON WHICH THE CALCULATIONS
REQUIRED BY THIS SECTION 4.07 WERE COMPUTED, TOGETHER WITH A COPY OF ANY
FAIRNESS OPINION OR APPRAISAL REQUIRED BY THE INDENTURE.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, CREATE OR PERMIT TO EXIST OR BECOME
EFFECTIVE ANY CONSENSUAL ENCUMBRANCE OR RESTRICTION ON THE ABILITY OF ANY
RESTRICTED SUBSIDIARY TO (I) PAY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTIONS ON
ITS CAPITAL STOCK TO THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES, OR WITH
RESPECT TO ANY OTHER INTEREST OR PARTICIPATION IN, OR MEASURED BY, ITS PROFITS,
OR PAY ANY INDEBTEDNESS OWED TO THE COMPANY OR ANY OF ITS RESTRICTED
SUBSIDIARIES, (II) MAKE LOANS OR ADVANCES TO THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES, OR (III) TRANSFER ANY OF ITS PROPERTIES OR ASSETS TO
THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES. HOWEVER, THE PRECEDING
RESTRICTIONS SHALL NOT APPLY TO ENCUMBRANCES OR RESTRICTIONS EXISTING UNDER OR
BY REASON OF: (A) EXISTING INDEBTEDNESS AS IN EFFECT ON THE DATE OF THE
INDENTURE, (B) THE INDENTURE, THE NOTES, THE EXCHANGE NOTES AND THE SUBSIDIARY
GUARANTIES, (C) APPLICABLE LAW REGULATION OR ORDER, (D) INDEBTEDNESS INCURRED BY
A RESTRICTED SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR IN COMPLIANCE WITH
THE PROVISIONS SET FORTH UNDER SECTION 4.17 HEREOF (E) ANY INSTRUMENT GOVERNING
INDEBTEDNESS OR CAPITAL STOCK OF A PERSON ACQUIRED BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES AS IN EFFECT AT THE TIME OF SUCH ACQUISITION (EXCEPT TO
THE EXTENT SUCH INDEBTEDNESS WAS INCURRED IN CONNECTION WITH OR IN CONTEMPLATION
OF SUCH ACQUISITION), WHICH ENCUMBRANCE OR RESTRICTION IS NOT APPLICABLE TO ANY
PERSON, OR THE PROPERTIES OR ASSETS OF ANY PERSON, OTHER THAN THE PERSON, OR THE
PROPERTY OR ASSETS OF THE PERSON, SO ACQUIRED, PROVIDED THAT, IN THE CASE OF
INDEBTEDNESS, SUCH INDEBTEDNESS WAS PERMITTED BY THE TERMS OF THE INDENTURE TO
BE INCURRED, (F) CUSTOMARY NON-ASSIGNMENT PROVISIONS IN LEASES, LICENSES OR
SIMILAR AGREEMENTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS AND
CONSISTENT WITH PAST PRACTICES, (G) PURCHASE MONEY OBLIGATIONS FOR PROPERTY
ACQUIRED IN THE ORDINARY COURSE OF BUSINESS THAT IMPOSE RESTRICTIONS ON THE
PROPERTY SO ACQUIRED OF THE NATURE DESCRIBED IN CLAUSE (III) OF THE PRECEDING
SENTENCE, (H) ANY AGREEMENT FOR THE SALE OR OTHER DISPOSITION OF A RESTRICTED
SUBSIDIARY THAT RESTRICTS DISTRIBUTIONS BY SUCH RESTRICTED SUBSIDIARY PENDING
ITS SALE OR OTHER DISPOSITION, (I) LIENS SECURING INDEBTEDNESS THAT LIMIT THE
RIGHT OF THE DEBTOR TO DISPOSE OF THE ASSETS SUBJECT TO SUCH LIEN; (J)
PROVISIONS WITH RESPECT TO THE DISPOSITION OR DISTRIBUTION OF ASSETS OR PROPERTY
IN JOINT VENTURE AGREEMENTS, ASSET SALE AGREEMENTS, STOCK SALE AGREEMENTS AND
OTHER SIMILAR AGREEMENTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS, (K)
RESTRICTIONS ON CASH OR OTHER DEPOSITS OR NET WORTH IMPOSED BY CUSTOMERS UNDER
CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS, (L) ANY ENCUMBRANCE
OR RESTRICTION ON A SECURITIZATION ENTITY EFFECTED IN CONNECTION WITH A
QUALIFIED SECURITIZATION TRANSACTION, (M)
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INDEBTEDNESS INCURRED AFTER THE DATE OF THE INDENTURE IN ACCORDANCE WITH THE
TERMS OF THE INDENTURE; PROVIDED, THAT THE RESTRICTIONS CONTAINED IN THE
AGREEMENTS GOVERNING SUCH NEW INDEBTEDNESS ARE, IN THE GOOD FAITH JUDGMENT OF
THE BOARD OF DIRECTORS OF THE COMPANY, NOT MATERIALLY LESS FAVORABLE, TAKEN AS A
WHOLE, TO THE HOLDERS OF THE NOTES THAN THOSE CONTAINED IN THE AGREEMENTS
GOVERNING INDEBTEDNESS OUTSTANDING ON THE DATE OF THE INDENTURE, (N) CUSTOMARY
PROVISIONS IN AGREEMENTS WITH RESPECT TO PERMITTED JOINT VENTURES, AND (O) ANY
ENCUMBRANCES OR RESTRICTIONS IMPOSED BY ANY AMENDMENTS, MODIFICATIONS,
RESTATEMENTS, RENEWALS, INCREASES, SUPPLEMENTS, REFUNDINGS, REPLACEMENTS OR
REFINANCINGS OF THE CONTRACTS, INSTRUMENTS OR OBLIGATIONS REFERRED TO IN CLAUSES
(A) THROUGH (N) ABOVE; PROVIDED THAT SUCH AMENDMENTS, MODIFICATIONS,
RESTATEMENTS, RENEWALS, INCREASES, SUPPLEMENTS, REFUNDINGS, REPLACEMENTS OR
REFINANCINGS ARE, IN THE GOOD FAITH JUDGMENT OF THE BOARD OF DIRECTORS, NO MORE
RESTRICTIVE WITH RESPECT TO SUCH DIVIDEND AND OTHER PAYMENT RESTRICTIONS THAN
THOSE CONTAINED IN THE DIVIDEND OR OTHER PAYMENT RESTRICTIONS PRIOR TO SUCH
AMENDMENT, MODIFICATION, RESTATEMENT, RENEWAL, INCREASE, SUPPLEMENT, REFUNDING,
REPLACEMENT OR REFINANCING.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES
TO, DIRECTLY OR INDIRECTLY, CREATE, INCUR, ISSUE, ASSUME, GUARANTEE OR OTHERWISE
BECOME DIRECTLY OR INDIRECTLY LIABLE, CONTINGENTLY OR OTHERWISE, WITH RESPECT TO
(COLLECTIVELY, "INCUR") ANY INDEBTEDNESS (INCLUDING ACQUIRED DEBT), AND THE
COMPANY SHALL NOT ISSUE ANY DISQUALIFIED STOCK AND SHALL NOT PERMIT ANY OF ITS
RESTRICTED SUBSIDIARIES TO ISSUE ANY SHARES OF PREFERRED STOCK; PROVIDED,
HOWEVER, THAT THE COMPANY MAY INCUR INDEBTEDNESS (INCLUDING ACQUIRED DEBT) OR
ISSUE DISQUALIFIED STOCK, AND ANY SUBSIDIARY GUARANTOR MAY INCUR INDEBTEDNESS
(INCLUDING ACQUIRED DEBT) OR ISSUE PREFERRED STOCK, IF THE FIXED CHARGE COVERAGE
RATIO FOR THE COMPANY'S MOST RECENTLY ENDED FOUR FULL FISCAL QUARTERS FOR WHICH
INTERNAL FINANCIAL STATEMENTS ARE AVAILABLE IMMEDIATELY PRECEDING THE DATE ON
WHICH SUCH ADDITIONAL INDEBTEDNESS IS INCURRED OR SUCH DISQUALIFIED STOCK OR
PREFERRED STOCK IS ISSUED WOULD HAVE BEEN AT LEAST 2.0 TO 1.0, DETERMINED ON A
PRO FORMA BASIS (INCLUDING A PRO FORMA APPLICATION OF THE NET PROCEEDS
THEREFROM) AS IF THE ADDITIONAL INDEBTEDNESS HAD BEEN INCURRED OR THE PREFERRED
STOCK OR DISQUALIFIED STOCK HAD BEEN ISSUED, AS THE CASE MAY BE, AT THE
BEGINNING OF SUCH FOUR-QUARTER PERIOD.
THE FIRST PARAGRAPH OF THIS SECTION 4.09 SHALL NOT PROHIBIT THE
INCURRENCE OF ANY OF THE FOLLOWING ITEMS OF INDEBTEDNESS (COLLECTIVELY,
"PERMITTED DEBT"):
(I) THE INCURRENCE BY THE COMPANY OR ANY RESTRICTED SUBSIDIARY OF
INDEBTEDNESS AND LETTERS OF CREDIT UNDER CREDIT FACILITIES IN AN
AGGREGATE PRINCIPAL AMOUNT AT ANY ONE TIME OUTSTANDING (WITH LETTERS
OF CREDIT BEING DEEMED TO HAVE A PRINCIPAL AMOUNT EQUAL TO THE FACE
AMOUNT THEREOF) NOT TO EXCEED THE POSITIVE DIFFERENCE BETWEEN (A)
THE GREATER OF (1) $330.0 MILLION AND (2) THE AMOUNT OF THE BORROWING
BASE AND (B) THE SUM OF (1) ALL OUTSTANDING INDEBTEDNESS
INCURRED IN QUALIFIED SECURITIZATION TRANSACTIONS, AND (2) THE
AGGREGATE AMOUNT OF ALL NET PROCEEDS OF ASSET SALES APPLIED BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES TO REPAY ANY INDEBTEDNESS UNDER THE
CREDIT FACILITIES PURSUANT TO SECTION 4.10 HEREOF;
(II) THE INCURRENCE BY THE COMPANY AND ITS RESTRICTED SUBSIDIARIES OF THE
EXISTING INDEBTEDNESS;
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(III) THE INCURRENCE BY THE COMPANY AND THE SUBSIDIARY GUARANTORS OF
INDEBTEDNESS REPRESENTED BY THE NOTES AND THE RELATED SUBSIDIARY
GUARANTIES TO BE ISSUED ON THE DATE OF THE INDENTURE AND BY THE
EXCHANGE NOTES AND THE RELATED SUBSIDIARY GUARANTIES TO BE ISSUED
PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT;
(IV) THE INCURRENCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF
INDEBTEDNESS REPRESENTED BY CAPITAL LEASE OBLIGATIONS, MORTGAGE
FINANCINGS OR PURCHASE MONEY OBLIGATIONS, IN EACH CASE, INCURRED FOR
THE PURPOSE OF FINANCING ALL OR ANY PART OF THE PURCHASE PRICE OR COST
OF CONSTRUCTION OR IMPROVEMENT OF PROPERTY, PLANT OR EQUIPMENT USED IN
THE BUSINESS OF THE COMPANY OR SUCH RESTRICTED SUBSIDIARY, IN AN
AGGREGATE PRINCIPAL AMOUNT, INCLUDING ALL PERMITTED REFINANCING
INDEBTEDNESS INCURRED TO REFUND, REFINANCE OR REPLACE ANY INDEBTEDNESS
INCURRED PURSUANT TO THIS CLAUSE (IV), NOT TO EXCEED 5.0% OF TOTAL
ASSETS AT ANY TIME OUTSTANDING;
(V) THE INCURRENCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF
PERMITTED REFINANCING INDEBTEDNESS IN EXCHANGE FOR, OR THE NET PROCEEDS
OF WHICH ARE USED TO REFUND, REFINANCE OR REPLACE INDEBTEDNESS (OTHER
THAN INTERCOMPANY INDEBTEDNESS) THAT WAS PERMITTED BY THE INDENTURE TO
BE INCURRED UNDER THE FIRST PARAGRAPH OF THIS SECTION 4.09 OR CLAUSES
(II), (III), (IV), (V), OR (X) OF THIS PARAGRAPH;
(VI) THE INCURRENCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES
OF INTERCOMPANY INDEBTEDNESS BETWEEN OR AMONG THE COMPANY AND ANY OF
ITS RESTRICTED SUBSIDIARIES; PROVIDED, HOWEVER, THAT:(A)IFTHE
COMPANY OR ANY SUBSIDIARY GUARANTOR IS THE OBLIGOR ON SUCH
INDEBTEDNESS, SUCH INDEBTEDNESS MUST BE EXPRESSLY SUBORDINATED TO
THE PRIOR PAYMENT IN FULL IN CASH OF ALL OBLIGATIONS WITH RESPECT TO
THE NOTES, IN THE CASE OF THE COMPANY, OR THE SUBSIDIARY GUARANTY, IN
THE CASE OF A SUBSIDIARY GUARANTOR; AND (B) (1) ANY SUBSEQUENT
ISSUANCE OR TRANSFER OF EQUITY INTERESTS THAT RESULTS IN ANY
SUCH INDEBTEDNESS BEING HELD BY A PERSON OTHER THAN THE COMPANY OR A
RESTRICTED SUBSIDIARY THEREOF AND (2) ANY SALE OR OTHER TRANSFER OF
ANY SUCH INDEBTEDNESS TO A PERSON THAT IS NOT EITHER THE COMPANY OR A
RESTRICTED SUBSIDIARY THEREOF; SHALL BE DEEMED, IN EACH CASE, TO
CONSTITUTE AN INCURRENCE OF SUCH INDEBTEDNESS BY THE COMPANY OR SUCH
SUBSIDIARY, AS THE CASE MAY BE, THAT WAS NOT PERMITTED BY THIS
CLAUSE (VI);
(VII) THE INCURRENCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF
HEDGING OBLIGATIONS THAT ARE INCURRED FOR THE PURPOSE OF FIXING OR
HEDGING (A) INTEREST RATE RISK WITH RESPECT TO ANY FLOATING RATE
INDEBTEDNESS THAT IS PERMITTED BY THE TERMS OF THIS INDENTURE TO BE
OUTSTANDING OR (B) THE VALUE OF FOREIGN CURRENCIES OR THE COST OF
COMMODITIES PURCHASED OR RECEIVED BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES;
(VIII) (A) THE GUARANTY BY THE COMPANY OR ANY OF THE SUBSIDIARY
GUARANTORS OF INDEBTEDNESS OF THE COMPANY OR A SUBSIDIARY
GUARANTOR THAT WAS PERMITTED TO BE INCURRED BY ANOTHER
PROVISION OF THIS COVENANT;
(B) THE GUARANTY BY ANY RESTRICTED SUBSIDIARY OF THE COMPANY THAT
IS NOT A SUBSIDIARY GUARANTOR OF INDEBTEDNESS OF THE COMPANY
OR ANOTHER RESTRICTED SUBSIDIARY OF THE COMPANY THAT WAS
PERMITTED TO BE INCURRED BY ANOTHER PROVISION OF THIS
COVENANT;
(IX) THE ACCRUAL OF INTEREST, THE ACCRETION OR AMORTIZATION OF ORIGINAL
ISSUE DISCOUNT, THE PAYMENT OF INTEREST ON ANY INDEBTEDNESS IN THE FORM
OF ADDITIONAL INDEBTEDNESS WITH THE
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SAME TERMS, AND THE PAYMENT OF DIVIDENDS ON DISQUALIFIED STOCK IN THE
FORM OF ADDITIONAL SHARES OF THE SAME CLASS OF DISQUALIFIED STOCK;
PROVIDED, IN EACH SUCH CASE, THAT THE AMOUNT THEREOF IS INCLUDED IN
FIXED CHARGES OF THE COMPANY AS ACCRUED;
(X) THE INCURRENCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF
ADDITIONAL INDEBTEDNESS OR DISQUALIFIED STOCK IN AN AGGREGATE PRINCIPAL
AMOUNT (OR ACCRETED VALUE, AS APPLICABLE) AT ANY TIME OUTSTANDING,
INCLUDING ALL PERMITTED REFINANCING INDEBTEDNESS INCURRED TO REFUND,
REFINANCE OR REPLACE ANY INDEBTEDNESS INCURRED PURSUANT TO THIS CLAUSE
(X), NOT TO EXCEED $25.0 MILLION;
(XI) THE INCURRENCE BY THE COMPANY'S UNRESTRICTED SUBSIDIARIES OF
NON-RECOURSE DEBT OR THE ISSUANCE OF PREFERRED STOCK, PROVIDED,
HOWEVER, THAT IF ANY SUCH INDEBTEDNESS CEASES TO BE NON-RECOURSE DEBT
OF AN UNRESTRICTED SUBSIDIARY, SUCH EVENT SHALL BE DEEMED TO CONSTITUTE
AN INCURRENCE OF INDEBTEDNESS BY A RESTRICTED SUBSIDIARY THAT WAS NOT
PERMITTED BY THIS CLAUSE (XI);
(XII) THE INCURRENCE OF INDEBTEDNESS OWING TO ANY INSURANCE COMPANY IN
CONNECTION WITH THE FINANCING OF INSURANCE PREMIUMS PERMITTED BY SUCH
INSURANCE COMPANY IN THE ORDINARY COURSE OF BUSINESS;
(XIII) THE INCURRENCE OF INDEBTEDNESS (INCLUDING LETTERS OF CREDIT) IN RESPECT
OF WORKERS' COMPENSATION CLAIMS, SELF-INSURANCE OBLIGATIONS,
PERFORMANCE, SURETY, BID OR SIMILAR BONDS AND COMPLETION GUARANTEES
PROVIDED BY THE COMPANY OR ONE OF ITS RESTRICTED SUBSIDIARIES IN THE
ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICES;
(XIV) INDEBTEDNESS ARISING FROM AGREEMENTS OF THE COMPANY OR A
RESTRICTED SUBSIDIARY PROVIDING FOR INDEMNIFICATION, ADJUSTMENT OF
PURCHASE PRICE, EARN OUT OR OTHER SIMILAR OBLIGATIONS, IN EACH CASE,
INCURRED OR ASSUMED IN CONNECTION WITH THE DISPOSITION OF ANY
BUSINESS, ASSETS OR A RESTRICTED SUBSIDIARY, OTHER THAN GUARANTEES
OF INDEBTEDNESS INCURRED BY ANY PERSON ACQUIRING ALL OR ANY PORTION
OF SUCH BUSINESS, ASSETS OR RESTRICTED SUBSIDIARY FOR THE PURPOSE
OF FINANCING SUCH ACQUISITION; PROVIDED THAT THE MAXIMUM ASSUMABLE
LIABILITY IN RESPECT OF ALL SUCH INDEBTEDNESS SHALL AT NO TIME EXCEED
THE GROSS PROCEEDS ACTUALLY RECEIVED BY THE COMPANY AND ITS
RESTRICTED SUBSIDIARIES IN CONNECTION WITH SUCH DISPOSITION;
(XV) THE INCURRENCE BY A SECURITIZATION ENTITY OF INDEBTEDNESS IN A
QUALIFIED SECURITIZATION TRANSACTION THAT IS NON-RECOURSE DEBT (EXCEPT
FOR STANDARD SECURITIZATION UNDERTAKINGS) WITH RESPECT TO THE COMPANY
AND ITS OTHER RESTRICTED SUBSIDIARIES;
(XVI) INDEBTEDNESS OF THE COMPANY EVIDENCED BY PROMISSORY NOTES SUBORDINATED
TO THE NOTES AND THE EXCHANGE NOTES ISSUED TO CURRENT OR FORMER
EMPLOYEES, DIRECTORS, OFFICERS OR CONSULTANTS OF THE COMPANY AND ITS
SUBSIDIARIES IN LIEU OF CASH PAYMENT FOR ANY EQUITY INTEREST OF THE
COMPANY BEING REPURCHASED FROM SUCH PERSONS; PROVIDED, THAT THE
AGGREGATE AMOUNT OF SUCH INDEBTEDNESS INCURRED DOES NOT EXCEED $2.5
MILLION IN ANY CALENDAR YEAR (PROVIDED THAT IN ANY CALENDAR YEAR SUCH
AMOUNT SHALL BE INCREASED BY THE AMOUNT AVAILABLE FOR INCURRENCE, BUT
NOT INCURRED, UNDER THIS CLAUSE (XVI) IN ANY PRECEDING YEAR) AND $10.0
MILLION SINCE THE DATE OF THE INDENTURE;
(XVII) GUARANTIES OF INDEBTEDNESS OF ANY OTHER PERSON INCURRED BY THE COMPANY
OR A RESTRICTED
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SUBSIDIARY IN THE ORDINARY COURSE OF BUSINESS IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $5.0 MILLION AT ANY ONE TIME
OUTSTANDING;
(XVIII) INDEBTEDNESS CONSISTING OF TAKE-OR-PAY OBLIGATIONS CONTAINED IN SUPPLY
AGREEMENTS ENTERED INTO BY THE COMPANY OR ITS SUBSIDIARIES IN THE
ORDINARY COURSE; AND
(XIX) THE INCURRENCE BY ANY FOREIGN SUBSIDIARY OF INDEBTEDNESS THAT IS NOT
PROHIBITED BY SECTION 4.17 HEREOF.
FOR PURPOSES OF DETERMINING COMPLIANCE WITH THIS SECTION 4.09 IN THE
EVENT THAT AN ITEM OF PROPOSED INDEBTEDNESS MEETS THE CRITERIA OF MORE THAN ONE
OF THE CATEGORIES OF PERMITTED DEBT DESCRIBED IN CLAUSES (I) THROUGH (XIX)
ABOVE, OR IS ENTITLED TO BE INCURRED PURSUANT TO THE FIRST PARAGRAPH OF THIS
COVENANT, THE COMPANY SHALL BE PERMITTED TO CLASSIFY SUCH ITEM OF INDEBTEDNESS
ON THE DATE OF ITS INCURRENCE, OR LATER RECLASSIFY ALL OR A PORTION OF SUCH ITEM
OF INDEBTEDNESS, IN ANY MANNER THAT COMPLIES WITH THIS COVENANT. INDEBTEDNESS
UNDER CREDIT FACILITIES OUTSTANDING ON THE DATE ON WHICH NOTES ARE FIRST ISSUED
AND AUTHENTICATED UNDER THE INDENTURE SHALL BE DEEMED TO HAVE BEEN INCURRED ON
SUCH DATE IN RELIANCE ON THE EXCEPTION PROVIDED BY CLAUSE (1) OF THE DEFINITION
OF PERMITTED DEBT.
SECTION 4.10. ASSET SALES.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, CONSUMMATE AN ASSET SALE UNLESS: (I) THE COMPANY OR THE
RESTRICTED SUBSIDIARY, AS THE CASE MAY BE, RECEIVES CONSIDERATION AT THE TIME OF
SUCH ASSET SALE AT LEAST EQUAL TO THE FAIR MARKET VALUE OF THE ASSETS OR EQUITY
INTERESTS ISSUED OR SOLD OR OTHERWISE DISPOSED OF (AS DETERMINED IN GOOD FAITH
BY THE COMPANY); (II) SUCH FAIR MARKET VALUE IS DETERMINED BY THE COMPANY'S
BOARD OF DIRECTORS AND EVIDENCED BY A RESOLUTION OF THE BOARD OF DIRECTORS SET
FORTH IN AN OFFICERS' CERTIFICATE DELIVERED TO THE TRUSTEE; AND (III) AT LEAST
75% OF THE CONSIDERATION THEREFOR RECEIVED BY THE COMPANY OR SUCH RESTRICTED
SUBSIDIARY IS IN THE FORM OF CASH OR CASH EQUIVALENTS. FOR PURPOSES OF THIS
PROVISION, EACH OF THE FOLLOWING SHALL BE DEEMED TO BE CASH: (A) ANY LIABILITIES
(AS SHOWN ON THE COMPANY'S OR SUCH RESTRICTED SUBSIDIARY'S MOST RECENT BALANCE
SHEET) OF THE COMPANY OR ANY RESTRICTED SUBSIDIARY (OTHER THAN CONTINGENT
LIABILITIES AND LIABILITIES THAT ARE BY THEIR TERMS SUBORDINATED TO THE NOTES OR
ANY SUBSIDIARY GUARANTY) THAT ARE ASSUMED BY THE TRANSFEREE OF ANY SUCH ASSETS
PURSUANT TO A CUSTOMARY NOVATION AGREEMENT THAT RELEASES THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY FROM FURTHER LIABILITY; (B) ANY SECURITIES, NOTES OR OTHER
OBLIGATIONS RECEIVED BY THE COMPANY OR ANY SUCH RESTRICTED SUBSIDIARY FROM SUCH
TRANSFEREE THAT ARE CONVERTED BY THE COMPANY OR SUCH RESTRICTED SUBSIDIARY INTO
CASH WITHIN 180 DAYS AFTER THE CONSUMMATION OF SUCH ASSET SALE (TO THE EXTENT OF
THE CASH RECEIVED IN THAT CONVERSION); AND (C) ANY DESIGNATED NONCASH
CONSIDERATION RECEIVED BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES IN
SUCH ASSET SALE; PROVIDED THAT THE AGGREGATE FAIR MARKET VALUE (AS DETERMINED
ABOVE) OF SUCH DESIGNATED NONCASH CONSIDERATION, TAKEN TOGETHER WITH THE FAIR
MARKET VALUE AT THE TIME OF RECEIPT OF ALL OTHER DESIGNATED NONCASH
CONSIDERATION RECEIVED PURSUANT TO THIS CLAUSE (C) LESS THE AMOUNT OF NET
PROCEEDS PREVIOUSLY REALIZED IN CASH FROM SUCH EARLIER RECEIVED DESIGNATED
NONCASH CONSIDERATION IS LESS THAN THE GREATER OF 5.0% OF TOTAL ASSETS OR $25.0
MILLION AT THE TIME OF THE RECEIPT OF SUCH DESIGNATED NONCASH CONSIDERATION
(WITH THE FAIR MARKET VALUE OF EACH ITEM OF DESIGNATED NONCASH CONSIDERATION
BEING MEASURED AT THE TIME RECEIVED AND WITHOUT GIVING EFFECT TO SUBSEQUENT
CHANGES IN VALUE).
WITHIN 365 DAYS AFTER THE RECEIPT OF ANY NET PROCEEDS FROM AN ASSET
SALE, THE
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COMPANY SHALL APPLY SUCH NET PROCEEDS AT ITS OPTION: (I) TO REPAY SENIOR DEBT
AND, IF THE SENIOR DEBT REPAID IS REVOLVING CREDIT INDEBTEDNESS, TO
CORRESPONDINGLY REDUCE COMMITMENTS WITH RESPECT THERETO; (II) TO ACQUIRE ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF, OR A MAJORITY OF THE VOTING STOCK OF,
ANOTHER PERMITTED BUSINESS; (III) TO MAKE CAPITAL EXPENDITURES; AND/OR (IV) TO
ACQUIRE OTHER LONG-TERM ASSETS THAT ARE USED OR USEFUL IN A PERMITTED BUSINESS.
PENDING THE FINAL APPLICATION OF ANY SUCH NET PROCEEDS, THE COMPANY MAY
TEMPORARILY REDUCE REVOLVING CREDIT BORROWINGS OR OTHERWISE INVEST SUCH NET
PROCEEDS IN ANY MANNER THAT IS NOT PROHIBITED BY THE INDENTURE. ANY NET PROCEEDS
FROM ASSET SALES THAT ARE NOT APPLIED OR INVESTED AS PROVIDED IN THE PRECEDING
PARAGRAPH SHALL CONSTITUTE "EXCESS PROCEEDS." WHEN THE AGGREGATE AMOUNT OF
EXCESS PROCEEDS EXCEEDS $10.0 MILLION, THE COMPANY SHALL MAKE AN ASSET SALE
OFFER TO ALL HOLDERS OF NOTES AND ALL HOLDERS OF OTHER INDEBTEDNESS THAT IS PARI
PASSU WITH THE NOTES CONTAINING PROVISIONS SIMILAR TO THOSE SET FORTH IN THE
INDENTURE WITH RESPECT TO OFFERS TO PURCHASE OR REDEEM WITH THE PROCEEDS OF
SALES OF ASSETS TO PURCHASE THE MAXIMUM PRINCIPAL AMOUNT OF NOTES AND SUCH OTHER
PARI PASSU INDEBTEDNESS THAT MAY BE PURCHASED OUT OF THE EXCESS PROCEEDS. THE
OFFER PRICE IN ANY ASSET SALE OFFER SHALL BE EQUAL TO 100% OF PRINCIPAL AMOUNT
PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES, IF ANY, TO THE DATE OF
PURCHASE, AND SHALL BE PAYABLE IN CASH. IF ANY EXCESS PROCEEDS REMAIN AFTER
CONSUMMATION OF AN ASSET SALE OFFER, THE COMPANY MAY USE SUCH EXCESS PROCEEDS
FOR ANY PURPOSE NOT OTHERWISE PROHIBITED BY THE INDENTURE. IF THE AGGREGATE
PRINCIPAL AMOUNT OF NOTES AND SUCH OTHER PARI PASSU INDEBTEDNESS TENDERED INTO
SUCH ASSET SALE OFFER EXCEEDS THE AMOUNT OF EXCESS PROCEEDS, THE TRUSTEE SHALL
SELECT THE NOTES AND SUCH OTHER PARI PASSU INDEBTEDNESS TO BE PURCHASED ON A PRO
RATA BASIS BASED ON THE PRINCIPAL AMOUNT OF NOTES AND SUCH OTHER PARI PASSU
INDEBTEDNESS TENDERED. UPON COMPLETION OF EACH ASSET SALE OFFER, THE AMOUNT OF
EXCESS PROCEEDS SHALL BE RESET AT ZERO.
THE COMPANY SHALL COMPLY WITH THE REQUIREMENTS OF RULE 14E-1 UNDER
THE EXCHANGE ACT AND ANY OTHER SECURITIES LAWS AND REGULATIONS THEREUNDER TO THE
EXTENT SUCH LAWS AND REGULATIONS ARE APPLICABLE IN CONNECTION WITH EACH
REPURCHASE OF NOTES PURSUANT TO AN ASSET SALE OFFER. TO THE EXTENT THAT THE
PROVISIONS OF ANY SECURITIES LAWS OR REGULATIONS CONFLICT WITH THIS SECTION
4.10, THE COMPANY SHALL COMPLY WITH THE APPLICABLE SECURITIES LAWS AND
REGULATIONS AND SHALL NOT BE DEEMED TO HAVE BREACHED ITS OBLIGATIONS UNDER THIS
SECTION 4.10 BY VIRTUE OF SUCH CONFLICT.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, MAKE ANY PAYMENT TO, OR SELL, LEASE, TRANSFER OR OTHERWISE
DISPOSE OF ANY OF ITS PROPERTIES OR ASSETS TO, OR PURCHASE ANY PROPERTY OR
ASSETS FROM, OR ENTER INTO OR MAKE OR AMEND ANY TRANSACTION, CONTRACT,
AGREEMENT, UNDERSTANDING, LOAN, ADVANCE OR GUARANTEE WITH, OR FOR THE BENEFIT
OF, ANY AFFILIATE (EACH, AN "AFFILIATE TRANSACTION"), UNLESS (A) SUCH AFFILIATE
TRANSACTION IS ON TERMS THAT ARE NO LESS FAVORABLE TO THE COMPANY OR THE
RELEVANT RESTRICTED SUBSIDIARY THAN THOSE THAT WOULD HAVE BEEN OBTAINED IN A
COMPARABLE TRANSACTION BY THE COMPANY OR SUCH RESTRICTED SUBSIDIARY WITH AN
UNRELATED PERSON AND (B) THE COMPANY DELIVERS TO THE TRUSTEE (I) WITH RESPECT TO
ANY AFFILIATE TRANSACTION OR SERIES OF RELATED AFFILIATE TRANSACTIONS INVOLVING
AGGREGATE CONSIDERATION IN EXCESS OF $2.5 MILLION, A RESOLUTION OF THE BOARD OF
DIRECTORS SET FORTH IN AN OFFICERS' CERTIFICATE CERTIFYING THAT SUCH AFFILIATE
TRANSACTION COMPLIES WITH THIS COVENANT AND THAT SUCH AFFILIATE TRANSACTION HAS
BEEN APPROVED BY A MAJORITY OF THE DISINTERESTED MEMBERS OF THE BOARD OF
DIRECTORS AND (II) WITH RESPECT TO ANY AFFILIATE TRANSACTION OR SERIES OF
RELATED AFFILIATE TRANSACTIONS INVOLVING AGGREGATE CONSIDERATION IN EXCESS OF
$7.5 MILLION, AN OPINION ISSUED BY AN ACCOUNTING, APPRAISAL OR INVESTMENT
BANKING FIRM OF NATIONAL STANDING
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THAT SUCH AFFILIATE TRANSACTION COMPLIES WITH THIS SECTION 4.11.
THE FOLLOWING ITEMS SHALL NOT BE DEEMED TO BE AFFILIATE TRANSACTIONS
AND, THEREFORE, SHALL NOT BE SUBJECT TO THE PROVISIONS OF THE PRIOR PARAGRAPH:
(I) ANY EMPLOYMENT AGREEMENT ENTERED INTO BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH
THE PAST PRACTICE OF THE COMPANY OR SUCH RESTRICTED SUBSIDIARY; (II)
TRANSACTIONS BETWEEN OR AMONG THE COMPANY AND/OR ITS RESTRICTED SUBSIDIARIES;
(III) TRANSACTIONS WITH A PERSON THAT IS AN AFFILIATE OF THE COMPANY SOLELY
BECAUSE THE COMPANY OWNS AN EQUITY INTEREST IN SUCH PERSON; (IV) PAYMENT OF
REASONABLE DIRECTORS FEES TO PERSONS WHO ARE NOT OTHERWISE AFFILIATES OF THE
COMPANY; (V) SALES OF EQUITY INTERESTS (OTHER THAN DISQUALIFIED STOCK) TO
AFFILIATES OF THE COMPANY; (VI) RESTRICTED PAYMENTS THAT ARE PERMITTED BY
SECTION 4.07 HEREOF (VII) PROVIDING INDEMNITY TO CURRENT OR FORMER OFFICERS,
DIRECTORS, EMPLOYEES OR CONSULTANTS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES AS
DETERMINED IN GOOD FAITH BY THE BOARD OF DIRECTORS OF THE COMPANY; (VIII) THE
PAYMENT OF CUSTOMARY MANAGEMENT, CONSULTING AND ADVISORY FEES AND RELATED
EXPENSES TO HIDDEN CREEK OR ITS AFFILIATES CONSISTENT WITH HIDDEN CREEK'S PAST
PRACTICES, INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ACQUISITIONS,
DIVESTITURES OR FINANCINGS BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES;
(IX) PERFORMANCE OF OBLIGATIONS OF THE COMPANY OR ANY OF ITS RESTRICTED
SUBSIDIARIES UNDER THE TERMS OF ANY AGREEMENT TO WHICH THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY IS A PARTY AS OF THE DATE OF THE INDENTURE AND WHICH IS
DESCRIBED UNDER THE CAPTION "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" IN
THE OFFERING MEMORANDUM DATED MAY 25, 1999, WITH REGARD TO THE COMPANY'S 11 1/2%
SENIOR SUBORDINATED NOTES DUE 2009, AND ANY SIMILAR AGREEMENTS ENTERED INTO
AFTER THE DATE OF THE INDENTURE AS SUCH AGREEMENTS MAY BE AMENDED OR MODIFIED
FROM TIME TO TIME; PROVIDED, HOWEVER, THAT THE EXISTENCE OF, OR THE PERFORMANCE
BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF OBLIGATIONS UNDER, ANY
FUTURE AMENDMENT TO ANY SUCH EXISTING AGREEMENT OR UNDER ANY SIMILAR AGREEMENT
ENTERED INTO AFTER THE DATE OF THE INDENTURE SHALL BE PERMITTED BY THIS CLAUSE
TO THE EXTENT THAT THE TERMS OF ANY SUCH AMENDMENT OR SIMILAR AGREEMENT ARE NOT
MORE DISADVANTAGEOUS TO THE HOLDERS IN ANY MATERIAL RESPECT THAN THE TERMS OF
THE AGREEMENTS IN PLACE ON THE DATE OF THE INDENTURE; (X) THE GRANT OF STOCK
OPTIONS, RESTRICTED STOCK OR SIMILAR RIGHTS TO THE COMPANY'S EMPLOYEES, AND
DIRECTORS AND CONSULTANTS PURSUANT TO PLANS APPROVED BY THE BOARD OF DIRECTORS
OF THE COMPANY; (XI) TRANSACTIONS EFFECTED AS PART OF A QUALIFIED SECURITIZATION
TRANSACTION; (XII) LOANS OR ADVANCES TO EMPLOYEES OR CONSULTANTS IN THE ORDINARY
COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICES, WHICH ARE APPROVED BY A
MAJORITY OF THE BOARD OF DIRECTORS OF THE COMPANY IN GOOD FAITH; AND (XIII)
TRANSACTIONS WITH CUSTOMERS, JOINT VENTURE PARTNERS, CLIENTS, SUPPLIERS, OR
PURCHASERS OR SELLERS OF GOODS OR SERVICES, IN EACH CASE IN THE ORDINARY COURSE
OF BUSINESS AND OTHERWISE IN COMPLIANCE WITH THE TERMS OF THE INDENTURE WHICH
ARE FAIR TO THE COMPANY OR ITS RESTRICTED SUBSIDIARIES, IN THE REASONABLE
DETERMINATION OF THE BOARD OF DIRECTORS OF THE COMPANY.
SECTION 4.12. LIENS.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, CREATE, INCUR, ASSUME OR SUFFER TO
EXIST ANY LIEN OF ANY KIND ON ANY ASSET NOW OWNED OR HEREAFTER ACQUIRED, EXCEPT
PERMITTED LIENS.
SECTION 4.13. BUSINESS ACTIVITIES.
THE COMPANY AND ITS RESTRICTED SUBSIDIARIES SHALL BE AT ALL TIMES
ENGAGED PRIMARILY IN PERMITTED BUSINESSES.
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SECTION 4.14. CORPORATE EXISTENCE.
SUBJECT TO ARTICLE 5 HEREOF, THE COMPANY SHALL DO OR CAUSE TO BE DONE
ALL THINGS NECESSARY TO PRESERVE AND KEEP IN FULL FORCE AND EFFECT (I) ITS
CORPORATE EXISTENCE, AND THE CORPORATE, PARTNERSHIP OR OTHER EXISTENCE OF EACH
OF ITS SUBSIDIARIES, IN ACCORDANCE WITH THE RESPECTIVE ORGAN IZATIONAL DOCUMENTS
(AS THE SAME MAY BE AMENDED FROM TIME TO TIME) OF THE COMPANY OR ANY SUCH
SUBSIDIARY AND (II) THE RIGHTS (CHARTER AND STATUTORY), LICENSES AND FRANCHISES
OF THE COMPANY AND ITS SUBSIDIARIES; PROVIDED, HOWEVER, THAT THE COMPANY SHALL
NOT BE REQUIRED TO PRESERVE ANY SUCH RIGHT, LICENSE OR FRANCHISE, OR THE
CORPORATE, PARTNERSHIP OR OTHER EXISTENCE OF ANY OF ITS SUBSIDIARIES, IF THE
BOARD OF DIRECTORS SHALL DETERMINE THAT THE PRESERVATION THEREOF IS NO LONGER
DESIRABLE IN THE CONDUCT OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES,
TAKEN AS A WHOLE, AND THAT THE LOSS THEREOF IS NOT ADVERSE IN ANY MATERIAL
RESPECT TO THE HOLDERS OF THE NOTES.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(A) UPON THE OCCURRENCE OF A CHANGE OF CONTROL, IF THE COMPANY HAS
NOT PREVIOUSLY ISSUED AN IRREVOCABLE NOTICE OF REDEMPTION OF ALL OF THE NOTES ON
THE TERMS SET FORTH IN SECTION 3.07(A) HEREOF, THE COMPANY SHALL MAKE AN OFFER
(A "CHANGE OF CONTROL OFFER") TO EACH HOLDER TO REPURCHASE ALL OR ANY PART
(EQUAL TO $1,000 OR AN INTEGRAL MULTIPLE THEREOF) OF EACH HOLDER'S NOTES AT A
PURCHASE PRICE EQUAL TO 101% OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF PLUS
ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE DATE
OF PURCHASE (THE "CHANGE OF CONTROL PAYMENT"). WITHIN 30 DAYS FOLLOWING ANY
CHANGE OF CONTROL, THE COMPANY SHALL MAIL A NOTICE TO EACH HOLDER STATING: (I)
THAT THE CHANGE OF CONTROL OFFER IS BEING MADE PURSUANT TO THIS SECTION 4.15 AND
THAT ALL NOTES TENDERED SHALL BE ACCEPTED FOR PAYMENT; (II) THE PURCHASE PRICE
AND THE PURCHASE DATE, WHICH SHALL BE NO EARLIER THAN 30 DAYS AND NO LATER THAN
60 DAYS FROM THE DATE SUCH NOTICE IS MAILED (THE "CHANGE OF CONTROL PAYMENT
DATE"); (III) THAT ANY NOTE NOT TENDERED SHALL CONTINUE TO ACCRUE INTEREST; (IV)
THAT, UNLESS THE COMPANY DEFAULTS IN THE PAYMENT OF THE CHANGE OF CONTROL
PAYMENT, ALL NOTES ACCEPTED FOR PAYMENT PURSUANT TO THE CHANGE OF CONTROL OFFER
SHALL CEASE TO ACCRUE INTEREST AFTER THE CHANGE OF CONTROL PAYMENT DATE; (V)
THAT HOLDERS ELECTING TO HAVE ANY NOTES PURCHASED PURSUANT TO A CHANGE OF
CONTROL OFFER SHALL BE REQUIRED TO SURRENDER THE NOTES, WITH THE FORM ENTITLED
"OPTION OF HOLDER TO ELECT PURCHASE" ON THE REVERSE OF THE NOTES COMPLETED, TO
THE PAYING AGENT AT THE ADDRESS SPECIFIED IN THE NOTICE PRIOR TO THE CLOSE OF
BUSINESS ON THE THIRD BUSINESS DAY PRECEDING THE CHANGE OF CONTROL PAYMENT DATE;
(VI) THAT HOLDERS SHALL BE ENTITLED TO WITHDRAW THEIR ELECTION IF THE PAYING
AGENT RECEIVES, NOT LATER THAN THE CLOSE OF BUSINESS ON THE SECOND BUSINESS DAY
PRECEDING THE CHANGE OF CONTROL PAYMENT DATE, A TELEGRAM, TELEX, FACSIMILE
TRANSMISSION OR LETTER SETTING FORTH THE NAME OF THE HOLDER, THE PRINCIPAL
AMOUNT OF NOTES DELIVERED FOR PURCHASE, AND A STATEMENT THAT SUCH HOLDER IS
WITHDRAWING HIS ELECTION TO HAVE THE NOTES PURCHASED; AND (VII) THAT HOLDERS
WHOSE NOTES ARE BEING PURCHASED ONLY IN PART SHALL BE ISSUED NEW NOTES EQUAL IN
PRINCIPAL AMOUNT TO THE UNPURCHASED PORTION OF THE NOTES SURRENDERED, WHICH
UNPURCHASED PORTION MUST BE EQUAL TO $1,000 IN PRINCIPAL AMOUNT OR AN INTEGRAL
MULTIPLE THEREOF. THE COMPANY SHALL COMPLY WITH THE REQUIREMENTS OF RULE 14E-1
UNDER THE EXCHANGE ACT AND ANY OTHER SECURITIES LAWS AND REGULATIONS THEREUNDER
TO THE EXTENT SUCH LAWS AND REGULATIONS ARE APPLICABLE IN CONNECTION WITH THE
REPURCHASE OF THE NOTES AS A RESULT OF A CHANGE OF CONTROL.
(B) ON THE CHANGE OF CONTROL PAYMENT DATE, THE COMPANY SHALL, TO THE
EXTENT LAWFUL, (I) ACCEPT FOR PAYMENT ALL NOTES OR PORTIONS THEREOF PROPERLY
TENDERED PURSUANT TO THE CHANGE OF CONTROL OFFER, (II) DEPOSIT WITH THE PAYING
AGENT AN AMOUNT EQUAL TO THE CHANGE OF CONTROL PAYMENT IN RESPECT OF ALL NOTES
OR PORTIONS THEREOF SO TENDERED AND (III) DELIVER OR CAUSE TO BE
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DELIVERED TO THE TRUSTEE THE NOTES SO ACCEPTED TOGETHER WITH AN OFFICERS'
CERTIFICATE STATING THE AGGREGATE PRINCIPAL AMOUNT OF NOTES BEING PURCHASED BY
THE COMPANY. THE PAYING AGENT SHALL PROMPTLY MAIL TO EACH HOLDER OF NOTES SO
TENDERED PAYMENT IN AN AMOUNT EQUAL TO THE PURCHASE PRICE FOR THE NOTES, AND THE
TRUSTEE SHALL PROMPTLY AUTHENTICATE AND MAIL (OR CAUSE TO BE TRANSFERRED BY BOOK
ENTRY) TO EACH HOLDER A NEW NOTE EQUAL IN PRINCIPAL AMOUNT TO ANY UNPURCHASED
PORTION OF THE NOTES SURRENDERED BY SUCH HOLDER, IF ANY; PROVIDED, THAT EACH
SUCH NEW NOTE SHALL BE IN A PRINCIPAL AMOUNT OF $1,000 OR AN INTEGRAL MULTIPLE
THEREOF.
(C) PRIOR TO COMPLYING WITH ANY OF THE PROVISIONS OF THIS SECTION
4.15, BUT IN ANY EVENT WITHIN 90 DAYS FOLLOWING A CHANGE OF CONTROL, THE COMPANY
SHALL EITHER REPAY ALL OUTSTANDING SENIOR DEBT OR OBTAIN THE REQUISITE CONSENTS,
IF ANY, UNDER ALL AGREEMENTS GOVERNING OUTSTANDING SENIOR DEBT TO PERMIT THE
REPURCHASE OF NOTES REQUIRED BY THIS COVENANT. IF THE COMPANY DOES NOT OBTAIN
SUCH CONSENTS OR REPAY SUCH BORROWINGS, IT SHALL BE PROHIBITED FROM REPURCHASING
THE NOTES. THE COMPANY SHALL PUBLICLY ANNOUNCE THE RESULTS OF THE CHANGE OF
CONTROL OFFER ON OR AS SOON AS PRACTICABLE AFTER THE CHANGE OF CONTROL PAYMENT
DATE.
(D) THE PROVISIONS DESCRIBED ABOVE THAT REQUIRE THE COMPANY TO MAKE A
CHANGE OF CONTROL OFFER FOLLOWING A CHANGE OF CONTROL SHALL BE APPLICABLE
REGARDLESS OF WHETHER ANY OTHER PROVISIONS OF THIS INDENTURE ARE APPLICABLE.
EXCEPT AS DESCRIBED ABOVE WITH RESPECT TO A CHANGE OF CONTROL, THIS INDENTURE
DOES NOT CONTAIN PROVISIONS THAT PERMIT THE HOLDERS OF THE NOTES TO REQUIRE THAT
THE COMPANY REPURCHASE OR REDEEM THE NOTES IN THE EVENT OF A TAKEOVER,
RECAPITALIZATION OR SIMILAR TRANSACTION.
(E) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 4.15,
THE COMPANY SHALL NOT BE REQUIRED TO MAKE A CHANGE OF CONTROL OFFER UPON A
CHANGE OF CONTROL IF A THIRD PARTY MAKES THE CHANGE OF CONTROL OFFER IN THE
MANNER, AT THE TIMES AND OTHERWISE IN COMPLIANCE WITH THE REQUIREMENTS SET FORTH
IN THIS SECTION 4.15 AND SECTION 3.09 HEREOF AND ALL OTHER PROVISIONS APPLICABLE
TO A CHANGE OF CONTROL OFFER MADE BY THE COMPANY AND PURCHASES ALL NOTES VALIDLY
TENDERED AND NOT WITHDRAWN UNDER SUCH CHANGE OF CONTROL OFFER.
SECTION 4.16. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
THE BOARD OF DIRECTORS MAY DESIGNATE ANY RESTRICTED SUBSIDIARY TO BE
AN UNRESTRICTED SUBSIDIARY IF THAT DESIGNATION WOULD NOT CAUSE A DEFAULT. IF A
RESTRICTED SUBSIDIARY IS DESIGNATED AS AN UNRESTRICTED SUBSIDIARY, THE AGGREGATE
FAIR MARKET VALUE OF ALL OUTSTANDING INVESTMENTS OWNED BY THE COMPANY AND ITS
RESTRICTED SUBSIDIARIES IN THE SUBSIDIARY SO DESIGNATED SHALL BE DEEMED TO BE AN
INVESTMENT MADE AS OF THE TIME OF SUCH DESIGNATION AND SHALL EITHER REDUCE THE
AMOUNT AVAILABLE FOR RESTRICTED PAYMENTS UNDER THE FIRST PARAGRAPH OF SECTION
4.07 HEREOF OR REDUCE THE AMOUNT AVAILABLE FOR FUTURE INVESTMENTS UNDER ONE OR
MORE CLAUSES OF THE DEFINITION OF PERMITTED INVESTMENTS, AS THE COMPANY SHALL
DETERMINE. THAT DESIGNATION SHALL ONLY BE PERMITTED IF SUCH INVESTMENT WOULD BE
PERMITTED AT THAT TIME AND IF SUCH RESTRICTED SUBSIDIARY OTHERWISE MEETS THE
DEFINITION OF AN UNRESTRICTED SUBSIDIARY. THE BOARD OF DIRECTORS MAY REDESIGNATE
ANY UNRESTRICTED SUBSIDIARY TO BE A RESTRICTED SUBSIDIARY IF THE REDESIGNATION
WOULD NOT CAUSE A DEFAULT.
SECTION 4.17. LIMITATION ON FOREIGN INDEBTEDNESS.
THE COMPANY SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY OF THE COMPANY
THAT IS NOT A SUBSIDIARY GUARANTOR TO, DIRECTLY OR INDIRECTLY, INCUR ANY
INDEBTEDNESS (INCLUDING ACQUIRED INDEBTEDNESS) OTHER THAN INDEBTEDNESS INCURRED
PURSUANT TO CLAUSE (I) OR (II) OF SECTION 4.09 UNLESS, (I) AFTER GIVING EFFECT
TO THE INCURRENCE OF SUCH INDEBTEDNESS AND THE RECEIPT
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OF THE APPLICATION OF THE PROCEEDS THEREOF; (A) IF, AS A RESULT OF THE
INCURRENCE OF SUCH INDEBTEDNESS, SUCH RESTRICTED SUBSIDIARY SHALL BECOME SUBJECT
TO ANY RESTRICTION OR LIMITATION ON THE PAYMENT OF DIVIDENDS OR THE MAKING OF
OTHER DISTRIBUTIONS, (1) THE FIXED CHARGE COVERAGE RATIO OF RESTRICTED
SUBSIDIARIES THAT ARE NOT SUBSIDIARY GUARANTORS (DETERMINED ON A PRO FORMA BASIS
FOR THE LAST FOUR FISCAL QUARTERS FOR WHICH FINANCIAL STATEMENTS ARE AVAILABLE
AT THE DATE OF DETERMINATION) IS GREATER THAN 2.5 TO 1; AND (2) THE COMPANY'S
FIXED CHARGE COVERAGE RATIO (DETERMINED ON A PRO FORMA BASIS FOR THE LAST FOUR
FISCAL QUARTERS OF THE COMPANY FOR WHICH FINANCIAL STATEMENTS ARE AVAILABLE AT
THE DATE OF DETERMINATION) IS GREATER THAN 2.0 TO 1; AND (B) IN ANY OTHER CASE,
THE COMPANY'S FIXED CHARGE COVERAGE RATIO (DETERMINED ON A PRO FORMA BASIS FOR
THE LAST FOUR FISCAL QUARTERS OF THE COMPANY FOR WHICH FINANCIAL STATEMENTS ARE
AVAILABLE AT THE DATE OF DETERMINATION) IS GREATER THAN 2.0 TO 1; AND (II) NO
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AT THE TIME OR
AS A CONSEQUENCE OF THE INCURRENCE OF SUCH INDEBTEDNESS.
THIS COVENANT SHALL NOT PROHIBIT THE INCURRENCE OF INDEBTEDNESS BY A
RESTRICTED SUBSIDIARY THAT IS NOT A SUBSIDIARY GUARANTOR IN AN AMOUNT AT ANY ONE
TIME OUTSTANDING THAT DOES NOT EXCEED $5.0 MILLION; PROVIDED, THAT NONE OF THE
COMPANY OR ANY SUBSIDIARY GUARANTOR SHALL BE OBLIGATED, DIRECTLY OR INDIRECTLY,
TO PAY PRINCIPAL, PREMIUM, INTEREST OR OTHER AMOUNTS THEREON OR IN RESPECT
THEREOF (INCLUDING BY WAY OF NET WORTH REQUIREMENTS, EQUITY KEEP WELLS OR THE
LIKE). IN THE EVENT THAT ANY INDEBTEDNESS INCURRED PURSUANT TO CLAUSE (1)(B) OF
THE FIRST PARAGRAPH OF THIS COVENANT IS PROPOSED TO BE AMENDED, MODIFIED OR
OTHERWISE SUPPLEMENTED SUCH THAT THE PAYMENT OF DIVIDENDS OR THE MAKING OF OTHER
DISTRIBUTIONS BECOMES SUBJECT IN ANY MANNER TO ANY RESTRICTION OR LIMITATION,
THE COMPANY SHALL NOT PERMIT THE RESTRICTED SUBSIDIARY TO SO AMEND, MODIFY OR
SUPPLEMENT SUCH INDEBTEDNESS UNLESS SUCH INDEBTEDNESS COULD BE INCURRED PURSUANT
TO THE TERMS OF CLAUSE (1)(A) OF THE FOREGOING PARAGRAPH.
ALL CALCULATIONS REQUIRED UNDER THE PRIOR TWO PARAGRAPHS HEREOF SHALL
BE MADE IN A MANNER CONSISTENT WITH THE CALCULATIONS REQUIRED UNDER SECTION
4.09.
SECTION 4.18. PAYMENTS FOR CONSENT.
THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES
TO, DIRECTLY OR INDIRECTLY, PAY OR CAUSE TO BE PAID ANY CONSIDERATION TO OR FOR
THE BENEFIT OF ANY HOLDER OF NOTES FOR OR AS AN INDUCEMENT TO ANY CONSENT,
WAIVER OR AMENDMENT OF ANY OF THE TERMS OR PROVISIONS OF THE INDENTURE OR THE
NOTES, UNLESS SUCH CONSIDERATION IS OFFERED TO BE PAID AND IS PAID TO ALL
HOLDERS OF THE NOTES THAT CONSENT, WAIVE OR AGREE TO AMEND IN THE TIME FRAME SET
FORTH IN THE SOLICITATION DOCUMENTS RELATING TO SUCH CONSENT, WAIVER OR
AGREEMENT.
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTIES.
IF THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES SHALL ACQUIRE OR
CREATE ANOTHER DOMESTIC RESTRICTED SUBSIDIARY AFTER THE DATE OF THIS INDENTURE
AND THE NEWLY ACQUIRED OR CREATED DOMESTIC RESTRICTED SUBSIDIARY BECOMES A
GUARANTOR OF ANY CREDIT FACILITY, THEN THAT NEWLY ACQUIRED OR CREATED DOMESTIC
RESTRICTED SUBSIDIARY MUST BECOME A SUBSIDIARY GUARANTOR AND EXECUTE A
SUPPLEMENTAL INDENTURE AND DELIVER AN OPINION OF COUNSEL TO THE TRUSTEE WITHIN
10 BUSINESS DAYS OF THE DATE ON WHICH IT BECAME A SUBSIDIARY GUARANTOR UNDER A
CREDIT FACILITY.
SECTION 4.20. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
THE COMPANY SHALL NOT PERMIT ANY RESTRICTED SUBSIDIARY THAT IS NOT A
SUBSIDIARY
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GUARANTOR, DIRECTLY OR INDIRECTLY, TO GUARANTY OR PLEDGE ANY ASSETS TO SECURE
THE PAYMENT OF ANY OTHER INDEBTEDNESS OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR
(OTHER THAN SUCH RESTRICTED SUBSIDIARY) UNLESS IT SIMULTANEOUSLY EXECUTES AND
DELIVERS A SUPPLEMENTAL INDENTURE PROVIDING FOR THE GUARANTY OF THE PAYMENT OF
THE NOTES BY SUCH RESTRICTED SUBSIDIARY, WHICH SUBSIDIARY GUARANTY SHALL BE
SENIOR TO OR PARI PASSU WITH SUCH RESTRICTED SUBSIDIARY'S GUARANTY OF OR PLEDGE
TO SECURE SUCH OTHER INDEBTEDNESS. NOTWITHSTANDING THE FOREGOING, ANY SUCH
SUBSIDIARY GUARANTY BY A SUBSIDIARY OF THE NOTES SHALL PROVIDE BY ITS TERMS THAT
IT SHALL BE AUTOMATICALLY AND UNCONDITIONALLY RELEASED AND DISCHARGED UPON ANY
SALE, EXCHANGE OR TRANSFER, TO ANY PERSON NOT AN AFFILIATE OF THE COMPANY, OF
ALL OF THE COMPANY'S STOCK IN, OR ALL OR SUBSTANTIALLY ALL THE ASSETS OF, SUCH
SUBSIDIARY, WHICH SALE, EXCHANGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF THIS INDENTURE. THE FORM OF SUCH SUBSIDIARY GUARANTY IS
ATTACHED AS EXHIBIT E HERETO.
SECTION 4.21. NO SENIOR SUBORDINATED DEBT.
NOTWITHSTANDING THE PROVISIONS OF SECTION 4.09 HEREOF, (I) THE
COMPANY SHALL NOT INCUR, CREATE, ISSUE, ASSUME, GUARANTEE OR OTHERWISE BECOME
LIABLE FOR ANY INDEBTEDNESS THAT IS SUBORDINATE OR JUNIOR IN RIGHT OF PAYMENT TO
ANY SENIOR DEBT OF THE COMPANY AND SENIOR IN ANY RESPECT IN RIGHT OF PAYMENT TO
THE NOTES, AND (II) NO SUBSIDIARY GUARANTOR SHALL INCUR, CREATE, ISSUE, ASSUME,
GUARANTEE OR OTHERWISE BECOME LIABLE FOR ANY INDEBTEDNESS THAT IS SUBORDINATED
OR JUNIOR IN RIGHT OF PAYMENT TO THE SENIOR DEBT OF SUCH SUBSIDIARY GUARANTOR
AND SENIOR IN ANY RESPECT IN RIGHT OF PAYMENT TO SUCH SUBSIDIARY GUARANTOR'S
SUBSIDIARY GUARANTY.
ARTICLE 5 SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
THE COMPANY SHALL NOT, DIRECTLY OR INDIRECTLY, CONSOLIDATE OR MERGE
WITH OR INTO ANOTHER PERSON (WHETHER OR NOT THE COMPANY IS THE SURVIVING
CORPORATION), OR SELL, ASSIGN, TRANSFER, CONVEY OR OTHERWISE DISPOSE OF ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES TAKEN AS A WHOLE, IN ONE OR MORE RELATED TRANSACTIONS, TO ANOTHER
PERSON UNLESS (I) EITHER (A) THE COMPANY IS THE SURVIVING CORPORATION; OR (B)
THE PERSON FORMED BY OR SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER
THAN THE COMPANY) OR TO WHICH SUCH SALE, ASSIGNMENT, TRANSFER, CONVEYANCE OR
OTHER DISPOSITION SHALL HAVE BEEN MADE IS A CORPORATION, PARTNERSHIP, LIMITED
LIABILITY COMPANY OR TRUST ORGANIZED OR EXISTING UNDER THE LAWS OF THE UNITED
STATES, ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA, (II) THE PERSON FORMED BY
OR SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN THE COMPANY) OR THE
PERSON TO WHICH SUCH SALE, ASSIGNMENT, TRANSFER, CONVEYANCE OR OTHER DISPOSITION
SHALL HAVE BEEN MADE ASSUMES ALL THE OBLIGATIONS OF THE COMPANY UNDER THE
REGISTRATION RIGHTS AGREEMENT, THE NOTES AND THIS INDENTURE PURSUANT TO
AGREEMENTS REASONABLY SATISFACTORY TO THE TRUSTEE, (III) IMMEDIATELY AFTER SUCH
TRANSACTION, NO DEFAULT OR EVENT OF DEFAULT EXISTS AND (IV) THE COMPANY OR THE
PERSON FORMED BY OR SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN
THE COMPANY), OR TO WHICH SUCH SALE, ASSIGNMENT, TRANSFER, CONVEYANCE OR OTHER
DISPOSITION SHALL HAVE BEEN MADE SHALL, ON THE DATE OF SUCH TRANSACTION AFTER
GIVING PRO FORMA EFFECT THERETO AND ANY RELATED FINANCING TRANSACTIONS AS IF THE
SAME HAD OCCURRED AT THE BEGINNING OF THE APPLICABLE FOUR-QUARTER PERIOD, BE
PERMITTED TO INCUR AT LEAST $1.00 OF ADDITIONAL INDEBTEDNESS PURSUANT TO THE
FIXED CHARGE COVERAGE RATIO TEST SET FORTH IN THE FIRST PARAGRAPH OF SECTION
4.09. IN ADDITION, THE COMPANY
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SHALL NOT, DIRECTLY OR INDIRECTLY, LEASE ALL OR SUBSTANTIALLY ALL OF ITS
PROPERTIES OR ASSETS, IN ONE OR MORE RELATED TRANSACTIONS, TO ANY OTHER PERSON.
THE PROVISIONS OF THIS SECTION 5.01 SHALL NOT BE APPLICABLE TO A SALE,
ASSIGNMENT, TRANSFER, CONVEYANCE OR OTHER DISPOSITION OF ASSETS BETWEEN OR AMONG
THE COMPANY AND ANY OF THE SUBSIDIARY GUARANTORS.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
UPON ANY CONSOLIDATION OR MERGER, OR ANY SALE, ASSIGNMENT,
TRANSFER, LEASE, CONVEYANCE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF THE COMPANY IN ACCORDANCE WITH SECTION 5.01 HEREOF, THE
SUCCESSOR CORPORATION FORMED BY SUCH CONSOLIDATION OR INTO OR WITH WHICH THE
COMPANY IS MERGED OR TO WHICH SUCH SALE, ASSIGNMENT, TRANSFER, LEASE,
CONVEYANCE OR OTHER DISPOSITION IS MADE SHALL SUCCEED TO, AND BE SUBSTITUTED
FOR (SO THAT FROM AND AFTER THE DATE OF SUCH CONSOLIDATION, MERGER, SALE,
LEASE, CONVEYANCE OR OTHER DISPOSITION, THE PROVISIONS OF THIS INDENTURE
REFERRING TO THE "COMPANY" SHALL REFER INSTEAD TO THE SUCCESSOR CORPORATION
AND NOT TO THE COMPANY), AND MAY EXERCISE EVERY RIGHT AND POWER OF THE
COMPANY UNDER THIS INDENTURE WITH THE SAME EFFECT AS IF SUCH SUCCESSOR PERSON
HAD BEEN NAMED AS THE COMPANY HEREIN; PROVIDED, HOWEVER, THAT THE PREDECESSOR
COMPANY SHALL NOT BE RELIEVED FROM THE OBLIGATION TO PAY THE PRINCIPAL OF AND
INTEREST ON THE NOTES EXCEPT IN THE CASE OF A SALE OF ALL OF THE COMPANY'S
ASSETS THAT MEETS THE REQUIREMENTS OF SECTION 5.01 HEREOF.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
AN "EVENT OF DEFAULT" OCCURS IF:
(A) THE COMPANY DEFAULTS FOR 30 DAYS IN THE PAYMENT WHEN DUE OF INTEREST
ON, OR LIQUIDATED DAMAGES, IF ANY, WITH RESPECT TO, THE NOTES WHETHER
OR NOT PROHIBITED BY THE SUBORDINATION PROVISIONS HEREOF;
(B) THE COMPANY DEFAULTS IN THE PAYMENT WHEN DUE OF THE PRINCIPAL OF, OR
PREMIUM, IF ANY, ON THE NOTES, WHETHER OR NOT PROHIBITED BY THE
SUBORDINATION PROVISIONS HEREOF;
(C) THE COMPANY FAILS OR ANY OF ITS RESTRICTED SUBSIDIARIES FAIL TO
COMPLY WITH THE PROVISIONS DESCRIBED IN SECTION 5.01 HEREOF;
(D) THE COMPANY FAILS OR ANY OF ITS RESTRICTED SUBSIDIARIES FAIL TO COMPLY
WITH ANY OF THE OTHER AGREEMENTS IN THIS INDENTURE FOR 60 DAYS AFTER
NOTICE FROM THE TRUSTEE OR HOLDERS OF AT LEAST 25% OF THE OUTSTANDING
PRINCIPAL BALANCE OF THE NOTES (INCLUDING ADDITIONAL NOTES, IF ANY)
THEN OUTSTANDING VOTING AS A SINGLE CLASS;
(E) A DEFAULT OCCURS UNDER ANY MORTGAGE, INDENTURE OR INSTRUMENT
UNDER WHICH THERE IS ISSUED AND OUTSTANDING ANY INDEBTEDNESS FOR
MONEY BORROWED BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES
(OR THE PAYMENT OF WHICH IS GUARANTIED BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES) WHETHER SUCH INDEBTEDNESS OR GUARANTY NOW
EXISTS, OR IS CREATED AFTER THE DATE OF THE INDENTURE, IF THAT
DEFAULT (I) IS CAUSED BY A FAILURE TO PAY PRINCIPAL OF, OR INTEREST
OR PREMIUM, IF ANY, ON SUCH INDEBTEDNESS PRIOR TO THE EXPIRATION
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OF THE GRACE PERIOD PROVIDED IN SUCH INDEBTEDNESS ON THE DATE OF SUCH
DEFAULT (A "PAYMENT DEFAULT") (II) RESULTS IN THE ACCELERATION OF SUCH
INDEBTEDNESS PRIOR TO ITS EXPRESS MATURITY, AND, IN EACH CASE, THE
PRINCIPAL AMOUNT OF ANY SUCH INDEBTEDNESS, TOGETHER WITH THE PRINCIPAL
AMOUNT OF ANY OTHER SUCH INDEBTEDNESS UNDER WHICH THERE HAS BEEN A
PAYMENT DEFAULT OR THE MATURITY OF WHICH HAS BEEN SO ACCELERATED,
AGGREGATES $10.0 MILLION OR MORE;
(F) THE COMPANY FAILS OR ANY OF ITS RESTRICTED SUBSIDIARIES FAIL TO PAY
FINAL JUDGMENTS AGGREGATING IN EXCESS OF $10.0 MILLION, WHICH JUDGMENTS
ARE NOT PAID, VACATED, DISCHARGED, STAYED OR NON-APPEALABLE FOR A
PERIOD OF 90 DAYS, AND IN THE EVENT SUCH JUDGMENT IS COVERED BY
INSURANCE, AN ENFORCEMENT PROCEEDING HAS BEEN COMMENCED BY ANY CREDITOR
UPON SUCH JUDGMENT OR DECREE WHICH IS NOT PROMPTLY STAYED;
(G) EXCEPT AS PERMITTED BY THIS INDENTURE, ANY SUBSIDIARY GUARANTY IS HELD
IN ANY JUDICIAL PROCEEDING TO BE UNENFORCEABLE OR INVALID OR CEASES FOR
ANY REASON TO BE IN FULL FORCE AND EFFECT OR ANY SUBSIDIARY GUARANTOR,
OR ANY PERSON ACTING ON BEHALF OF ANY SUBSIDIARY GUARANTOR, DENIES OR
DISAFFIRMS ITS OBLIGATIONS UNDER ITS SUBSIDIARY GUARANTY;
(H) THE COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES OR ANY GROUP OF
SUBSIDIARIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY PURSUANT TO OR WITHIN THE MEANING OF BANKRUPTCY
LAW: (I) COMMENCES A VOLUNTARY CASE, (II) CONSENTS TO THE ENTRY OF AN
ORDER FOR RELIEF AGAINST IT IN AN INVOLUNTARY CASE, (III) CONSENTS TO
THE APPOINTMENT OF A CUSTODIAN OF IT OR FOR ALL OR SUBSTANTIALLY ALL OF
ITS PROPERTY, (IV) MAKES A GENERAL ASSIGNMENT FOR THE BENEFIT OF ITS
CREDITORS, OR (V) GENERALLY IS NOT PAYING ITS DEBTS AS THEY BECOME DUE;
OR
(I) A COURT OF COMPETENT JURISDICTION ENTERS AN ORDER OR DECREE UNDER
ANY BANKRUPTCY LAW THAT:(I) IS FOR RELIEF AGAINST THE COMPANY OR
ANY OF ITS SIGNIFICANT SUBSIDIARIES OR ANY GROUP OF SUBSIDIARIES
THAT, TAKEN AS A WHOLE, WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY
IN AN INVOLUNTARY CASE; (II) APPOINTS A CUSTODIAN OF THE COMPANY
OR ANY OF ITS SIGNIFICANT SUBSIDIARIES OR ANY GROUP OF
SUBSIDIARIES THAT, TAKEN AS A WHOLE, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY OR FOR ALL OR SUBSTANTIALLY ALL OF THE
PROPERTY OF THE COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES OR ANY
GROUP OF SUBSIDIARIES THAT, TAKEN AS A WHOLE, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY; OR (III) ORDERS THE LIQUIDATION OF THE
COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES OR ANY GROUP OF
SUBSIDIARIES THAT, TAKEN AS A WHOLE, WOULD CONSTITUTE A SIGNIFICANT
SUBSIDIARY; AND THE ORDER OR DECREE REMAINS UNSTAYED AND IN EFFECT FOR
60 CONSECUTIVE DAYS.
SECTION 6.02. ACCELERATION.
IF ANY EVENT OF DEFAULT (OTHER THAN AN EVENT OF DEFAULT SPECIFIED IN
CLAUSE (H) OR (I) OF SECTION 6.01 HEREOF WITH RESPECT TO THE COMPANY, ANY
SUBSIDIARY THAT IS A SIGNIFICANT SUBSIDIARY OR ANY GROUP OF SUBSIDIARIES THAT,
TAKEN TOGETHER, WOULD CONSTITUTE A SIGNIFICANT SUBSIDIARY) OCCURS AND IS
CONTINUING, THE TRUSTEE OR THE HOLDERS OF AT LEAST 25% IN PRINCIPAL AMOUNT OF
THE THEN OUTSTANDING NOTES MAY DECLARE ALL THE NOTES TO BE PAST DUE AND PAYABLE
IMMEDIATELY; PROVIDED, HOWEVER, THAT SO LONG AS ANY INDEBTEDNESS PERMITTED TO BE
INCURRED UNDER THIS INDENTURE AS PART OF THE CREDIT FACILITIES IS OUTSTANDING,
NO SUCH ACCELERATION SHALL BE EFFECTIVE UNTIL THE EARLIER OF (I) FIVE BUSINESS
DAYS AFTER THE GIVING OF WRITTEN NOTICE TO THE COMPANY AND THE ADMINISTRATIVE
AGENT UNDER THE CREDIT FACILITIES OF SUCH ACCELERATION OR (II) ACCELERATION OF
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ANY SUCH INDEBTEDNESS UNDER THE CREDIT FACILITIES. NOTWITHSTANDING THE
FOREGOING, IF AN EVENT OF DEFAULT SPECIFIED IN CLAUSE (H) OR (I) OF SECTION 6.01
HEREOF OCCURS WITH RESPECT TO THE COMPANY, ANY SUBSIDIARY THAT IS A SIGNIFICANT
SUBSIDIARY OR ANY GROUP OF SUBSIDIARIES THAT, TAKEN TOGETHER, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY, ALL OUTSTANDING NOTES SHALL BE DUE AND PAYABLE
IMMEDIATELY WITHOUT FURTHER ACTION OR NOTICE. THE HOLDERS OF A MAJORITY IN
AGGREGATE PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES BY WRITTEN NOTICE TO
THE TRUSTEE MAY ON BEHALF OF ALL OF THE HOLDERS RESCIND AN ACCELERATION AND ITS
CONSEQUENCES IF THE RESCISSION WOULD NOT CONFLICT WITH ANY JUDGMENT OR DECREE
AND IF ALL EXISTING EVENTS OF DEFAULT (EXCEPT NONPAYMENT OF PRINCIPAL, INTEREST
OR PREMIUM THAT HAS BECOME DUE SOLELY BECAUSE OF THE ACCELERATION) HAVE BEEN
CURED OR WAIVED.
SECTION 6.03. OTHER REMEDIES.
IF AN EVENT OF DEFAULT OCCURS AND IS CONTINUING, THE TRUSTEE MAY
PURSUE ANY AVAILABLE REMEDY TO COLLECT THE PAYMENT OF PRINCIPAL, PREMIUM, IF
ANY, AND INTEREST ON THE NOTES OR TO ENFORCE THE PERFORMANCE OF ANY PROVISION OF
THE NOTES OR THIS INDENTURE.
THE TRUSTEE MAY MAINTAIN A PROCEEDING EVEN IF IT DOES NOT POSSESS ANY
OF THE NOTES OR DOES NOT PRODUCE ANY OF THEM IN THE PROCEEDING. A DELAY OR
OMISSION BY THE TRUSTEE OR ANY HOLDER OF A NOTE IN EXERCISING ANY RIGHT OR
REMEDY ACCRUING UPON AN EVENT OF DEFAULT SHALL NOT IMPAIR THE RIGHT OR REMEDY OR
CONSTITUTE A WAIVER OF OR ACQUIESCENCE IN THE EVENT OF DEFAULT. ALL REMEDIES ARE
CUMULATIVE TO THE EXTENT PERMITTED BY LAW.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
HOLDERS OF NOT LESS THAN A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF
THE THEN OUTSTANDING NOTES BY NOTICE TO THE TRUSTEE MAY ON BEHALF OF THE HOLDERS
OF ALL OF THE NOTES WAIVE AN EXISTING DEFAULT OR EVENT OF DEFAULT AND ITS
CONSEQUENCES HEREUNDER, EXCEPT A CONTINUING DEFAULT OR EVENT OF DEFAULT IN THE
PAYMENT OF THE PRINCIPAL OF, PREMIUM AND LIQUIDATED DAMAGES, IF ANY, OR INTEREST
ON, THE NOTES (INCLUDING IN CONNECTION WITH AN OFFER TO PURCHASE) (PROVIDED,
HOWEVER, THAT THE HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE
THEN OUTSTANDING NOTES MAY RESCIND AN ACCELERATION AND ITS CONSEQUENCES,
INCLUDING ANY RELATED PAYMENT DEFAULT THAT RESULTED FROM SUCH ACCELERATION).
UPON ANY SUCH WAIVER, SUCH DEFAULT SHALL CEASE TO EXIST, AND ANY EVENT OF
DEFAULT ARISING THEREFROM SHALL BE DEEMED TO HAVE BEEN CURED FOR EVERY PURPOSE
OF THIS INDENTURE; BUT NO SUCH WAIVER SHALL EXTEND TO ANY SUBSEQUENT OR OTHER
DEFAULT OR IMPAIR ANY RIGHT CONSEQUENT THEREON.
SECTION 6.05. CONTROL BY MAJORITY.
HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING
NOTES MAY DIRECT THE TIME, METHOD AND PLACE OF CONDUCTING ANY PROCEEDING FOR
EXERCISING ANY REMEDY AVAILABLE TO THE TRUSTEE OR EXERCISING ANY TRUST OR POWER
CONFERRED ON IT. HOWEVER, THE TRUSTEE MAY REFUSE TO FOLLOW ANY DIRECTION THAT
CONFLICTS WITH LAW OR THIS INDENTURE THAT THE TRUSTEE DETERMINES MAY BE UNDULY
PREJUDICIAL TO THE RIGHTS OF OTHER HOLDERS OF NOTES OR THAT MAY INVOLVE THE
TRUSTEE IN PERSONAL LIABILITY.
SECTION 6.06. LIMITATION ON SUITS.
A HOLDER OF A NOTE MAY PURSUE A REMEDY WITH RESPECT TO THIS INDENTURE
OR THE NOTES ONLY IF:
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(A) THE HOLDER OF A NOTE GIVES TO THE TRUSTEE WRITTEN NOTICE OF A
CONTINUING EVENT OF DEFAULT;
(B) THE HOLDERS OF AT LEAST 25% IN PRINCIPAL AMOUNT OF THE THEN
OUTSTANDING NOTES MAKE A WRITTEN REQUEST TO THE TRUSTEE TO PURSUE THE REMEDY;
(C) SUCH HOLDER OF A NOTE OR HOLDERS OF NOTES OFFER AND, IF
REQUESTED, PROVIDE TO THE TRUSTEE INDEMNITY SATISFACTORY TO THE TRUSTEE AGAINST
ANY LOSS, LIABILITY OR EXPENSE;
(D) THE TRUSTEE DOES NOT COMPLY WITH THE REQUEST WITHIN 60 DAYS AFTER
RECEIPT OF THE REQUEST AND THE OFFER AND, IF REQUESTED, THE PROVISION OF
INDEMNITY; AND
(E) DURING SUCH 60-DAY PERIOD THE HOLDERS OF A MAJORITY IN PRINCIPAL
AMOUNT OF THE THEN OUTSTANDING NOTES DO NOT GIVE THE TRUSTEE A DIRECTION
INCONSISTENT WITH THE REQUEST.
A HOLDER OF A NOTE MAY NOT USE THIS INDENTURE TO PREJUDICE THE RIGHTS
OF ANOTHER HOLDER OF A NOTE OR TO OBTAIN A PREFERENCE OR PRIORITY OVER ANOTHER
HOLDER OF A NOTE.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS INDENTURE, THE RIGHT OF
ANY HOLDER OF A NOTE TO RECEIVE PAYMENT OF PRINCIPAL, PREMIUM AND LIQUIDATED
DAMAGES, IF ANY, AND INTEREST ON THE NOTE, ON OR AFTER THE RESPECTIVE DUE DATES
EXPRESSED IN THE NOTE (INCLUDING IN CONNECTION WITH AN OFFER TO PURCHASE), OR TO
BRING SUIT FOR THE ENFORCEMENT OF ANY SUCH PAYMENT ON OR AFTER SUCH RESPECTIVE
DATES, SHALL NOT BE IMPAIRED OR AFFECTED WITHOUT THE CONSENT OF SUCH HOLDER.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
IF AN EVENT OF DEFAULT SPECIFIED IN SECTION 6.01(A) OR (B) OCCURS AND
IS CONTINUING, THE TRUSTEE IS AUTHORIZED TO RECOVER JUDGMENT IN ITS OWN NAME AND
AS TRUSTEE OF AN EXPRESS TRUST AGAINST THE COMPANY FOR THE WHOLE AMOUNT OF
PRINCIPAL OF, PREMIUM AND LIQUIDATED DAMAGES, IF ANY, AND INTEREST REMAINING
UNPAID ON THE NOTES AND INTEREST ON OVERDUE PRINCIPAL AND, TO THE EXTENT LAWFUL,
INTEREST AND SUCH FURTHER AMOUNT AS SHALL BE SUFFICIENT TO COVER THE COSTS AND
EXPENSES OF COLLECTION, INCLUDING THE REASONABLE COMPENSATION, EXPENSES,
DISBURSEMENTS AND ADVANCES OF THE TRUSTEE, ITS AGENTS AND COUNSEL.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
THE TRUSTEE IS AUTHORIZED TO FILE SUCH PROOFS OF CLAIM AND OTHER
PAPERS OR DOCUMENTS AS MAY BE NECESSARY OR ADVISABLE IN ORDER TO HAVE THE CLAIMS
OF THE TRUSTEE (INCLUDING ANY CLAIM FOR THE REASONABLE COMPENSATION, EXPENSES,
DISBURSEMENTS AND ADVANCES OF THE TRUSTEE, ITS AGENTS AND COUNSEL) AND THE
HOLDERS OF THE NOTES ALLOWED IN ANY JUDICIAL PROCEEDINGS RELATIVE TO THE COMPANY
(OR ANY OTHER OBLIGOR UPON THE NOTES), ITS CREDITORS OR ITS PROPERTY AND SHALL
BE ENTITLED AND EMPOWERED TO COLLECT, RECEIVE AND DISTRIBUTE ANY MONEY OR OTHER
PROPERTY PAYABLE OR DELIVERABLE ON ANY SUCH CLAIMS AND ANY CUSTODIAN IN ANY SUCH
JUDICIAL PROCEEDING IS HEREBY AUTHORIZED BY EACH HOLDER TO MAKE SUCH PAYMENTS TO
THE TRUSTEE, AND IN THE EVENT THAT THE TRUSTEE SHALL CONSENT TO THE MAKING OF
SUCH PAYMENTS DIRECTLY TO THE HOLDERS, TO PAY TO THE TRUSTEE ANY AMOUNT DUE TO
IT FOR THE REASONABLE COMPENSATION, EXPENSES, DISBURSEMENTS AND ADVANCES OF THE
TRUSTEE, ITS AGENTS AND COUNSEL, AND ANY OTHER AMOUNTS DUE THE TRUSTEE UNDER
SECTION 7.07 HEREOF. TO THE
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EXTENT THAT THE PAYMENT OF ANY SUCH COMPENSATION, EXPENSES, DISBURSEMENTS AND
ADVANCES OF THE TRUSTEE, ITS AGENTS AND COUNSEL, AND ANY OTHER AMOUNTS DUE THE
TRUSTEE UNDER SECTION 7.07 HEREOF OUT OF THE ESTATE IN ANY SUCH PROCEEDING,
SHALL BE DENIED FOR ANY REASON, PAYMENT OF THE SAME SHALL BE SECURED BY A LIEN
ON, AND SHALL BE PAID OUT OF, ANY AND ALL DISTRIBUTIONS, DIVIDENDS, MONEY,
SECURITIES AND OTHER PROPERTIES THAT THE HOLDERS MAY BE ENTITLED TO RECEIVE IN
SUCH PROCEEDING WHETHER IN LIQUIDATION OR UNDER ANY PLAN OF REORGAN IZATION OR
ARRANGEMENT OR OTHERWISE. NOTHING HEREIN CONTAINED SHALL BE DEEMED TO AUTHORIZE
THE TRUSTEE TO AUTHORIZE OR CONSENT TO OR ACCEPT OR ADOPT ON BEHALF OF ANY
HOLDER ANY PLAN OF REORGANIZATION, ARRANGEMENT, ADJUSTMENT OR COMPOSITION
AFFECTING THE NOTES OR THE RIGHTS OF ANY HOLDER, OR TO AUTHORIZE THE TRUSTEE TO
VOTE IN RESPECT OF THE CLAIM OF ANY HOLDER IN ANY SUCH PROCEEDING.
SECTION 6.10. PRIORITIES.
IF THE TRUSTEE COLLECTS ANY MONEY PURSUANT TO THIS ARTICLE, IT SHALL
PAY OUT THE MONEY IN THE FOLLOWING ORDER:
FIRST: TO THE TRUSTEE, ITS AGENTS AND ATTORNEYS FOR
AMOUNTS DUE UNDER SECTION 7.07 HEREOF, INCLUDING PAYMENT OF ALL
COMPENSATION, EXPENSE AND LIABILITIES INCURRED, AND ALL ADVANCES MADE,
BY THE TRUSTEE AND THE COSTS AND EXPENSES OF COLLECTION;
SECOND: SUBJECT TO THE SUBORDINATION PROVISIONS HEREOF, TO
HOLDERS OF NOTES FOR AMOUNTS DUE AND UNPAID ON THE NOTES FOR PRINCIPAL,
PREMIUM AND LIQUIDATED DAMAGES, IF ANY, AND INTEREST, RATABLY, WITHOUT
PREFERENCE OR PRIORITY OF ANY KIND, ACCORDING TO THE AMOUNTS DUE AND
PAYABLE ON THE NOTES FOR PRINCIPAL, PREMIUM AND LIQUIDATED DAMAGES, IF ANY
AND INTEREST, RESPECTIVELY; AND
THIRD: TO THE COMPANY OR TO SUCH PARTY AS A COURT OF
COMPETENT JURISDICTION SHALL DIRECT.
THE TRUSTEE MAY FIX A RECORD DATE AND PAYMENT DATE FOR ANY PAYMENT TO
HOLDERS OF NOTES PURSUANT TO THIS SECTION 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
IN ANY SUIT FOR THE ENFORCEMENT OF ANY RIGHT OR REMEDY UNDER THIS
INDENTURE OR IN ANY SUIT AGAINST THE TRUSTEE FOR ANY ACTION TAKEN OR OMITTED BY
IT AS A TRUSTEE, A COURT IN ITS DISCRETION MAY REQUIRE THE FILING BY ANY PARTY
LITIGANT IN THE SUIT OF AN UNDERTAKING TO PAY THE COSTS OF THE SUIT, AND THE
COURT IN ITS DISCRETION MAY ASSESS REASONABLE COSTS, INCLUDING REASONABLE
ATTORNEYS' FEES, AGAINST ANY PARTY LITIGANT IN THE SUIT, HAVING DUE REGARD TO
THE MERITS AND GOOD FAITH OF THE CLAIMS OR DEFENSES MADE BY THE PARTY LITIGANT.
THIS SECTION DOES NOT APPLY TO A SUIT BY THE TRUSTEE, A SUIT BY A HOLDER OF A
NOTE PURSUANT TO SECTION 6.07 HEREOF, OR A SUIT BY HOLDERS OF MORE THAN 10% IN
PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
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(A) IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, THE
TRUSTEE SHALL EXERCISE SUCH OF THE RIGHTS AND POWERS VESTED IN IT BY THIS
INDENTURE, AND USE THE SAME DEGREE OF CARE AND SKILL IN ITS EXERCISE, AS A
PRUDENT PERSON WOULD EXERCISE OR USE UNDER THE CIRCUMSTANCES IN THE CONDUCT OF
SUCH PERSON'S OWN AFFAIRS.
(B) EXCEPT DURING THE CONTINUANCE OF AN EVENT OF DEFAULT:
(I) THE DUTIES OF THE TRUSTEE SHALL BE DETERMINED SOLELY BY THE
EXPRESS PROVISIONS OF THIS INDENTURE AND THE TRUSTEE NEED PERFORM ONLY THOSE
DUTIES THAT ARE SPECIFICALLY SET FORTH IN THIS INDENTURE AND NO OTHERS, AND NO
IMPLIED COVENANTS OR OBLIGATIONS SHALL BE READ INTO THIS INDENTURE AGAINST THE
TRUSTEE; AND
(II) IN THE ABSENCE OF BAD FAITH ON ITS PART, THE TRUSTEE MAY
CONCLUSIVELY RELY, AS TO THE TRUTH OF THE STATEMENTS AND THE CORRECTNESS OF THE
OPINIONS EXPRESSED THEREIN, UPON CERTIFICATES OR OPINIONS FURNISHED TO THE
TRUSTEE AND CONFORMING TO THE REQUIREMENTS OF THIS INDENTURE. HOWEVER, THE
TRUSTEE SHALL EXAMINE THE CERTIFICATES AND OPINIONS TO DETERMINE WHETHER OR NOT
THEY CONFORM TO THE REQUIREMENTS OF THIS INDENTURE.
(C) THE TRUSTEE MAY NOT BE RELIEVED FROM LIABILITIES FOR ITS OWN
NEGLIGENT ACTION, ITS OWN NEGLIGENT FAILURE TO ACT, OR ITS OWN WILLFUL
MISCONDUCT, EXCEPT THAT:
(I) THIS PARAGRAPH DOES NOT LIMIT THE EFFECT OF PARAGRAPH (B) OF
THIS SECTION;
(II) THE TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT MADE
IN GOOD FAITH BY A RESPONSIBLE OFFICER, UNLESS IT IS PROVED THAT THE TRUSTEE WAS
NEGLIGENT IN ASCERTAINING THE PERTINENT FACTS; AND
(III) THE TRUSTEE SHALL NOT BE LIABLE WITH RESPECT TO ANY ACTION IT
TAKES OR OMITS TO TAKE IN GOOD FAITH IN ACCORDANCE WITH A DIRECTION RECEIVED BY
IT PURSUANT TO SECTION 6.05 HEREOF.
(D) WHETHER OR NOT THEREIN EXPRESSLY SO PROVIDED, EVERY PROVISION OF
THIS INDENTURE THAT IN ANY WAY RELATES TO THE TRUSTEE IS SUBJECT TO PARAGRAPHS
(A), (B), AND (C) OF THIS SECTION.
(E) NO PROVISION OF THIS INDENTURE SHALL REQUIRE THE TRUSTEE TO
EXPEND OR RISK ITS OWN FUNDS OR INCUR ANY LIABILITY. THE TRUSTEE SHALL BE UNDER
NO OBLIGATION TO EXERCISE ANY OF ITS RIGHTS AND POWERS UNDER THIS INDENTURE AT
THE REQUEST OF ANY HOLDERS, UNLESS SUCH HOLDER SHALL HAVE OFFERED TO THE TRUSTEE
SECURITY AND INDEMNITY SATISFACTORY TO IT AGAINST ANY LOSS, LIABILITY OR
EXPENSE.
(F) THE TRUSTEE SHALL NOT BE LIABLE FOR INTEREST ON ANY MONEY
RECEIVED BY IT EXCEPT AS THE TRUSTEE MAY AGREE IN WRITING WITH THE COMPANY.
MONEY HELD IN TRUST BY THE TRUSTEE NEED NOT BE SEGREGATED FROM OTHER FUNDS
EXCEPT TO THE EXTENT REQUIRED BY LAW.
SECTION 7.02. RIGHTS OF TRUSTEE.
(A) THE TRUSTEE MAY CONCLUSIVELY RELY UPON ANY DOCUMENT BELIEVED BY
IT TO BE GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER PERSON. THE
TRUSTEE NEED NOT INVESTIGATE ANY FACT OR MATTER STATED IN THE DOCUMENT.
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(B) BEFORE THE TRUSTEE ACTS OR REFRAINS FROM ACTING, IT MAY REQUIRE
AN OFFICERS' CERTIFICATE OR AN OPINION OF COUNSEL OR BOTH. THE TRUSTEE SHALL NOT
BE LIABLE FOR ANY ACTION IT TAKES OR OMITS TO TAKE IN GOOD FAITH IN RELIANCE ON
SUCH OFFICERS' CERTIFICATE OR OPINION OF COUNSEL. THE TRUSTEE MAY CONSULT WITH
COUNSEL AND THE WRITTEN ADVICE OF SUCH COUNSEL OR ANY OPINION OF COUNSEL SHALL
BE FULL AND COMPLETE AUTHORIZATION AND PROTECTION FROM LIABILITY IN RESPECT OF
ANY ACTION TAKEN, SUFFERED OR OMITTED BY IT HEREUNDER IN GOOD FAITH AND IN
RELIANCE THEREON.
(C) THE TRUSTEE MAY ACT THROUGH ITS ATTORNEYS AND AGENTS AND SHALL
NOT BE RESPONSIBLE FOR THE MISCONDUCT OR NEGLIGENCE OF ANY AGENT APPOINTED WITH
DUE CARE.
(D) THE TRUSTEE SHALL NOT BE LIABLE FOR ANY ACTION IT TAKES OR OMITS
TO TAKE IN GOOD FAITH THAT IT BELIEVES TO BE AUTHORIZED OR WITHIN THE RIGHTS OR
POWERS CONFERRED UPON IT BY THIS INDENTURE.
(E) UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THIS INDENTURE, ANY
DEMAND, REQUEST, DIRECTION OR NOTICE FROM THE COMPANY SHALL BE SUFFICIENT IF
SIGNED BY AN OFFICER OF THE COMPANY.
(F) THE TRUSTEE SHALL BE UNDER NO OBLIGATION TO EXERCISE ANY OF THE
RIGHTS OR POWERS VESTED IN IT BY THIS INDENTURE AT THE REQUEST OR DIRECTION OF
ANY OF THE HOLDERS UNLESS SUCH HOLDERS SHALL HAVE OFFERED TO THE TRUSTEE
REASONABLE SECURITY OR INDEMNITY AGAINST THE COSTS, EXPENSES AND LIABILITIES
THAT MIGHT BE INCURRED BY IT IN COMPLIANCE WITH SUCH REQUEST OR DIRECTION.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
THE TRUSTEE IN ITS INDIVIDUAL OR ANY OTHER CAPACITY MAY BECOME THE
OWNER OR PLEDGEE OF NOTES AND MAY OTHERWISE DEAL WITH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WITH THE SAME RIGHTS IT WOULD HAVE IF IT WERE NOT
TRUSTEE. HOWEVER, IN THE EVENT THAT THE TRUSTEE ACQUIRES ANY CONFLICTING
INTEREST IT MUST ELIMINATE SUCH CONFLICT WITHIN 90 DAYS, APPLY TO THE SEC FOR
PERMISSION TO CONTINUE AS TRUSTEE OR RESIGN. ANY AGENT MAY DO THE SAME WITH
LIKE RIGHTS AND DUTIES. THE TRUSTEE IS ALSO SUBJECT TO SECTIONS 7.10 AND 7.11
HEREOF.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
THE TRUSTEE SHALL NOT BE RESPONSIBLE FOR AND MAKES NO REPRESENTATION
AS TO THE VALIDITY OR ADEQUACY OF THIS INDENTURE OR THE NOTES, IT SHALL NOT BE
ACCOUNTABLE FOR THE COMPANY'S USE OF THE PROCEEDS FROM THE NOTES OR ANY MONEY
PAID TO THE COMPANY OR UPON THE COMPANY'S DIRECTION UNDER ANY PROVISION OF THIS
INDENTURE, IT SHALL NOT BE RESPONSIBLE FOR THE USE OR APPLICATION OF ANY MONEY
RECEIVED BY ANY PAYING AGENT OTHER THAN THE TRUSTEE, AND IT SHALL NOT BE
RESPONSIBLE FOR ANY STATEMENT OR RECITAL HEREIN OR ANY STATEMENT IN THE NOTES OR
ANY OTHER DOCUMENT IN CONNECTION WITH THE SALE OF THE NOTES OR PURSUANT TO THIS
INDENTURE OTHER THAN ITS CERTIFICATE OF AUTHENTICATION.
SECTION 7.05. NOTICE OF DEFAULTS.
IF A DEFAULT OR EVENT OF DEFAULT OCCURS AND IS CONTINUING AND IF IT
IS KNOWN TO THE TRUSTEE, THE TRUSTEE SHALL MAIL TO HOLDERS OF NOTES A NOTICE OF
THE DEFAULT OR EVENT OF DEFAULT WITHIN 90 DAYS AFTER IT OCCURS. EXCEPT IN THE
CASE OF A DEFAULT OR EVENT OF DEFAULT IN PAYMENT OF PRINCIPAL OF, PREMIUM, IF
ANY, OR INTEREST ON ANY NOTE, THE TRUSTEE MAY WITHHOLD
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THE NOTICE IF AND SO LONG AS A COMMITTEE OF ITS RESPONSIBLE OFFICERS IN GOOD
FAITH DETERMINES THAT WITHHOLDING THE NOTICE IS IN THE INTERESTS OF THE HOLDERS
OF THE NOTES.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
WITHIN 60 DAYS AFTER EACH MAY 15 BEGINNING WITH THE MAY 15
FOLLOWING THE DATE OF THIS INDENTURE, AND FOR SO LONG AS NOTES REMAIN
OUTSTANDING, THE TRUSTEE SHALL MAIL TO THE HOLDERS OF THE NOTES A BRIEF
REPORT DATED AS OF SUCH REPORTING DATE THAT COMPLIES WITH TIA SECTION 313(A)
(BUT IF NO EVENT DESCRIBED IN TIA SECTION 313(A) HAS OCCURRED WITHIN THE
TWELVE MONTHS PRECEDING THE REPORTING DATE, NO REPORT NEED BE TRANSMITTED).
THE TRUSTEE ALSO SHALL COMPLY WITH TIA SECTION 313(B)(2). THE TRUSTEE SHALL
ALSO TRANSMIT BY MAIL ALL REPORTS AS REQUIRED BY TIA SECTION 313(C).
A COPY OF EACH REPORT AT THE TIME OF ITS MAILING TO THE HOLDERS OF
NOTES SHALL BE MAILED TO THE COMPANY AND FILED WITH THE SEC AND EACH STOCK
EXCHANGE ON WHICH THE NOTES ARE LISTED IN ACCORDANCE WITH TIA SECTION 313(D).
THE COMPANY SHALL PROMPTLY NOTIFY THE TRUSTEE WHEN THE NOTES ARE LISTED ON
ANY STOCK EXCHANGE.
SECTION 7.07. COMPENSATION AND INDEMNITY.
THE COMPANY SHALL PAY TO THE TRUSTEE FROM TIME TO TIME REASONABLE
COMPENSATION FOR ITS ACCEPTANCE OF THIS INDENTURE AND SERVICES HEREUNDER. THE
TRUSTEE'S COMPENSATION SHALL NOT BE LIMITED BY ANY LAW ON COMPENSATION OF A
TRUSTEE OF AN EXPRESS TRUST. THE COMPANY SHALL REIMBURSE THE TRUSTEE PROMPTLY
UPON REQUEST FOR ALL REASONABLE DISBURSEMENTS, ADVANCES AND EXPENSES INCURRED OR
MADE BY IT IN ADDITION TO THE COMPENSATION FOR ITS SERVICES. SUCH EXPENSES SHALL
INCLUDE THE REASONABLE COMPENSATION, DISBURSEMENTS AND EXPENSES OF THE TRUSTEE'S
AGENTS AND COUNSEL.
THE COMPANY SHALL INDEMNIFY THE TRUSTEE AGAINST ANY AND ALL
LOSSES, LIABILITIES OR EXPENSES INCURRED BY IT ARISING OUT OF OR IN
CONNECTION WITH THE ACCEPTANCE OR ADMINISTRATION OF ITS DUTIES UNDER THIS
INDENTURE, INCLUDING THE COSTS AND EXPENSES OF ENFORCING THIS INDENTURE
AGAINST THE COMPANY (INCLUDING THIS SECTION 7.07) AND DEFENDING ITSELF
AGAINST ANY CLAIM (WHETHER ASSERTED BY THE COMPANY OR ANY HOLDER OR ANY OTHER
PERSON) OR LIABILITY IN CONNECTION WITH THE EXERCISE OR PERFORMANCE OF ANY OF
ITS POWERS OR DUTIES HEREUNDER, EXCEPT TO THE EXTENT ANY SUCH LOSS, LIABILITY
OR EXPENSE MAY BE ATTRIBUTABLE TO ITS NEGLIGENCE OR BAD FAITH. THE TRUSTEE
SHALL NOTIFY THE COMPANY PROMPTLY OF ANY CLAIM FOR WHICH IT MAY SEEK
INDEMNITY. FAILURE BY THE TRUSTEE TO SO NOTIFY THE COMPANY SHALL NOT RELIEVE
THE COMPANY OF ITS OBLIGATIONS HEREUNDER. THE COMPANY SHALL DEFEND THE CLAIM
AND THE TRUSTEE SHALL COOPERATE IN THE DEFENSE. THE TRUSTEE MAY HAVE SEPARATE
COUNSEL AND THE COMPANY SHALL PAY THE REASONABLE FEES AND EXPENSES OF SUCH
COUNSEL. THE COMPANY NEED NOT PAY FOR ANY SETTLEMENT MADE WITHOUT ITS
CONSENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.
THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 7.07 SHALL SURVIVE
THE SATISFACTION AND DISCHARGE OF THIS INDENTURE.
TO SECURE THE COMPANY'S PAYMENT OBLIGATIONS IN THIS SECTION, THE
TRUSTEE SHALL HAVE A LIEN PRIOR TO THE NOTES ON ALL MONEY OR PROPERTY HELD OR
COLLECTED BY THE TRUSTEE, EXCEPT THAT HELD IN TRUST TO PAY PRINCIPAL AND
INTEREST ON PARTICULAR NOTES. SUCH LIEN SHALL SURVIVE THE SATISFACTION AND
DISCHARGE OF THIS INDENTURE.
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WHEN THE TRUSTEE INCURS EXPENSES OR RENDERS SERVICES AFTER AN EVENT
OF DEFAULT SPECIFIED IN SECTION 6.01(G) OR (H) HEREOF OCCURS, THE EXPENSES AND
THE COMPENSATION FOR THE SERVICES (INCLUDING THE FEES AND EXPENSES OF ITS AGENTS
AND COUNSEL) ARE INTENDED TO CONSTITUTE EXPENSES OF ADMINISTRATION UNDER ANY
BANKRUPTCY LAW.
THE TRUSTEE SHALL COMPLY WITH THE PROVISIONS OF TIA SECTION
313(B)(2) TO THE EXTENT APPLICABLE.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A RESIGNATION OR REMOVAL OF THE TRUSTEE AND APPOINTMENT OF A
SUCCESSOR TRUSTEE SHALL BECOME EFFECTIVE ONLY UPON THE SUCCESSOR TRUSTEE'S
ACCEPTANCE OF APPOINTMENT AS PROVIDED IN THIS SECTION.
THE TRUSTEE MAY RESIGN IN WRITING AT ANY TIME AND BE DISCHARGED FROM
THE TRUST HEREBY CREATED BY SO NOTIFYING THE COMPANY. THE HOLDERS OF A MAJORITY
IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES MAY REMOVE THE TRUSTEE BY SO
NOTIFYING THE TRUSTEE AND THE COMPANY IN WRITING. THE COMPANY MAY REMOVE THE
TRUSTEE IF:
(A) THE TRUSTEE FAILS TO COMPLY WITH SECTION 7.10 HEREOF;
(B) THE TRUSTEE IS ADJUDGED A BANKRUPT OR AN INSOLVENT OR AN ORDER
FOR RELIEF IS ENTERED WITH RESPECT TO THE TRUSTEE UNDER ANY BANKRUPTCY LAW;
(C) A CUSTODIAN OR PUBLIC OFFICER TAKES CHARGE OF THE TRUSTEE OR ITS
PROPERTY; OR
(D) THE TRUSTEE BECOMES INCAPABLE OF ACTING.
IF THE TRUSTEE RESIGNS OR IS REMOVED OR IF A VACANCY EXISTS IN THE
OFFICE OF TRUSTEE FOR ANY REASON, THE COMPANY SHALL PROMPTLY APPOINT A SUCCESSOR
TRUSTEE. WITHIN ONE YEAR AFTER THE SUCCESSOR TRUSTEE TAKES OFFICE, THE HOLDERS
OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES MAY APPOINT A
SUCCESSOR TRUSTEE TO REPLACE THE SUCCESSOR TRUSTEE APPOINTED BY THE COMPANY.
IF A SUCCESSOR TRUSTEE DOES NOT TAKE OFFICE WITHIN 60 DAYS AFTER THE
RETIRING TRUSTEE RESIGNS OR IS REMOVED, THE RETIRING TRUSTEE, THE COMPANY, OR
THE HOLDERS OF AT LEAST 10% IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES
MAY PETITION ANY COURT OF COMPETENT JURISDICTION FOR THE APPOINTMENT OF A
SUCCESSOR TRUSTEE.
IF THE TRUSTEE, AFTER WRITTEN REQUEST BY ANY HOLDER WHO HAS BEEN A
HOLDER FOR AT LEAST SIX MONTHS, FAILS TO COMPLY WITH SECTION 7.10, SUCH HOLDER
MAY PETITION ANY COURT OF COMPETENT JURISDICTION FOR THE REMOVAL OF THE TRUSTEE
AND THE APPOINTMENT OF A SUCCESSOR TRUSTEE.
A SUCCESSOR TRUSTEE SHALL DELIVER A WRITTEN ACCEPTANCE OF ITS
APPOINTMENT TO THE RETIRING TRUSTEE AND TO THE COMPANY. THEREUPON, THE
RESIGNATION OR REMOVAL OF THE RETIRING TRUSTEE SHALL BECOME EFFECTIVE, AND THE
SUCCESSOR TRUSTEE SHALL HAVE ALL THE RIGHTS, POWERS AND DUTIES OF THE TRUSTEE
UNDER THIS INDENTURE. THE SUCCESSOR TRUSTEE SHALL MAIL A NOTICE OF ITS
SUCCESSION TO HOLDERS. THE RETIRING TRUSTEE SHALL PROMPTLY TRANSFER ALL PROPERTY
HELD BY IT AS TRUSTEE TO THE SUCCESSOR TRUSTEE, PROVIDED ALL SUMS OWING TO THE
TRUSTEE HEREUNDER HAVE BEEN PAID AND SUBJECT TO THE LIEN PROVIDED FOR IN SECTION
7.07 HEREOF. NOTWITHSTANDING
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REPLACEMENT OF THE TRUSTEE PURSUANT TO THIS SECTION 7.08, THE COMPANY'S
OBLIGATIONS UNDER SECTION 7.07 HEREOF SHALL CONTINUE FOR THE BENEFIT OF THE
RETIRING TRUSTEE.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
IF THE TRUSTEE CONSOLIDATES, MERGES OR CONVERTS INTO, OR TRANSFERS
ALL OR SUBSTANTIALLY ALL OF ITS CORPORATE TRUST BUSINESS TO, ANOTHER
CORPORATION, THE SUCCESSOR CORPORATION WITHOUT ANY FURTHER ACT SHALL BE THE
SUCCESSOR TRUSTEE.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
THERE SHALL AT ALL TIMES BE A TRUSTEE HEREUNDER THAT IS A CORPORATION
ORGANIZED AND DOING BUSINESS UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR
OF ANY STATE THEREOF THAT IS AUTHORIZED UNDER SUCH LAWS TO EXERCISE CORPORATE
TRUSTEE POWER, THAT IS SUBJECT TO SUPERVISION OR EXAMINATION BY FEDERAL OR STATE
AUTHORITIES AND THAT HAS A COMBINED CAPITAL AND SURPLUS OF AT LEAST $100 MILLION
OR BE A PART OF A BANK HOLDING COMPANY WITH A COMBINED CAPITAL AND SURPLUS OF AT
LEAST $100 MILLION AS SET FORTH IN ITS MOST RECENT PUBLISHED ANNUAL REPORT OF
CONDITION.
THIS INDENTURE SHALL ALWAYS HAVE A TRUSTEE WHO SATISFIES THE
REQUIREMENTS OF TIA SECTIONS 310(A)(1), (2) AND (5). THE TRUSTEE IS SUBJECT
TO TIA SECTION 310(B).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
THE TRUSTEE IS SUBJECT TO TIA SECTION 311(A), EXCLUDING ANY CREDITOR
RELATIONSHIP LISTED IN TIA SECTION 311(B). A TRUSTEE WHO HAS RESIGNED OR BEEN
REMOVED SHALL BE SUBJECT TO TIA SECTION 311(A) TO THE EXTENT INDICATED THEREIN.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
THE COMPANY MAY, AT THE OPTION OF ITS BOARD OF DIRECTORS EVIDENCED BY
A RESOLUTION SET FORTH IN AN OFFICERS' CERTIFICATE, AT ANY TIME, ELECT TO HAVE
EITHER SECTION 8.02 OR 8.03 HEREOF BE APPLIED TO ALL OUTSTANDING NOTES UPON
COMPLIANCE WITH THE CONDITIONS SET FORTH BELOW IN THIS ARTICLE EIGHT.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
UPON THE COMPANY'S EXERCISE UNDER SECTION 8.01 HEREOF OF THE OPTION
APPLICABLE TO THIS SECTION 8.02, THE COMPANY AND THE SUBSIDIARY GUARANTORS
SHALL, SUBJECT TO THE SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 8.04
HEREOF, BE DEEMED TO HAVE BEEN DISCHARGED FROM THEIR RESPECTIVE OBLIGATIONS WITH
RESPECT TO ALL OUTSTANDING NOTES AND SUBSIDIARY GUARANTIES, RESPECTIVELY, ON THE
DATE THE CONDITIONS SET FORTH BELOW ARE SATISFIED (HEREINAFTER, "LEGAL
DEFEASANCE"). FOR THIS PURPOSE, LEGAL DEFEASANCE MEANS THAT THE COMPANY SHALL BE
DEEMED TO HAVE PAID AND DISCHARGED THE ENTIRE INDEBTEDNESS REPRESENTED BY THE
OUTSTANDING NOTES, WHICH SHALL THEREAFTER BE DEEMED TO BE "OUTSTANDING" ONLY FOR
THE PURPOSES OF SECTION 8.05 HEREOF AND THE OTHER SECTIONS OF THIS INDENTURE
REFERRED TO IN (A) AND (B) BELOW, AND TO HAVE SATISFIED ALL ITS OTHER
OBLIGATIONS UNDER SUCH NOTES AND THIS
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INDENTURE AND THE SUBSIDIARY GUARANTORS SHALL BE DEEMED TO HAVE BEEN DISCHARGED
FROM THEIR OBLIGATIONS WITH RESPECT TO THE SUBSIDIARY GUARANTIES (AND THE
TRUSTEE, ON DEMAND OF AND AT THE EXPENSE OF THE COMPANY, SHALL EXECUTE PROPER
INSTRUMENTS ACKNOWLEDGING THE SAME), EXCEPT FOR THE FOLLOWING PROVISIONS WHICH
SHALL SURVIVE UNTIL OTHERWISE TERMINATED OR DISCHARGED HEREUNDER: (A) THE RIGHTS
OF HOLDERS OF OUTSTANDING NOTES TO RECEIVE SOLELY FROM THE TRUST FUND DESCRIBED
IN SECTION 8.04 HEREOF, AND AS MORE FULLY SET FORTH IN SUCH SECTION, PAYMENTS IN
RESPECT OF THE PRINCIPAL OF, PREMIUM, LIQUIDATED DAMAGES, IF ANY, AND INTEREST
ON SUCH NOTES WHEN SUCH PAYMENTS ARE DUE, (B) THE COMPANY'S OBLIGATIONS WITH
RESPECT TO SUCH NOTES UNDER ARTICLE 2 AND SECTION 4.02 HEREOF, (C) THE RIGHTS,
POWERS, TRUSTS, DUTIES AND IMMUNITIES OF THE TRUSTEE HEREUNDER AND THE COMPANY'S
AND THE SUBSIDIARY GUARANTORS' OBLIGATIONS IN CONNECTION THEREWITH AND (D) THIS
ARTICLE EIGHT. SUBJECT TO COMPLIANCE WITH THIS ARTICLE EIGHT, THE COMPANY MAY
EXERCISE ITS OPTION UNDER THIS SECTION 8.02 NOTWITHSTANDING THE PRIOR EXERCISE
OF ITS OPTION UNDER SECTION 8.03 HEREOF.
SECTION 8.03. COVENANT DEFEASANCE.
UPON THE COMPANY'S EXERCISE UNDER SECTION 8.01 HEREOF OF THE OPTION
APPLICABLE TO THIS SECTION 8.03, THE COMPANY AND THE SUBSIDIARY GUARANTORS
SHALL, SUBJECT TO THE SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 8.04
HEREOF, BE RELEASED FROM ITS OBLIGATIONS UNDER THE COVENANTS CONTAINED IN
SECTIONS 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20 AND 4.21 HEREOF AND CLAUSE (IV) OF SECTION 5.01 HEREOF WITH RESPECT TO THE
OUTSTANDING NOTES ON AND AFTER THE DATE THE CONDITIONS SET FORTH IN SECTION 8.04
ARE SATISFIED (HEREINAFTER, "COVENANT DEFEASANCE"), AND THE NOTES SHALL
THEREAFTER BE DEEMED NOT "OUTSTANDING" FOR THE PURPOSES OF ANY DIRECTION,
WAIVER, CONSENT OR DECLARATION OR ACT OF HOLDERS (AND THE CONSEQUENCES OF ANY
THEREOF) IN CONNECTION WITH SUCH COVENANTS, BUT SHALL CONTINUE TO BE DEEMED
"OUTSTANDING" FOR ALL OTHER PURPOSES HEREUNDER (IT BEING UNDERSTOOD THAT SUCH
NOTES SHALL NOT BE DEEMED OUTSTANDING FOR ACCOUNTING PURPOSES). FOR THIS
PURPOSE, COVENANT DEFEASANCE MEANS THAT, WITH RESPECT TO THE OUTSTANDING NOTES,
THE COMPANY OR THE SUBSIDIARY GUARANTORS MAY OMIT TO COMPLY WITH AND SHALL HAVE
NO LIABILITY IN RESPECT OF ANY TERM, CONDITION OR LIMITATION SET FORTH IN ANY
SUCH COVENANT, WHETHER DIRECTLY OR INDIRECTLY, BY REASON OF ANY REFERENCE
ELSEWHERE HEREIN TO ANY SUCH COVENANT OR BY REASON OF ANY REFERENCE IN ANY SUCH
COVENANT TO ANY OTHER PROVISION HEREIN OR IN ANY OTHER DOCUMENT AND SUCH
OMISSION TO COMPLY SHALL NOT CONSTITUTE A DEFAULT OR AN EVENT OF DEFAULT UNDER
SECTION 6.01 HEREOF, BUT, EXCEPT AS SPECIFIED ABOVE, THE REMAINDER OF THIS
INDENTURE AND SUCH NOTES SHALL BE UNAFFECTED THEREBY. IN ADDITION, UPON THE
COMPANY'S EXERCISE UNDER SECTION 8.01 HEREOF OF THE OPTION APPLICABLE TO THIS
SECTION 8.03 HEREOF, SUBJECT TO THE SATISFACTION OF THE CONDITIONS SET FORTH IN
SECTION 8.04 HEREOF, SECTIONS 6.01(C) THROUGH 6.01(F) HEREOF SHALL NOT
CONSTITUTE EVENTS OF DEFAULT.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
THE FOLLOWING SHALL BE THE CONDITIONS TO THE APPLICATION OF EITHER
SECTION 8.02 OR 8.03 HEREOF TO THE OUTSTANDING NOTES:
IN ORDER TO EXERCISE EITHER LEGAL DEFEASANCE OR COVENANT DEFEASANCE:
(A) THE COMPANY MUST IRREVOCABLY DEPOSIT WITH THE TRUSTEE, IN TRUST,
FOR THE BENEFIT OF THE HOLDERS, CASH IN UNITED STATES DOLLARS, NON-CALLABLE
GOVERNMENT SECURITIES, OR A COMBINATION THEREOF, IN SUCH AMOUNTS AS SHALL BE
SUFFICIENT, IN THE OPINION OF A NATIONALLY RECOGNIZED FIRM OF INDEPENDENT PUBLIC
ACCOUNTANTS, TO PAY THE PRINCIPAL OF, OR INTEREST AND PREMIUM AND LIQUIDATED
DAMAGES, IF ANY, ON THE OUTSTANDING NOTES ON THE
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STATED MATURITY OR ON THE APPLICABLE REDEMPTION DATE, AS THE CASE MAY BE;
(B) IN THE CASE OF AN ELECTION UNDER SECTION 8.02 HEREOF, THE COMPANY
SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL IN THE UNITED STATES
REASONABLY ACCEPTABLE TO THE TRUSTEE CONFIRMING THAT (A) THE COMPANY HAS
RECEIVED FROM, OR THERE HAS BEEN PUBLISHED BY, THE INTERNAL REVENUE SERVICE A
RULING OR (B) SINCE THE DATE OF THIS INDENTURE, THERE HAS BEEN A CHANGE IN THE
APPLICABLE FEDERAL INCOME TAX LAW, IN EITHER CASE TO THE EFFECT THAT, AND BASED
THEREON SUCH OPINION OF COUNSEL SHALL CONFIRM THAT, THE HOLDERS OF THE
OUTSTANDING NOTES SHALL NOT RECOGNIZE INCOME, GAIN OR LOSS FOR FEDERAL INCOME
TAX PURPOSES AS A RESULT OF SUCH LEGAL DEFEASANCE AND SHALL BE SUBJECT TO
FEDERAL INCOME TAX ON THE SAME AMOUNTS, IN THE SAME MANNER AND AT THE SAME TIMES
AS WOULD HAVE BEEN THE CASE IF SUCH LEGAL DEFEASANCE HAD NOT OCCURRED;
(C) IN THE CASE OF AN ELECTION UNDER SECTION 8.03 HEREOF, THE COMPANY
SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL IN THE UNITED STATES
REASONABLY ACCEPTABLE TO THE TRUSTEE CONFIRMING THAT THE HOLDERS OF THE
OUTSTANDING NOTES SHALL NOT RECOGNIZE INCOME, GAIN OR LOSS FOR FEDERAL INCOME
TAX PURPOSES AS A RESULT OF SUCH COVENANT DEFEASANCE AND SHALL BE SUBJECT TO
FEDERAL INCOME TAX ON THE SAME AMOUNTS, IN THE SAME MANNER AND AT THE SAME TIMES
AS WOULD HAVE BEEN THE CASE IF SUCH COVENANT DEFEASANCE HAD NOT OCCURRED;
(D) NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING ON THE DATE OF SUCH DEPOSIT (OTHER THAN A DEFAULT OR EVENT OF DEFAULT
RESULTING FROM THE INCURRENCE OF INDEBTEDNESS ALL OR A PORTION OF THE PROCEEDS
OF WHICH SHALL BE USED TO DEFEASE THE NOTES PURSUANT TO THIS ARTICLE EIGHT
CONCURRENTLY WITH SUCH INCURRENCE) OR INSOFAR AS SECTIONS 6.01(G) OR 6.01(H)
HEREOF IS CONCERNED, AT ANY TIME IN THE PERIOD ENDING ON THE 91ST DAY AFTER THE
DATE OF DEPOSIT;
(E) SUCH LEGAL DEFEASANCE OR COVENANT DEFEASANCE SHALL NOT RESULT IN
A BREACH OR VIOLATION OF, OR CONSTITUTE A DEFAULT UNDER, ANY MATERIAL AGREEMENT
OR INSTRUMENT (OTHER THAN THIS INDENTURE) TO WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS A PARTY OR BY WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS
BOUND;
(F) THE COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF
COUNSEL (WHICH MAY BE SUBJECT TO CUSTOMARY EXCEPTIONS) TO THE EFFECT THAT,
ASSUMING NO INTERVENING BANKRUPTCY OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR
BETWEEN THE DATE OF DEPOSIT AND THE 91ST DAY FOLLOWING THE DEPOSIT AND ASSUMING
THAT NO HOLDER IS AN "INSIDER" OF THE COMPANY UNDER APPLICABLE BANKRUPTCY LAW,
AFTER THE 91ST DAY FOLLOWING THE DEPOSIT, THE TRUST FUNDS SHALL NOT BE SUBJECT
TO THE EFFECT OF ANY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION OR
SIMILAR LAWS AFFECTING CREDITORS' RIGHTS GENERALLY;
(G) THE COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE AN OFFICERS'
CERTIFICATE STATING THAT THE DEPOSIT WAS NOT MADE BY THE COMPANY WITH THE INTENT
OF PREFERRING THE HOLDERS OVER ANY OTHER CREDITORS OF THE COMPANY OR WITH THE
INTENT OF DEFEATING, HINDERING, DELAYING OR DEFRAUDING ANY OTHER CREDITORS OF
THE COMPANY; AND
(H) THE COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE AN OFFICERS'
CERTIFICATE AND AN OPINION OF COUNSEL, EACH STATING THAT ALL CONDITIONS
PRECEDENT PROVIDED FOR OR RELATING TO THE LEGAL DEFEASANCE OR THE COVENANT
DEFEASANCE HAVE BEEN COMPLIED WITH.
NOTWITHSTANDING THE FOREGOING, THE OPINION OF COUNSEL REQUIRED BY
CLAUSES (B) OR
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(C) ABOVE NEED NOT BE DELIVERED IF, AT SUCH TIME, ALL OUTSTANDING NOTES HAVE
BEEN IRREVOCABLY CALLED FOR REDEMPTION IN ACCORDANCE WITH THE TERMS OF THIS
INDENTURE.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
SUBJECT TO SECTION 8.06 HEREOF, ALL MONEY AND NON-CALLABLE GOVERNMENT
SECURITIES (INCLUDING THE PROCEEDS THEREOF) DEPOSITED WITH THE TRUSTEE (OR OTHER
QUALIFYING TRUSTEE, COLLECTIVELY FOR PURPOSES OF THIS SECTION 8.05, THE
"TRUSTEE") PURSUANT TO SECTION 8.04 HEREOF IN RESPECT OF THE OUTSTANDING NOTES
SHALL BE HELD IN TRUST AND APPLIED BY THE TRUSTEE, IN ACCORDANCE WITH THE
PROVISIONS OF SUCH NOTES AND THIS INDENTURE, TO THE PAYMENT, EITHER DIRECTLY OR
THROUGH ANY PAYING AGENT (INCLUDING THE COMPANY ACTING AS PAYING AGENT) AS THE
TRUSTEE MAY DETERMINE, TO THE HOLDERS OF SUCH NOTES OF ALL SUMS DUE AND TO
BECOME DUE THEREON IN RESPECT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, BUT
SUCH MONEY NEED NOT BE SEGREGATED FROM OTHER FUNDS EXCEPT TO THE EXTENT REQUIRED
BY LAW.
THE COMPANY SHALL PAY AND INDEMNIFY THE TRUSTEE AGAINST ANY TAX, FEE
OR OTHER CHARGE IMPOSED ON OR ASSESSED AGAINST THE CASH OR NON-CALLABLE
GOVERNMENT SECURITIES DEPOSITED PURSUANT TO SECTION 8.04 HEREOF OR THE PRINCIPAL
AND INTEREST RECEIVED IN RESPECT THEREOF OTHER THAN ANY SUCH TAX, FEE OR OTHER
CHARGE WHICH BY LAW IS FOR THE ACCOUNT OF THE HOLDERS OF THE OUTSTANDING NOTES.
ANYTHING IN THIS ARTICLE EIGHT TO THE CONTRARY NOTWITHSTANDING, THE
TRUSTEE SHALL DELIVER OR PAY TO THE COMPANY FROM TIME TO TIME UPON THE REQUEST
OF THE COMPANY ANY MONEY OR NON-CALLABLE GOVERNMENT SECURITIES HELD BY IT AS
PROVIDED IN SECTION 8.04 HEREOF WHICH, IN THE OPINION OF A NATIONALLY RECOGNIZED
FIRM OF INDEPENDENT PUBLIC ACCOUNTANTS EXPRESSED IN A WRITTEN CERTIFICATION
THEREOF DELIVERED TO THE TRUSTEE (WHICH MAY BE THE OPINION DELIVERED UNDER
SECTION 8.04(A) HEREOF), ARE IN EXCESS OF THE AMOUNT THEREOF THAT WOULD THEN BE
REQUIRED TO BE DEPOSITED TO EFFECT AN EQUIVALENT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
SECTION 8.06. REPAYMENT TO COMPANY.
ANY MONEY DEPOSITED WITH THE TRUSTEE OR ANY PAYING AGENT, OR THEN
HELD BY THE COMPANY, IN TRUST FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF
ANY, OR INTEREST ON ANY NOTE AND REMAINING UNCLAIMED FOR TWO YEARS AFTER SUCH
PRINCIPAL, AND PREMIUM, IF ANY, OR INTEREST HAS BECOME DUE AND PAYABLE SHALL BE
PAID TO THE COMPANY ON ITS REQUEST OR (IF THEN HELD BY THE COMPANY) SHALL BE
DISCHARGED FROM SUCH TRUST; AND THE HOLDER OF SUCH NOTE SHALL THEREAFTER LOOK
ONLY TO THE COMPANY FOR PAYMENT THEREOF, AND ALL LIABILITY OF THE TRUSTEE OR
SUCH PAYING AGENT WITH RESPECT TO SUCH TRUST MONEY, AND ALL LIABILITY OF THE
COMPANY AS TRUSTEE THEREOF, SHALL THEREUPON CEASE; PROVIDED, HOWEVER, THAT THE
TRUSTEE OR SUCH PAYING AGENT, BEFORE BEING REQUIRED TO MAKE ANY SUCH REPAYMENT,
MAY AT THE EXPENSE OF THE COMPANY CAUSE TO BE PUBLISHED ONCE, IN THE NEW YORK
TIMES AND THE WALL STREET JOURNAL (NATIONAL EDITION), NOTICE THAT SUCH MONEY
REMAINS UNCLAIMED AND THAT, AFTER A DATE SPECIFIED THEREIN, WHICH SHALL NOT BE
LESS THAN 30 DAYS FROM THE DATE OF SUCH NOTIFICATION OR PUBLICATION, ANY
UNCLAIMED BALANCE OF SUCH MONEY THEN REMAINING SHALL BE REPAID TO THE COMPANY.
SECTION 8.07. REINSTATEMENT.
IF THE TRUSTEE OR PAYING AGENT IS UNABLE TO APPLY ANY UNITED STATES
DOLLARS OR NON-
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CALLABLE GOVERNMENT SECURITIES IN ACCORDANCE WITH SECTION 8.02 OR 8.03 HEREOF,
AS THE CASE MAY BE, BY REASON OF ANY ORDER OR JUDGMENT OF ANY COURT OR
GOVERNMENTAL AUTHORITY ENJOINING, RESTRAINING OR OTHERWISE PROHIBITING SUCH
APPLICATION, THEN THE COMPANY'S OBLIGATIONS UNDER THIS INDENTURE AND THE NOTES
SHALL BE REVIVED AND REINSTATED AS THOUGH NO DEPOSIT HAD OCCURRED PURSUANT TO
SECTION 8.02 OR 8.03 HEREOF UNTIL SUCH TIME AS THE TRUSTEE OR PAYING AGENT IS
PERMITTED TO APPLY ALL SUCH MONEY IN ACCORDANCE WITH SECTION 8.02 OR 8.03
HEREOF, AS THE CASE MAY BE; PROVIDED, HOWEVER, THAT, IF THE COMPANY MAKES ANY
PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY NOTE FOLLOWING THE
REINSTATEMENT OF ITS OBLIGATIONS, THE COMPANY SHALL BE SUBROGATED TO THE RIGHTS
OF THE HOLDERS OF SUCH NOTES TO RECEIVE SUCH PAYMENT FROM THE MONEY HELD BY THE
TRUSTEE OR PAYING AGENT.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
NOTWITHSTANDING SECTION 9.02 OF THIS INDENTURE, THE COMPANY, THE
SUBSIDIARY GUARANTORS AND THE TRUSTEE MAY AMEND OR SUPPLEMENT THIS INDENTURE,
THE SUBSIDIARY GUARANTIES OR THE NOTES WITHOUT THE CONSENT OF ANY HOLDER OF A
NOTE:
(A) TO CURE ANY AMBIGUITY, DEFECT OR INCONSISTENCY;
(B) TO PROVIDE FOR UNCERTIFICATED NOTES IN ADDITION TO OR IN PLACE OF
CERTIFICATED NOTES OR TO ALTER THE PROVISIONS OF ARTICLE 2 HEREOF (INCLUDING THE
RELATED DEFINITIONS) IN A MANNER THAT DOES NOT MATERIALLY ADVERSELY AFFECT ANY
HOLDER;
(C) TO PROVIDE FOR THE ASSUMPTION OF THE COMPANY'S, OR ANY SUBSIDIARY
GUARANTOR'S OBLIGATIONS TO THE HOLDERS OF THE NOTES BY A SUCCESSOR TO THE
COMPANY PURSUANT TO ARTICLE 5 HEREOF;
(D) TO MAKE ANY CHANGE THAT WOULD PROVIDE ANY ADDITIONAL RIGHTS OR
BENEFITS TO THE HOLDERS OF THE NOTES, INCLUDING PROVIDING FOR ADDITIONAL
SUBSIDIARY GUARANTIES, OR THAT DOES NOT ADVERSELY AFFECT THE LEGAL RIGHTS
HEREUNDER OF ANY HOLDER OF THE NOTE;
(E) TO COMPLY WITH REQUIREMENTS OF THE SEC IN ORDER TO EFFECT OR
MAINTAIN THE QUALIFICATION OF THIS INDENTURE UNDER THE TIA;
(F) TO PROVIDE FOR THE ISSUANCE OF ADDITIONAL NOTES IN ACCORDANCE
WITH THE LIMITATIONS SET FORTH IN THIS INDENTURE AS OF THE DATE HEREOF; OR
(G) TO ALLOW ANY GUARANTOR TO EXECUTE A SUPPLEMENTAL INDENTURE AND/OR
A SUBSIDIARY GUARANTEE WITH RESPECT TO THE NOTES.
UPON THE REQUEST OF THE COMPANY ACCOMPANIED BY A RESOLUTION OF ITS
BOARD OF DIRECTORS AUTHORIZING THE EXECUTION OF ANY SUCH AMENDED OR SUPPLEMENTAL
INDENTURE, AND UPON RECEIPT BY THE TRUSTEE OF THE DOCUMENTS DESCRIBED IN SECTION
7.02 HEREOF, THE TRUSTEE SHALL JOIN WITH THE COMPANY AND THE SUBSIDIARY
GUARANTORS IN THE EXECUTION OF ANY AMENDED OR SUPPLE MENTAL INDENTURE AUTHORIZED
OR PERMITTED BY THE TERMS OF THIS INDENTURE AND TO MAKE ANY FURTHER APPROPRIATE
AGREEMENTS AND STIPULATIONS THAT MAY BE THEREIN CONTAINED, BUT THE TRUSTEE SHALL
NOT BE OBLIGATED TO ENTER INTO SUCH AMENDED OR SUPPLEMENTAL
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INDENTURE THAT AFFECTS ITS OWN RIGHTS, DUTIES OR IMMUNITIES UNDER THIS INDENTURE
OR OTHERWISE.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
EXCEPT AS PROVIDED BELOW IN THIS SECTION 9.02, THE COMPANY AND THE
TRUSTEE MAY AMEND OR SUPPLEMENT THIS INDENTURE (INCLUDING SECTION 3.09, 4.10 AND
4.15 HEREOF) AND THE NOTES MAY BE AMENDED OR SUPPLEMENTED WITH THE CONSENT OF
THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE NOTES (INCLUDING
ADDITIONAL NOTES, IF ANY) THEN OUTSTANDING (INCLUDING, WITHOUT LIMITATION,
CONSENTS OBTAINED IN CONNECTION WITH A TENDER OFFER OR EXCHANGE OFFER FOR, OR
PURCHASE OF, THE NOTES), AND, SUBJECT TO SECTIONS 6.04 AND 6.07 HEREOF, ANY
EXISTING DEFAULT OR EVENT OF DEFAULT (OTHER THAN A DEFAULT OR EVENT OF DEFAULT
IN THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE NOTES,
EXCEPT A PAYMENT DEFAULT RESULTING FROM AN ACCELERATION THAT HAS BEEN RESCINDED)
OR COMPLIANCE WITH ANY PROVISION OF THIS INDENTURE OR THE NOTES MAY BE WAIVED
WITH THE CONSENT OF THE HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN
OUTSTANDING NOTES (INCLUDING ADDITIONAL NOTES, IF ANY) VOTING AS A SINGLE CLASS
(INCLUDING, WITHOUT LIMITATION, CONSENTS OBTAINED IN CONNECTION WITH A TENDER
OFFER OR EXCHANGE OFFER FOR, OR PURCHASE OF, THE NOTES).
UPON THE REQUEST OF THE COMPANY ACCOMPANIED BY A RESOLUTION OF ITS
BOARD OF DIRECTORS AUTHORIZING THE EXECUTION OF ANY SUCH AMENDED OR SUPPLEMENTAL
INDENTURE, AND UPON THE FILING WITH THE TRUSTEE OF EVIDENCE SATISFACTORY TO THE
TRUSTEE OF THE CONSENT OF THE HOLDERS OF NOTES AS AFORESAID, AND UPON RECEIPT BY
THE TRUSTEE OF THE DOCUMENTS DESCRIBED IN SECTION 7.02 HEREOF, THE TRUSTEE SHALL
JOIN WITH THE COMPANY IN THE EXECUTION OF SUCH AMENDED OR SUPPLEMENTAL INDENTURE
UNLESS SUCH AMENDED OR SUPPLEMENTAL INDENTURE DIRECTLY AFFECTS THE TRUSTEE'S OWN
RIGHTS, DUTIES OR IMMUNITIES UNDER THIS INDENTURE OR OTHERWISE, IN WHICH CASE
THE TRUSTEE MAY IN ITS DISCRETION, BUT SHALL NOT BE OBLIGATED TO, ENTER INTO
SUCH AMENDED OR SUPPLEMENTAL INDENTURE.
IT SHALL NOT BE NECESSARY FOR THE CONSENT OF THE HOLDERS OF NOTES
UNDER THIS SECTION 9.02 TO APPROVE THE PARTICULAR FORM OF ANY PROPOSED AMENDMENT
OR WAIVER, BUT IT SHALL BE SUFFICIENT IF SUCH CONSENT APPROVES THE SUBSTANCE
THEREOF.
AFTER AN AMENDMENT, SUPPLEMENT OR WAIVER UNDER THIS SECTION BECOMES
EFFECTIVE, THE COMPANY SHALL MAIL TO THE HOLDERS OF NOTES AFFECTED THEREBY A
NOTICE BRIEFLY DESCRIBING THE AMENDMENT, SUPPLEMENT OR WAIVER. ANY FAILURE OF
THE COMPANY TO MAIL SUCH NOTICE, OR ANY DEFECT THEREIN, SHALL NOT, HOWEVER, IN
ANY WAY IMPAIR OR AFFECT THE VALIDITY OF ANY SUCH AMENDED OR SUPPLEMENTAL
INDENTURE OR WAIVER. SUBJECT TO SECTIONS 6.04 AND 6.07 HEREOF, THE HOLDERS OF A
MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING VOTING AS A
SINGLE CLASS MAY WAIVE COMPLIANCE IN A PARTICULAR INSTANCE BY THE COMPANY WITH
ANY PROVISION OF THIS INDENTURE OR THE NOTES. HOWEVER, WITHOUT THE CONSENT OF
EACH HOLDER AFFECTED, AN AMENDMENT OR WAIVER UNDER THIS SECTION 9.02 MAY NOT
(WITH RESPECT TO ANY NOTES (INCLUDING ADDITIONAL NOTES, IF ANY) HELD BY A
NON-CONSENTING HOLDER):
(A) REDUCE THE PRINCIPAL AMOUNT OF NOTES WHOSE HOLDERS MUST CONSENT
TO AN AMENDMENT, SUPPLEMENT OR WAIVER;
(B) REDUCE THE PRINCIPAL OF OR CHANGE THE FIXED MATURITY OF ANY NOTE
OR ALTER OR WAIVE ANY OF THE PROVISIONS WITH RESPECT TO THE REDEMPTION OF THE
NOTES EXCEPT AS PROVIDED ABOVE WITH RESPECT TO SECTIONS 3.09, 4.10 AND 4.15
HEREOF;
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(C) REDUCE THE RATE OF OR CHANGE THE TIME FOR PAYMENT OF INTEREST,
INCLUDING DEFAULT INTEREST, ON ANY NOTE;
(D) WAIVE A DEFAULT OR EVENT OF DEFAULT IN THE PAYMENT OF PRINCIPAL
OF OR INTEREST OR PREMIUM OR LIQUIDATED DAMAGES, IF ANY, ON THE NOTES (EXCEPT A
RESCISSION OF ACCELERATION OF THE NOTES BY THE HOLDERS OF AT LEAST A MAJORITY IN
AGGREGATE PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES (INCLUDING ADDITIONAL
NOTES, IF ANY) AND A WAIVER OF THE PAYMENT DEFAULT THAT RESULTED FROM SUCH
ACCELERATION);
(E) MAKE ANY NOTE PAYABLE IN MONEY OTHER THAN THAT STATED IN THE
NOTES;
(F) MAKE ANY CHANGE IN THE PROVISIONS OF THIS INDENTURE RELATING TO
WAIVERS OF PAST DEFAULTS OR THE RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENTS
OF PRINCIPAL OF OR INTEREST OR PREMIUM OR LIQUIDATED DAMAGES, IF ANY, ON THE
NOTES;
(G) RELEASE ANY SUBSIDIARY GUARANTOR FROM ANY OF ITS OBLIGATIONS
UNDER ITS SUBSIDIARY GUARANTY OR THE INDENTURE, EXCEPT IN ACCORDANCE WITH THE
TERMS OF THE INDENTURE;
(H) MAKE ANY CHANGE IN SECTION 6.04 OR 6.07 HEREOF OR IN THE
FOREGOING AMENDMENT AND WAIVER PROVISIONS; OR
(I) WAIVE A REDEMPTION PAYMENT WITH RESPECT TO ANY NOTE OTHER THAN A
PAYMENT REQUIRED UNDER SECTIONS 4.10 OR 4.15.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
EVERY AMENDMENT OR SUPPLEMENT TO THIS INDENTURE OR THE NOTES SHALL BE
SET FORTH IN AN AMENDED OR SUPPLEMENTAL INDENTURE THAT COMPLIES WITH THE TIA AS
THEN IN EFFECT.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
UNTIL AN AMENDMENT, SUPPLEMENT OR WAIVER BECOMES EFFECTIVE, A CONSENT
TO IT BY A HOLDER OF A NOTE IS A CONTINUING CONSENT BY THE HOLDER OF A NOTE AND
EVERY SUBSEQUENT HOLDER OF A NOTE OR PORTION OF A NOTE THAT EVIDENCES THE SAME
DEBT AS THE CONSENTING HOLDER'S NOTE, EVEN IF NOTATION OF THE CONSENT IS NOT
MADE ON ANY NOTE. HOWEVER, ANY SUCH HOLDER OF A NOTE OR SUBSEQUENT HOLDER OF A
NOTE MAY REVOKE THE CONSENT AS TO ITS NOTE IF THE TRUSTEE RECEIVES WRITTEN
NOTICE OF REVOCATION BEFORE THE DATE THE WAIVER, SUPPLEMENT OR AMENDMENT BECOMES
EFFECTIVE. AN AMENDMENT, SUPPLEMENT OR WAIVER BECOMES EFFECTIVE IN ACCORDANCE
WITH ITS TERMS AND THEREAFTER BINDS EVERY HOLDER.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
THE TRUSTEE MAY PLACE AN APPROPRIATE NOTATION ABOUT AN AMENDMENT,
SUPPLEMENT OR WAIVER ON ANY NOTE THEREAFTER AUTHENTICATED. THE COMPANY IN
EXCHANGE FOR ALL NOTES MAY ISSUE AND THE TRUSTEE SHALL, UPON RECEIPT OF AN
AUTHENTICATION ORDER, AUTHENTICATE NEW NOTES THAT REFLECT THE AMENDMENT,
SUPPLEMENT OR WAIVER.
FAILURE TO MAKE THE APPROPRIATE NOTATION OR ISSUE A NEW NOTE SHALL
NOT AFFECT THE VALIDITY AND EFFECT OF SUCH AMENDMENT, SUPPLEMENT OR WAIVER.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
THE TRUSTEE SHALL SIGN ANY AMENDED OR SUPPLEMENTAL INDENTURE
AUTHORIZED PURSUANT TO THIS ARTICLE NINE IF THE AMENDMENT OR SUPPLEMENT DOES NOT
ADVERSELY AFFECT THE RIGHTS, DUTIES, LIABILITIES OR IMMUNITIES OF THE TRUSTEE.
THE COMPANY MAY NOT SIGN AN AMENDMENT OR SUPPLEMENTAL INDENTURE UNTIL THE BOARD
OF DIRECTORS APPROVES IT. IN EXECUTING ANY AMENDED OR SUPPLEMENTAL INDENTURE,
THE TRUSTEE SHALL BE ENTITLED TO RECEIVE AND (SUBJECT TO SECTION 7.01 HEREOF)
SHALL BE FULLY PROTECTED IN RELYING UPON, IN ADDITION TO THE DOCUMENTS REQUIRED
BY SECTION 10.04 HEREOF, AN OFFICER'S CERTIFICATE AND AN OPINION OF COUNSEL
STATING THAT THE EXECUTION OF SUCH AMENDED OR SUPPLEMENTAL INDENTURE IS
AUTHORIZED OR PERMITTED BY THIS INDENTURE.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
THE COMPANY AGREES, AND EACH HOLDER BY ACCEPTING A NOTE AGREES, THAT
THE INDEBTEDNESS EVIDENCED BY AND OTHER OBLIGATIONS WITH RESPECT TO THE NOTES
ARE SUBORDINATED IN RIGHT OF PAYMENT, TO THE EXTENT AND IN THE MANNER PROVIDED
IN THIS ARTICLE 10, TO THE PRIOR PAYMENT IN FULL IN CASH OF ALL SENIOR DEBT
(WHETHER OUTSTANDING ON THE DATE HEREOF OR HEREAFTER CREATED, INCURRED, ASSUMED
OR GUARANTEED), AND THAT THE SUBORDINATION IS FOR THE BENEFIT OF THE HOLDERS OF
SENIOR DEBT.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
UPON ANY PAYMENT OR DISTRIBUTION TO CREDITORS OF THE COMPANY IN A
LIQUIDATION OR DISSOLUTION OF THE COMPANY OR IN A BANKRUPTCY, REORGANIZATION,
INSOLVENCY, RECEIVERSHIP OR SIMILAR PROCEEDING RELATING TO THE COMPANY OR ITS
PROPERTY, IN AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR ANY MARSHALING OF THE
COMPANY'S ASSETS AND LIABILITIES:
(I) HOLDERS OF SENIOR DEBT SHALL BE ENTITLED TO RECEIVE PAYMENT
IN FULL IN CASH OF ALL OBLIGATIONS DUE IN RESPECT OF SUCH SENIOR DEBT
(INCLUDING INTEREST AFTER THE COMMENCEMENT OF ANY SUCH PROCEEDING AT THE
RATE SPECIFIED IN THE APPLICABLE SENIOR DEBT, WHETHER OR NOT SUCH INTEREST
WOULD BE AN ALLOWED CLAIM IN SUCH PROCEEDING) BEFORE HOLDERS OF THE NOTES
SHALL BE ENTITLED TO RECEIVE ANY PAYMENT WITH RESPECT TO THE NOTES (EXCEPT
THAT HOLDERS MAY RECEIVE (A) PERMITTED JUNIOR SECURITIES AND (B) PAYMENTS
AND OTHER DISTRIBUTIONS MADE FROM ANY DEFEASANCE TRUST CREATED PURSUANT TO
SECTION 8.01 HEREOF IF THE FUNDING OF SUCH TRUST IS PERMITTED UNDER
SECTION 8.04); AND
(II) UNTIL ALL OBLIGATIONS WITH RESPECT TO SENIOR DEBT (AS
PROVIDED IN CLAUSE (I) ABOVE) ARE PAID IN FULL IN CASH, ANY PAYMENT OR
DISTRIBUTION TO WHICH HOLDERS WOULD BE ENTITLED BUT FOR THIS ARTICLE 10
SHALL BE MADE TO HOLDERS OF SENIOR DEBT (EXCEPT THAT HOLDERS OF NOTES MAY
RECEIVE (A) PERMITTED JUNIOR SECURITIES AND (B) PAYMENTS AND OTHER
DISTRIBUTIONS MADE FROM ANY DEFEASANCE TRUST CREATED PURSUANT TO SECTION
8.01 HEREOF IF THE FUNDING OF SUCH TRUST IS PERMITTED UNDER SECTION 8.04),
AS THEIR INTERESTS MAY APPEAR.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
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(A) THE COMPANY MAY NOT MAKE ANY PAYMENT OR DISTRIBUTION (WHETHER BY
PURCHASE, REDEMPTION, DEFEASANCE OR OTHERWISE) IN RESPECT OF OBLIGATIONS WITH
RESPECT TO THE NOTES AND MAY NOT ACQUIRE FROM THE TRUSTEE OR ANY HOLDER ANY
NOTES FOR CASH OR PROPERTY (OTHER THAN (A) PERMITTED JUNIOR SECURITIES AND (B)
PAYMENTS AND OTHER DISTRIBUTIONS MADE FROM ANY DEFEASANCE TRUST CREATED PURSUANT
TO SECTION 8.01 HEREOF IF THE FUNDING OF SUCH TRUST IS PERMITTED UNDER SECTION
8.04), UNTIL ALL PRINCIPAL AND OTHER OBLIGATIONS WITH RESPECT TO THE SENIOR DEBT
HAVE BEEN PAID IN FULL IN CASH IF:
(I) A DEFAULT IN THE PAYMENT OF ANY PRINCIPAL OR OTHER
OBLIGATIONS WITH RESPECT TO DESIGNATED SENIOR DEBT OCCURS AND IS
CONTINUING; OR
(II) A DEFAULT, OTHER THAN A PAYMENT DEFAULT, ON DESIGNATED
SENIOR DEBT OCCURS AND IS CONTINUING THAT THEN PERMITS HOLDERS OF THE
DESIGNATED SENIOR DEBT TO ACCELERATE ITS MATURITY AND THE TRUSTEE RECEIVES
A NOTICE OF THE DEFAULT (A "PAYMENT BLOCKAGE NOTICE") FROM A PERSON WHO
MAY GIVE IT PURSUANT TO SECTION 10.11 HEREOF. IF THE TRUSTEE RECEIVES ANY
SUCH PAYMENT BLOCKAGE NOTICE, NO SUBSEQUENT PAYMENT BLOCKAGE NOTICE SHALL
BE EFFECTIVE FOR PURPOSES OF THIS SECTION UNLESS AND UNTIL AT LEAST 360
DAYS SHALL HAVE ELAPSED SINCE THE EFFECTIVENESS OF THE IMMEDIATELY PRIOR
PAYMENT BLOCKAGE NOTICE. NO NONPAYMENT DEFAULT THAT EXISTED OR WAS
CONTINUING ON THE DATE OF DELIVERY OF ANY PAYMENT BLOCKAGE NOTICE TO THE
TRUSTEE SHALL BE, OR BE MADE, THE BASIS FOR A SUBSEQUENT PAYMENT BLOCKAGE
NOTICE UNLESS SUCH DEFAULT SHALL HAVE BEEN WAIVED FOR A PERIOD OF NOT LESS
THAN 90 DAYS.
(B) THE COMPANY MAY AND SHALL RESUME PAYMENTS ON AND DISTRIBUTIONS IN
RESPECT OF THE NOTES:
(I) IN THE CASE OF A PAYMENT DEFAULT, THE DATE UPON WHICH THE
DEFAULT IS CURED OR WAIVED, OR
(II) IN THE CASE OF A NONPAYMENT DEFAULT, THE EARLIER OF THE
DATE ON WHICH SUCH NONPAYMENT DEFAULT IS CURED OR WAIVED OR 179 DAYS AFTER
THE DATE ON WHICH THE APPLICABLE PAYMENT BLOCKAGE NOTICE IS RECEIVED
UNLESS THE MATURITY OF SUCH DESIGNATED SENIOR DEBT HAS BEEN ACCELERATED,
IF THIS ARTICLE 10 OTHERWISE PERMITS THE PAYMENT, DISTRIBUTION OR
ACQUISITION AT THE TIME OF SUCH PAYMENT OR ACQUISITION.
SECTION 10.04. ACCELERATION OF SECURITIES.
IF PAYMENT OF THE SECURITIES IS ACCELERATED BECAUSE OF AN EVENT OF
DEFAULT, THE COMPANY SHALL PROMPTLY NOTIFY HOLDERS OF SENIOR DEBT OF THE
ACCELERATION.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
IN THE EVENT THAT THE TRUSTEE OR ANY HOLDER RECEIVES ANY PAYMENT OF
OR DISTRIBUTION WITH RESPECT TO ANY OBLIGATIONS WITH RESPECT TO THE NOTES
(EXCEPT IN PERMITTED JUNIOR SECURITIES IN THE CIRCUMSTANCES PERMITTED IN SECTION
10.02 OR FROM THE TRUST DESCRIBED IN SECTION 8 HEREOF IF THE FUNDING OF SUCH
TRUST IS PERMITTED BY SECTION 8.04) AT A TIME WHEN SUCH PAYMENT IS PROHIBITED BY
SECTION 10.02 OR 10.03 HEREOF, SUCH PAYMENT OR DISTRIBUTION SHALL BE HELD BY THE
TRUSTEE OR SUCH HOLDER, IN TRUST FOR THE BENEFIT OF, AND SHALL BE PAID FORTHWITH
OVER AND DELIVERED, UPON WRITTEN REQUEST, TO, THE HOLDERS OF SENIOR DEBT AS
THEIR INTERESTS
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MAY APPEAR OR THEIR REPRESENTATIVE UNDER THE INDENTURE OR OTHER AGREEMENT (IF
ANY) PURSUANT TO WHICH SENIOR DEBT MAY HAVE BEEN ISSUED, AS THEIR RESPECTIVE
INTERESTS MAY APPEAR, FOR APPLICATION TO THE PAYMENT OF ALL OBLIGATIONS WITH
RESPECT TO SENIOR DEBT REMAINING UNPAID TO THE EXTENT NECESSARY TO PAY SUCH
OBLIGATIONS IN FULL IN ACCORDANCE WITH THEIR TERMS IN CASH, AFTER GIVING EFFECT
TO ANY CONCURRENT PAYMENT OR DISTRIBUTION TO OR FOR THE HOLDERS OF SENIOR DEBT.
WITH RESPECT TO THE HOLDERS OF SENIOR DEBT, THE TRUSTEE UNDERTAKES TO
PERFORM ONLY SUCH OBLIGATIONS ON THE PART OF THE TRUSTEE AS ARE SPECIFICALLY SET
FORTH IN THIS ARTICLE 10, AND NO IMPLIED COVENANTS OR OBLIGATIONS WITH RESPECT
TO THE HOLDERS OF SENIOR DEBT SHALL BE READ INTO THIS INDENTURE AGAINST THE
TRUSTEE. THE TRUSTEE SHALL NOT BE DEEMED TO OWE ANY FIDUCIARY DUTY TO THE
HOLDERS OF SENIOR DEBT, AND SHALL NOT BE LIABLE TO ANY SUCH HOLDERS IF THE
TRUSTEE SHALL PAY OVER OR DISTRIBUTE TO OR ON BEHALF OF HOLDERS OR THE COMPANY
OR ANY OTHER PERSON MONEY OR ASSETS TO WHICH ANY HOLDERS OF SENIOR DEBT SHALL BE
ENTITLED BY VIRTUE OF THIS ARTICLE 10, EXCEPT IF SUCH PAYMENT IS MADE AS A
RESULT OF THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE TRUSTEE.
SECTION 10.06. NOTICE BY COMPANY.
THE COMPANY SHALL PROMPTLY NOTIFY THE TRUSTEE AND THE PAYING AGENT OF
ANY FACTS KNOWN TO THE COMPANY THAT WOULD CAUSE A PAYMENT OF ANY OBLIGATIONS
WITH RESPECT TO THE NOTES TO VIOLATE THIS ARTICLE 10, BUT FAILURE TO GIVE SUCH
NOTICE SHALL NOT AFFECT THE SUBORDINATION OF THE NOTES TO THE SENIOR DEBT AS
PROVIDED IN THIS ARTICLE 10.
SECTION 10.07. SUBROGATION.
AFTER ALL SENIOR DEBT IS PAID IN FULL IN CASH AND UNTIL THE NOTES ARE
PAID IN FULL, HOLDERS OF NOTES SHALL BE SUBROGATED (EQUALLY AND RATABLY WITH ALL
OTHER INDEBTEDNESS PARI PASSU WITH THE NOTES) TO THE RIGHTS OF HOLDERS OF SENIOR
DEBT TO RECEIVE DISTRIBUTIONS APPLICABLE TO SENIOR DEBT TO THE EXTENT THAT
DISTRIBUTIONS OTHERWISE PAYABLE TO THE HOLDERS OF NOTES HAVE BEEN APPLIED TO THE
PAYMENT OF SENIOR DEBT. A DISTRIBUTION MADE UNDER THIS ARTICLE 10 TO HOLDERS OF
SENIOR DEBT THAT OTHERWISE WOULD HAVE BEEN MADE TO HOLDERS OF NOTES IS NOT, AS
BETWEEN THE COMPANY AND HOLDERS, A PAYMENT BY THE COMPANY ON THE NOTES.
SECTION 10.08. RELATIVE RIGHTS.
THIS ARTICLE 10 DEFINES THE RELATIVE RIGHTS OF HOLDERS OF NOTES AND
HOLDERS OF SENIOR DEBT. NOTHING IN THIS INDENTURE SHALL:
(I) IMPAIR, AS BETWEEN THE COMPANY AND HOLDERS OF NOTES, THE
OBLIGATION OF THE COMPANY, WHICH IS ABSOLUTE AND UNCONDITIONAL, TO PAY
PRINCIPAL OF AND INTEREST ON THE NOTES IN ACCORDANCE WITH THEIR TERMS;
(II) AFFECT THE RELATIVE RIGHTS OF HOLDERS OF NOTES AND
CREDITORS OF THE COMPANY OTHER THAN THEIR RIGHTS IN RELATION TO HOLDERS OF
SENIOR DEBT; OR
(III)PREVENT THE TRUSTEE OR ANY HOLDER OF NOTES FROM EXERCISING
ITS AVAILABLE REMEDIES UPON A DEFAULT OR EVENT OF DEFAULT, SUBJECT TO THE
RIGHTS OF HOLDERS AND OWNERS OF SENIOR DEBT TO RECEIVE DISTRIBUTIONS AND
PAYMENTS OTHERWISE PAYABLE TO HOLDERS OF NOTES.
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IF THE COMPANY FAILS BECAUSE OF THIS ARTICLE 10 TO PAY PRINCIPAL OF
OR INTEREST ON A NOTE ON THE DUE DATE, THE FAILURE IS STILL A DEFAULT OR EVENT
OF DEFAULT.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
NO RIGHT OF ANY HOLDER OF SENIOR DEBT TO ENFORCE THE SUBORDINATION OF
THE INDEBTEDNESS EVIDENCED BY THE NOTES SHALL BE IMPAIRED BY ANY ACT OR FAILURE
TO ACT BY THE COMPANY OR ANY HOLDER OR BY THE FAILURE OF THE COMPANY OR ANY
HOLDER TO COMPLY WITH THIS INDENTURE.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
WHENEVER A PAYMENT OR DISTRIBUTION IS TO BE MADE OR A NOTICE GIVEN TO
HOLDERS OF SENIOR DEBT, THE PAYMENT OR DISTRIBUTION MAY BE MADE AND THE NOTICE
GIVEN TO THEIR REPRESENTATIVE.
UPON ANY PAYMENT OR DISTRIBUTION OF ASSETS OF THE COMPANY REFERRED TO
IN THIS ARTICLE 10, THE TRUSTEE AND THE HOLDERS OF NOTES SHALL BE ENTITLED TO
RELY UPON ANY ORDER OR DECREE MADE BY ANY COURT OF COMPETENT JURISDICTION OR
UPON ANY CERTIFICATE OF SUCH REPRESENTATIVE OR OF THE LIQUIDATING TRUSTEE OR
AGENT OR OTHER PERSON MAKING ANY DISTRIBUTION TO THE TRUSTEE OR TO THE HOLDERS
OF NOTES FOR THE PURPOSE OF ASCERTAINING THE PERSONS ENTITLED TO PARTICIPATE IN
SUCH DISTRIBUTION, THE HOLDERS OF THE SENIOR DEBT AND OTHER INDEBTEDNESS OF THE
COMPANY, THE AMOUNT THEREOF OR PAYABLE THEREON, THE AMOUNT OR AMOUNTS PAID OR
DISTRIBUTED THEREON AND ALL OTHER FACTS PERTINENT THERETO OR TO THIS ARTICLE 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
NOTWITHSTANDING THE PROVISIONS OF THIS ARTICLE 10 OR ANY OTHER
PROVISION OF THIS INDENTURE, THE TRUSTEE SHALL NOT BE CHARGED WITH KNOWLEDGE OF
THE EXISTENCE OF ANY FACTS THAT WOULD PROHIBIT THE MAKING OF ANY PAYMENT OR
DISTRIBUTION BY THE TRUSTEE, AND THE TRUSTEE AND THE PAYING AGENT MAY CONTINUE
TO MAKE PAYMENTS ON THE NOTES, UNLESS THE TRUSTEE SHALL HAVE RECEIVED AT ITS
CORPORATE TRUST OFFICE AT LEAST TWO BUSINESS DAYS PRIOR TO THE DATE OF SUCH
PAYMENT WRITTEN NOTICE OF FACTS THAT WOULD CAUSE THE PAYMENT OF ANY OBLIGATIONS
WITH RESPECT TO THE NOTES TO VIOLATE THIS ARTICLE 10. ONLY THE COMPANY OR A
REPRESENTATIVE MAY GIVE THE NOTICE. NOTHING IN THIS ARTICLE 10 SHALL IMPAIR THE
CLAIMS OF, OR PAYMENTS TO, THE TRUSTEE UNDER OR PURSUANT TO SECTION 7.07 HEREOF.
THE TRUSTEE IN ITS INDIVIDUAL OR ANY OTHER CAPACITY MAY HOLD SENIOR
DEBT WITH THE SAME RIGHTS IT WOULD HAVE IF IT WERE NOT TRUSTEE. ANY AGENT MAY DO
THE SAME WITH LIKE RIGHTS. EACH PAYING AGENT SHALL BE SUBJECT TO THE OBLIGATIONS
OF THE TRUSTEE UNDER THIS ARTICLE 10.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
EACH HOLDER OF NOTES, BY THE HOLDER'S ACCEPTANCE THEREOF, AUTHORIZES
AND DIRECTS THE TRUSTEE ON SUCH HOLDER'S BEHALF TO TAKE SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE TO EFFECTUATE THE SUBORDINATION AS PROVIDED IN THIS
ARTICLE 10, AND APPOINTS THE TRUSTEE TO ACT AS SUCH HOLDER'S ATTORNEY-IN-FACT
FOR ANY AND ALL SUCH PURPOSES. IF THE TRUSTEE DOES NOT FILE A PROPER PROOF OF
CLAIM OR PROOF OF DEBT IN THE FORM REQUIRED IN ANY PROCEEDING REFERRED TO IN
SECTION 6.09 HEREOF AT LEAST 30 DAYS BEFORE THE EXPIRATION OF THE TIME TO FILE
SUCH CLAIM, THE REPRESENTATIVE OF THE HOLDERS IS HEREBY AUTHORIZED TO FILE AN
APPROPRIATE CLAIM FOR AND
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ON BEHALF OF THE HOLDERS OF THE NOTES.
SECTION 10.13. AMENDMENTS.
THE PROVISIONS OF THIS ARTICLE 10 SHALL NOT BE AMENDED OR MODIFIED
WITHOUT THE WRITTEN CONSENT OF THE HOLDERS OF ALL SENIOR DEBT.
ARTICLE 11 SUBSIDIARY GUARANTIES
SECTION 11.01. GUARANTY.
SUBJECT TO THIS ARTICLE 11, EACH OF THE SUBSIDIARY GUARANTORS HEREBY,
JOINTLY AND SEVERALLY, UNCONDITIONALLY GUARANTIES TO EACH HOLDER OF A NOTE
AUTHENTICATED AND DELIVERED BY THE TRUSTEE AND TO THE TRUSTEE AND ITS SUCCESSORS
AND ASSIGNS, IRRESPECTIVE OF THE VALIDITY AND ENFORCEABILITY OF THIS INDENTURE,
THE NOTES OR THE OBLIGATIONS OF THE COMPANY HEREUNDER OR THEREUNDER, THAT: (A)
THE PRINCIPAL OF AND INTEREST ON THE NOTES SHALL BE PROMPTLY PAID IN FULL WHEN
DUE, WHETHER AT MATURITY, BY ACCELERATION, REDEMPTION OR OTHERWISE, AND INTEREST
ON THE OVERDUE PRINCIPAL OF AND INTEREST ON THE NOTES, IF ANY, IF LAWFUL, AND
ALL OTHER OBLIGATIONS OF THE COMPANY TO THE HOLDERS OR THE TRUSTEE HEREUNDER OR
THEREUNDER SHALL BE PROMPTLY PAID IN FULL OR PERFORMED, ALL IN ACCORDANCE WITH
THE TERMS HEREOF AND THEREOF; AND (B) IN CASE OF ANY EXTENSION OF TIME OF
PAYMENT OR RENEWAL OF ANY NOTES OR ANY OF SUCH OTHER OBLIGATIONS, THAT SAME
SHALL BE PROMPTLY PAID IN FULL WHEN DUE OR PERFORMED IN ACCORDANCE WITH THE
TERMS OF THE EXTENSION OR RENEWAL, WHETHER AT STATED MATURITY, BY ACCELERATION
OR OTHERWISE. FAILING PAYMENT WHEN DUE OF ANY AMOUNT SO GUARANTEED OR ANY
PERFORMANCE SO GUARANTEED FOR WHATEVER REASON, THE SUBSIDIARY GUARANTORS SHALL
BE JOINTLY AND SEVERALLY OBLIGATED TO PAY THE SAME IMMEDIATELY. EACH SUBSIDIARY
GUARANTOR AGREES THAT THIS IS A GUARANTY OF PAYMENT AND NOT A GUARANTY OF
COLLECTION.
THE SUBSIDIARY GUARANTORS HEREBY AGREE THAT THEIR OBLIGATIONS
HEREUNDER SHALL BE UNCONDITIONAL, IRRESPECTIVE OF THE VALIDITY, REGULARITY OR
ENFORCEABILITY OF THE NOTES OR THIS INDENTURE, THE ABSENCE OF ANY ACTION TO
ENFORCE THE SAME, ANY WAIVER OR CONSENT BY ANY HOLDER OF THE NOTES WITH RESPECT
TO ANY PROVISIONS HEREOF OR THEREOF, THE RECOVERY OF ANY JUDGMENT AGAINST THE
COMPANY, ANY ACTION TO ENFORCE THE SAME OR ANY OTHER CIRCUMSTANCE WHICH MIGHT
OTHERWISE CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OR DEFENSE OF A SUBSIDIARY
GUARANTOR. EACH SUBSIDIARY GUARANTOR HEREBY WAIVES DILIGENCE, PRESENTMENT,
DEMAND OF PAYMENT, FILING OF CLAIMS WITH A COURT IN THE EVENT OF INSOLVENCY OR
BANKRUPTCY OF THE COMPANY, ANY RIGHT TO REQUIRE A PROCEEDING FIRST AGAINST THE
COMPANY, PROTEST, NOTICE AND ALL DEMANDS WHATSOEVER AND COVENANT THAT THIS
SUBSIDIARY GUARANTY SHALL NOT BE DISCHARGED EXCEPT BY COMPLETE PERFORMANCE OF
THE OBLIGATIONS CONTAINED IN THE NOTES AND THIS INDENTURE.
IF ANY HOLDER OR THE TRUSTEE IS REQUIRED BY ANY COURT OR OTHERWISE TO
RETURN TO THE COMPANY, THE SUBSIDIARY GUARANTORS OR ANY CUSTODIAN, TRUSTEE,
LIQUIDATOR OR OTHER SIMILAR OFFICIAL ACTING IN RELATION TO EITHER THE COMPANY OR
THE SUBSIDIARY GUARANTORS, ANY AMOUNT PAID BY EITHER TO THE TRUSTEE OR SUCH
HOLDER, THIS SUBSIDIARY GUARANTY, TO THE EXTENT THERETOFORE DISCHARGED, SHALL BE
REINSTATED IN FULL FORCE AND EFFECT.
EACH SUBSIDIARY GUARANTOR AGREES THAT IT SHALL NOT BE ENTITLED TO ANY
RIGHT OF
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SUBROGATION IN RELATION TO THE HOLDERS IN RESPECT OF ANY OBLIGATIONS GUARANTIED
HEREBY UNTIL PAYMENT IN FULL OF ALL OBLIGATIONS GUARANTEED HEREBY. EACH
SUBSIDIARY GUARANTOR FURTHER AGREES THAT, AS BETWEEN THE SUBSIDIARY GUARANTORS,
ON THE ONE HAND, AND THE HOLDERS AND THE TRUSTEE, ON THE OTHER HAND, (X) THE
MATURITY OF THE OBLIGATIONS GUARANTEED HEREBY MAY BE ACCELERATED AS PROVIDED IN
ARTICLE 6 HEREOF FOR THE PURPOSES OF THIS SUBSIDIARY GUARANTY, NOTWITHSTANDING
ANY STAY, INJUNCTION OR OTHER PROHIBITION PREVENTING SUCH ACCELERATION IN
RESPECT OF THE OBLIGATIONS GUARANTEED HEREBY, AND (Y) IN THE EVENT OF ANY
DECLARATION OF ACCELERATION OF SUCH OBLIGATIONS AS PROVIDED IN ARTICLE 6 HEREOF,
SUCH OBLIGATIONS (WHETHER OR NOT DUE AND PAYABLE) SHALL FORTHWITH BECOME DUE AND
PAYABLE BY THE SUBSIDIARY GUARANTORS FOR THE PURPOSE OF THIS SUBSIDIARY
GUARANTY. THE SUBSIDIARY GUARANTORS SHALL HAVE THE RIGHT TO SEEK CONTRIBUTION
FROM ANY NON-PAYING SUBSIDIARY GUARANTOR SO LONG AS THE EXERCISE OF SUCH RIGHT
DOES NOT IMPAIR THE RIGHTS OF THE HOLDERS UNDER THE SUBSIDIARY GUARANTY.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTY.
THE OBLIGATIONS OF EACH SUBSIDIARY GUARANTOR UNDER ITS SUBSIDIARY
GUARANTY PURSUANT TO THIS ARTICLE 11 OR ITS SUBSIDIARY GUARANTY IN THE FORM OF
EXHIBIT F HERETO SHALL BE JUNIOR AND SUBORDINATED IN RIGHT OR PAYMENT TO THE
PRIOR PAYMENT IN FULL IN CASH OF SENIOR DEBT (INCLUDING INTEREST AFTER THE
COMMENCEMENT OF ANY PROCEEDING OF THE TYPE DESCRIBED IN SECTION 10.02 WITH
RESPECT TO SUCH SUBSIDIARY GUARANTOR AT THE RATE SPECIFIED IN THE APPLICABLE
SENIOR DEBT, WHETHER OR NOT SUCH INTEREST WOULD BE AN ALLOWED CLAIM IN SUCH
PROCEEDING) OF SUCH SUBSIDIARY GUARANTOR ON THE SAME BASIS AS THE NOTES ARE
JUNIOR AND SUBORDINATED TO SENIOR DEBT OF THE COMPANY MUTADIS MUTANDIS AND
INCLUDING, WITHOUT LIMITATION, WITH REFERENCES TO THE COMPANY IN SECTION 10.02
BEING DEEMED TO BE REFERENCES TO SUCH SUBSIDIARY GUARANTORS FOR PURPOSES OF THIS
SECTION 11.02. FOR THE PURPOSES OF THE FOREGOING SENTENCE, THE TRUSTEE AND THE
HOLDERS SHALL HAVE THE RIGHT TO RECEIVE AND/OR RETAIN PAYMENTS BY ANY OF THE
SUBSIDIARY GUARANTORS ONLY AT SUCH TIMES AS THEY MAY RECEIVE AND/OR RETAIN
PAYMENTS IN RESPECT OF THE NOTES PURSUANT TO THIS INDENTURE, INCLUDING ARTICLE
10 HEREOF.
SECTION 11.03. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
EACH SUBSIDIARY GUARANTOR, AND BY ITS ACCEPTANCE OF NOTES, EACH
HOLDER, HEREBY CONFIRMS THAT IT IS THE INTENTION OF ALL SUCH PARTIES THAT THE
SUBSIDIARY GUARANTY OF SUCH SUBSIDIARY GUARANTOR NOT CONSTITUTE A FRAUDULENT
TRANSFER OR CONVEYANCE FOR PURPOSES OF BANKRUPTCY LAW, THE UNIFORM FRAUDULENT
CONVEYANCE ACT, THE UNIFORM FRAUDULENT TRANSFER ACT OR ANY SIMILAR FEDERAL OR
STATE LAW TO THE EXTENT APPLICABLE TO ANY SUBSIDIARY GUARANTY. TO EFFECTUATE THE
FOREGOING INTENTION, THE TRUSTEE, THE HOLDERS AND THE SUBSIDIARY GUARANTORS
HEREBY IRREVOCABLY AGREE THAT THE OBLIGATIONS OF SUCH SUBSIDIARY GUARANTOR
SHALL, AFTER GIVING EFFECT TO SUCH MAXIMUM AMOUNT AND ALL OTHER CONTINGENT AND
FIXED LIABILITIES OF SUCH SUBSIDIARY GUARANTOR THAT ARE RELEVANT UNDER SUCH
LAWS, AND AFTER GIVING EFFECT TO ANY COLLECTIONS FROM, RIGHTS TO RECEIVE
CONTRIBUTION FROM OR PAYMENTS MADE BY OR ON BEHALF OF ANY OTHER SUBSIDIARY
GUARANTOR IN RESPECT OF THE OBLIGATIONS OF SUCH OTHER SUBSIDIARY GUARANTOR UNDER
THIS ARTICLE 11, RESULT IN THE OBLIGATIONS OF SUCH SUBSIDIARY GUARANTOR UNDER
ITS SUBSIDIARY GUARANTY NOT CONSTITUTING A FRAUDULENT TRANSFER OR CONVEYANCE.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTY.
TO EVIDENCE ITS SUBSIDIARY GUARANTY SET FORTH IN SECTION 11.01, EACH
SUBSIDIARY
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GUARANTOR HEREBY AGREES THAT A NOTATION OF SUCH SUBSIDIARY GUARANTY
SUBSTANTIALLY IN THE FORM INCLUDED IN EXHIBIT E SHALL BE ENDORSED BY AN OFFICER
OF SUCH SUBSIDIARY GUARANTOR ON EACH NOTE AUTHENTICATED AND DELIVERED BY THE
TRUSTEE AND THAT THIS INDENTURE SHALL BE EXECUTED ON BEHALF OF SUCH SUBSIDIARY
GUARANTOR BY ITS PRESIDENT OR ONE OF ITS VICE PRESIDENTS.
EACH SUBSIDIARY GUARANTOR HEREBY AGREES THAT ITS SUBSIDIARY GUARANTY
SET FORTH IN SECTION 11.01 SHALL REMAIN IN FULL FORCE AND EFFECT NOTWITHSTANDING
ANY FAILURE TO ENDORSE ON EACH NOTE A NOTATION OF SUCH SUBSIDIARY GUARANTY.
IF AN OFFICER WHOSE SIGNATURE IS ON THIS INDENTURE OR ON THE
SUBSIDIARY GUARANTY NO LONGER HOLDS THAT OFFICE AT THE TIME THE TRUSTEE
AUTHENTICATES THE NOTE ON WHICH A SUBSIDIARY GUARANTY IS ENDORSED, THE
SUBSIDIARY GUARANTY SHALL BE VALID NEVERTHELESS
THE DELIVERY OF ANY NOTE BY THE TRUSTEE, AFTER THE AUTHENTICATION
THEREOF HEREUNDER, SHALL CONSTITUTE DUE DELIVERY OF THE SUBSIDIARY GUARANTY SET
FORTH IN THIS INDENTURE ON BEHALF OF THE SUBSIDIARY GUARANTORS.
IN THE EVENT THAT THE COMPANY CREATES OR ACQUIRES ANY NEW
SUBSIDIARIES SUBSEQUENT TO THE DATE OF THIS INDENTURE, IF REQUIRED BY SECTION
4.19 HEREOF, THE COMPANY SHALL CAUSE SUCH SUBSIDIARIES TO EXECUTE SUPPLEMENTAL
INDENTURES TO THIS INDENTURE AND SUBSIDIARY GUARANTIES IN ACCORDANCE WITH
SECTION 4.19 HEREOF AND THIS ARTICLE 11, TO THE EXTENT APPLICABLE.
SECTION 11.05. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
EXCEPT AS OTHERWISE PROVIDED IN SECTION 11.06, NO SUBSIDIARY
GUARANTOR MAY SELL OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS
ASSETS TO, OR CONSOLIDATE WITH OR MERGE WITH OR INTO (WHETHER OR NOT SUCH
SUBSIDIARY GUARANTOR IS THE SURVIVING PERSON) ANOTHER PERSON, OTHER THAN THE
COMPANY OR ANOTHER SUBSIDIARY GUARANTOR, UNLESS:
(A) EITHER (I) SUBJECT TO SECTION 11.06 HEREOF, THE PERSON ACQUIRING
THE PROPERTY ON ANY SUCH SALE OR DISPOSITION OR THE PERSON FORMED BY OR
SURVIVING ANY SUCH CONSOLIDATION OR MERGER (IF OTHER THAN A SUBSIDIARY GUARANTOR
OR THE COMPANY) UNCONDITIONALLY ASSUMES ALL THE OBLIGATIONS OF SUCH SUBSIDIARY
GUARANTOR UNDER THE INDENTURE AND THE SUBSIDIARY GUARANTY AND THE REGISTRATION
RIGHTS AGREEMENT PURSUANT TO A SUPPLEMENTAL INDENTURE AND APPROPRIATE COLLATERAL
DOCUMENTS SATISFACTORY TO THE TRUSTEE OR (II) THE NET PROCEEDS OF SUCH SALE OR
DISPOSITION ARE APPLIED IN ACCORDANCE WITH SECTION 4.10 HEREOF; AND
(B) IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION, NO DEFAULT
OR EVENT OF DEFAULT EXISTS.
IN CASE OF ANY SUCH CONSOLIDATION, MERGER, SALE OR CONVEYANCE AND
UPON THE ASSUMPTION BY THE SUCCESSOR PERSON, BY SUPPLEMENTAL INDENTURE, EXECUTED
AND DELIVERED TO THE TRUSTEE AND SATISFACTORY IN FORM TO THE TRUSTEE, OF THE
SUBSIDIARY GUARANTEE ENDORSED UPON THE NOTES AND THE DUE AND PUNCTUAL
PERFORMANCE OF ALL OF THE COVENANTS AND CONDITIONS OF THIS INDENTURE TO BE
PERFORMED BY THE SUBSIDIARY GUARANTOR, SUCH SUCCESSOR PERSON SHALL SUCCEED TO
AND BE SUBSTITUTED FOR THE SUBSIDIARY GUARANTOR WITH THE SAME EFFECT AS IF IT
HAD BEEN NAMED HEREIN AS A SUBSIDIARY GUARANTOR. SUCH SUCCESSOR PERSON THEREUPON
MAY CAUSE TO BE SIGNED ANY OR ALL OF THE SUBSIDIARY GUARANTEES TO BE ENDORSED
UPON ALL OF THE NOTES ISSUABLE HEREUNDER WHICH THERETOFORE SHALL NOT HAVE BEEN
SIGNED BY
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THE COMPANY AND DELIVERED TO THE TRUSTEE. ALL THE SUBSIDIARY GUARANTEES SO
ISSUED SHALL IN ALL RESPECTS HAVE THE SAME LEGAL RANK AND BENEFIT UNDER THIS
INDENTURE AS THE SUBSIDIARY GUARANTEES THERETOFORE AND THEREAFTER ISSUED IN
ACCORDANCE WITH THE TERMS OF THIS INDENTURE AS THOUGH ALL OF SUCH SUBSIDIARY
GUARANTEES HAD BEEN ISSUED AT THE DATE OF THE EXECUTION HEREOF.
EXCEPT AS SET FORTH IN ARTICLES 4 AND 5 HEREOF, AND NOTWITHSTANDING
CLAUSES (A) AND (B) ABOVE, NOTHING CONTAINED IN THIS INDENTURE OR IN ANY OF THE
NOTES SHALL PREVENT ANY CONSOLIDATION OR MERGER OF A SUBSIDIARY GUARANTOR WITH
OR INTO THE COMPANY OR ANOTHER SUBSIDIARY GUARANTOR, OR SHALL PREVENT ANY SALE
OR CONVEYANCE OF THE PROPERTY OF A SUBSIDIARY GUARANTOR AS AN ENTIRETY OR
SUBSTANTIALLY AS AN ENTIRETY TO THE COMPANY OR ANOTHER SUBSIDIARY GUARANTOR.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
IF THE COMPANY PROPERLY DESIGNATES ANY RESTRICTED SUBSIDIARY THAT IS
A SUBSIDIARY GUARANTOR AS AN UNRESTRICTED SUBSIDIARY OR IN THE EVENT OF A SALE
OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF ANY SUBSIDIARY
GUARANTOR, BY WAY OF MERGER, CONSOLIDATION OR OTHERWISE, OR A SALE OR OTHER
DISPOSITION OF ALL OF THE CAPITAL STOCK OF ANY SUBSIDIARY GUARANTOR, IN EACH
CASE TO A PERSON THAT IS NOT (EITHER BEFORE OR AFTER GIVING EFFECT TO SUCH
TRANSACTIONS) A RESTRICTED SUBSIDIARY OF THE COMPANY, THEN SUCH SUBSIDIARY
GUARANTOR (IN THE EVENT OF A SALE OR OTHER DISPOSITION, BY WAY OF MERGER,
CONSOLIDATION OR OTHERWISE, OF ALL OF THE CAPITAL STOCK OF SUCH SUBSIDIARY
GUARANTOR) OR THE CORPORATION ACQUIRING THE PROPERTY (IN THE EVENT OF A SALE OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF SUCH SUBSIDIARY
GUARANTOR) SHALL BE RELEASED AND RELIEVED OF ANY OBLIGATIONS UNDER ITS
SUBSIDIARY GUARANTY; PROVIDED THAT THE NET PROCEEDS OF SUCH SALE OR OTHER
DISPOSITION ARE APPLIED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THIS
INDENTURE, INCLUDING WITHOUT LIMITATION SECTION 4.10 HEREOF. UPON DELIVERY BY
THE COMPANY TO THE TRUSTEE OF AN OFFICERS' CERTIFICATE AND AN OPINION OF COUNSEL
TO THE EFFECT THAT SUCH SALE OR OTHER DISPOSITION WAS MADE BY THE COMPANY IN
ACCORDANCE WITH THE PROVISIONS OF THIS INDENTURE, INCLUDING WITHOUT LIMITATION
SECTION 4.10 HEREOF, THE TRUSTEE SHALL EXECUTE ANY DOCUMENTS REASONABLY REQUIRED
IN ORDER TO EVIDENCE THE RELEASE OF ANY SUBSIDIARY GUARANTOR FROM ITS
OBLIGATIONS UNDER ITS SUBSIDIARY GUARANTY.
ANY SUBSIDIARY GUARANTOR NOT RELEASED FROM ITS OBLIGATIONS UNDER ITS
SUBSIDIARY GUARANTY SHALL REMAIN LIABLE FOR THE FULL AMOUNT OF PRINCIPAL OF AND
INTEREST ON THE NOTES AND FOR THE OTHER OBLIGATIONS OF ANY SUBSIDIARY GUARANTOR
UNDER THIS INDENTURE AS PROVIDED IN THIS ARTICLE 11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
IF ANY PROVISION OF THIS INDENTURE LIMITS, QUALIFIES OR CONFLICTS
WITH THE DUTIES IMPOSED BY TIA SECTION 318(C), THE IMPOSED DUTIES SHALL CONTROL.
SECTION 12.02. NOTICES.
ANY NOTICE OR COMMUNICATION BY THE COMPANY, ANY SUBSIDIARY GUARANTOR
OR THE
87
<PAGE>
TRUSTEE TO THE OTHERS IS DULY GIVEN IF IN WRITING AND DELIVERED IN PERSON OR
MAILED BY FIRST CLASS MAIL (REGISTERED OR CERTIFIED, RETURN RECEIPT REQUESTED),
TELEX, TELECOPIER OR OVERNIGHT AIR COURIER GUARANTEEING NEXT DAY DELIVERY, TO
THE OTHERS' ADDRESS:
IF TO THE COMPANY :
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
TELECOPIER NO: (612) 332-2012
ATTENTION: CHIEF FINANCIAL OFFICER
WITH A COPY TO:
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
TELECOPIER NO.: (312) 861-2200
ATTENTION: CARTER W. EMERSON, P.C.
IF TO THE TRUSTEE:
U.S. BANK TRUST NATIONAL ASSOCIATION
180 EAST 5TH STREET
ST. PAUL, MINNESOTA 55101
TELECOPIER NO.: (651) 244-0712
ATTENTION: CORPORATE TRUST DEPARTMENT
THE COMPANY OR THE TRUSTEE, BY NOTICE TO THE OTHERS MAY DESIGNATE
ADDITIONAL OR DIFFERENT ADDRESSES FOR SUBSEQUENT NOTICES OR COMMUNICATIONS.
ALL NOTICES AND COMMUNICATIONS (OTHER THAN THOSE SENT TO HOLDERS)
SHALL BE DEEMED TO HAVE BEEN DULY GIVEN: AT THE TIME DELIVERED BY HAND, IF
PERSONALLY DELIVERED; FIVE BUSINESS DAYS AFTER BEING DEPOSITED IN THE MAIL,
POSTAGE PREPAID, IF MAILED; WHEN ANSWERED BACK, IF TELEXED; WHEN RECEIPT
ACKNOWLEDGED, IF TELECOPIED; AND THE NEXT BUSINESS DAY AFTER TIMELY DELIVERY TO
THE COURIER, IF SENT BY OVERNIGHT AIR COURIER GUARANTEEING NEXT DAY DELIVERY.
88
<PAGE>
ANY NOTICE OR COMMUNICATION TO A HOLDER SHALL BE MAILED BY FIRST
CLASS MAIL, CERTIFIED OR REGISTERED, RETURN RECEIPT REQUESTED, OR BY OVERNIGHT
AIR COURIER GUARANTEEING NEXT DAY DELIVERY TO ITS ADDRESS SHOWN ON THE REGISTER
KEPT BY THE REGISTRAR. ANY NOTICE OR COMMUNICATION SHALL ALSO BE SO MAILED TO
ANY PERSON DESCRIBED IN TIA SECTION 313(C), TO THE EXTENT REQUIRED BY THE TIA.
FAILURE TO MAIL A NOTICE OR COMMUNICATION TO A HOLDER OR ANY DEFECT IN IT SHALL
NOT AFFECT ITS SUFFICIENCY WITH RESPECT TO OTHER HOLDERS.
IF A NOTICE OR COMMUNICATION IS MAILED IN THE MANNER PROVIDED ABOVE
WITHIN THE TIME PRESCRIBED, IT IS DULY GIVEN, WHETHER OR NOT THE ADDRESSEE
RECEIVES IT.
IF THE COMPANY MAILS A NOTICE OR COMMUNICATION TO HOLDERS, IT SHALL
MAIL A COPY TO THE TRUSTEE AND EACH AGENT AT THE SAME TIME.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
HOLDERS MAY COMMUNICATE PURSUANT TO TIA SECTION 312(B) WITH OTHER
HOLDERS WITH RESPECT TO THEIR RIGHtS UNDER THIS INDENTURE OR THE NOTES. THE
COMPANY, THE TRUSTEE, THE REGISTRAR AND ANYONE ELSE SHALL HAVE THE PROTECTION
OF TIA SECTION 312(C).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
UPON ANY REQUEST OR APPLICATION BY THE COMPANY TO THE TRUSTEE TO TAKE
ANY ACTION UNDER THIS INDENTURE, THE COMPANY SHALL FURNISH TO THE TRUSTEE:
(A) AN OFFICERS' CERTIFICATE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE TRUSTEE (WHICH SHALL INCLUDE THE STATEMENTS SET FORTH IN
SECTION 12.05 HEREOF) STATING THAT, IN THE OPINION OF THE SIGNERS, ALL
CONDITIONS PRECEDENT AND COVENANTS, IF ANY, PROVIDED FOR IN THIS INDENTURE
RELATING TO THE PROPOSED ACTION HAVE BEEN SATISFIED; AND
(B) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE TRUSTEE (WHICH SHALL INCLUDE THE STATEMENTS SET FORTH IN
SECTION 12.05 HEREOF) STATING THAT, IN THE OPINION OF SUCH COUNSEL, ALL SUCH
CONDITIONS PRECEDENT AND COVENANTS HAVE BEEN SATISFIED.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
EACH CERTIFICATE OR OPINION WITH RESPECT TO COMPLIANCE WITH A
CONDITION OR COVENANT PROVIDED FOR IN THIS INDENTURE (OTHER THAN A
CERTIFICATE PROVIDED PURSUANT TO TIA SECTION 314(A)(4)) SHALL COMPLY WITH THE
PROVISIONS OF TIA SECTION 314(E) AND SHALL INCLUDE:
(A) A STATEMENT THAT THE PERSON MAKING SUCH CERTIFICATE OR OPINION
HAS READ SUCH COVENANT OR CONDITION;
(B) A BRIEF STATEMENT AS TO THE NATURE AND SCOPE OF THE EXAMINATION
OR INVESTIGATION UPON WHICH THE STATEMENTS OR OPINIONS CONTAINED IN SUCH
CERTIFICATE OR OPINION ARE BASED;
(C) A STATEMENT THAT, IN THE OPINION OF SUCH PERSON, HE OR SHE HAS
MADE SUCH EXAMINATION OR INVESTIGATION AS IS NECESSARY TO ENABLE HIM TO EXPRESS
AN INFORMED OPINION AS TO WHETHER OR NOT SUCH COVENANT OR CONDITION HAS BEEN
SATISFIED; AND
89
<PAGE>
(D) A STATEMENT AS TO WHETHER OR NOT, IN THE OPINION OF SUCH PERSON,
SUCH CONDITION OR COVENANT HAS BEEN SATISFIED.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
THE TRUSTEE MAY MAKE REASONABLE RULES FOR ACTION BY OR AT A MEETING
OF HOLDERS. THE REGISTRAR OR PAYING AGENT MAY MAKE REASONABLE RULES AND SET
REASONABLE REQUIREMENTS FOR ITS FUNCTIONS.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
NO DIRECTOR, OFFICER, EMPLOYEE, INCORPORATOR OR STOCKHOLDER OF THE
COMPANY OR ANY SUBSIDIARY GUARANTOR, AS SUCH, SHALL HAVE ANY LIABILITY FOR ANY
OBLIGATIONS OF THE COMPANY OR THE SUBSIDIARY GUARANTORS UNDER THE NOTES, THIS
INDENTURE OR THE SUBSIDIARY GUARANTIES OR FOR ANY CLAIM BASED ON, IN RESPECT OF,
OR BY REASON OF, SUCH OBLIGATIONS OR THEIR CREATION. EACH HOLDER OF NOTES BY
ACCEPTING A NOTE WAIVES AND RELEASES ALL SUCH LIABILITY. THE WAIVER AND RELEASE
ARE PART OF THE CONSIDERATION FOR ISSUANCE OF THE NOTES.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTIES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
THIS INDENTURE MAY NOT BE USED TO INTERPRET ANY OTHER INDENTURE, LOAN
OR DEBT AGREEMENT OF THE COMPANY OR ITS SUBSIDIARIES OR OF ANY OTHER PERSON. ANY
SUCH INDENTURE, LOAN OR DEBT AGREEMENT MAY NOT BE USED TO INTERPRET THIS
INDENTURE.
SECTION 12.10. SUCCESSORS.
ALL AGREEMENTS OF THE COMPANY IN THIS INDENTURE AND THE NOTES SHALL
BIND ITS SUCCESSORS. ALL AGREEMENTS OF THE TRUSTEE IN THIS INDENTURE SHALL BIND
ITS SUCCESSORS. ALL AGREEMENTS OF EACH SUBSIDIARY GUARANTOR IN THIS INDENTURE
SHALL BIND ITS SUCCESSORS, EXCEPT AS OTHERWISE PROVIDED IN SECTION 11.05.
SECTION 12.11. SEVERABILITY.
IN CASE ANY PROVISION IN THIS INDENTURE OR IN THE NOTES SHALL BE
INVALID, ILLEGAL OR UNENFORCEABLE, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF
THE REMAINING PROVISIONS SHALL NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY.
SECTION 12.12. COUNTERPART ORIGINALS.
THE PARTIES MAY SIGN ANY NUMBER OF COPIES OF THIS INDENTURE. EACH
SIGNED COPY SHALL BE AN ORIGINAL, BUT ALL OF THEM TOGETHER REPRESENT THE SAME
AGREEMENT.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
90
<PAGE>
THE TABLE OF CONTENTS, CROSS-REFERENCE TABLE AND HEADINGS OF THE
ARTICLES AND SECTIONS OF THIS INDENTURE HAVE BEEN INSERTED FOR CONVENIENCE OF
REFERENCE ONLY, ARE NOT TO BE CONSIDERED A PART OF THIS INDENTURE AND SHALL IN
NO WAY MODIFY OR RESTRICT ANY OF THE TERMS OR PROVISIONS HEREOF.
[SIGNATURES ON FOLLOWING PAGE]
91
<PAGE>
SIGNATURES
DATED AS OF MAY 28, 1999
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
BY: /s/ CHARLES M. WALDON
-------------------------------------
CHARLES M. WALDON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: /S/ CARL E. NELSON
CARL E. NELSON
SECRETARY
FRENCH HOLDINGS, INC.
BY: /s/ CHARLES M. WALDON
-------------------------------------
CHARLES M. WALDON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: /S/ CARL E. NELSON
CARL E. NELSON
SECRETARY
J.L. FRENCH CORPORATION
BY: /s/ CHARLES M. WALDON
-------------------------------------
CHARLES M. WALDON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: /S/ CARL E. NELSON
CARL E. NELSON
SECRETARY
ALLOTECH INTERNATIONAL, INC.
BY: /s/ CHARLES M. WALDON
-------------------------------------
S-1
<PAGE>
CHARLES M. WALDON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: /S/ CARL E. NELSON
CARL E. NELSON
SECRETARY
U. S. BANK TRUST NATIONAL ASSOCIATION
BY: /s/ HARRY HALL
-------------------------------------
HARRY HALL
VICE PRESIDENT
ATTEST: /S/ L. HOWARD
NAME:
TITLE:
S-2
<PAGE>
EXHIBIT A1
[FACE OF RULE 144A GLOBAL NOTE]
CUSIP ___________
11 1/2% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2009
NO. __ $___________
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
PROMISES TO PAY TO
OR REGISTERED ASSIGNS,
THE PRINCIPAL SUM OF
DOLLARS ON JUNE 1, 2009.
INTEREST PAYMENT DATES: JUNE 1 AND DECEMBER 1
RECORD DATES: MAY 15 AND NOVEMBER 15
DATED: MAY 28, 1999
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
BY:
NAME:
TITLE:
BY:
NAME:
TITLE:
THIS IS ONE OF THE NOTES REFERRED TO
IN THE WITHIN-MENTIONED INDENTURE:
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS TRUSTEE
BY: __________________________________
AUTHORIZED SIGNATORY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A1-1
<PAGE>
[BACK OF RULE 144A GLOBAL NOTE]
11 1/2% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2009
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(A) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THE NOTE (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) (A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE NOTES (THE FORM OF SUCH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), OR (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED THAT IN THE CASE OF A TRANSFER
PURSUANT TO CLAUSE (E) SUCH TRANSFER IS EFFECTED BY THE DELIVERY TO THE
TRANSFEREE OF DEFINITIVE SECURITIES REGISTERED IN ITS NAME (OR ITS NOMINEE'S
NAME) IN THE BOOKS MAINTAINED BY THE REGISTRAR, AND IS SUBJECT TO THE RECEIPT BY
THE REGISTRAR (AND THE COMPANY, IF IT SO REQUESTS) OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (II) TO THE COMPANY OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
A1-2
<PAGE>
CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO
THEM IN THE INDENTURE REFERRED TO BELOW UNLESS OTHERWISE INDICATED.
1. INTEREST. J. L. FRENCH AUTOMOTIVE CASTINGS, INC., A DELAWARE
CORPORATION (THE "COMPANY"), PROMISES TO PAY INTEREST ON THE PRINCIPAL AMOUNT OF
THIS NOTE AT 11 1/2% PER ANNUM FROM MAY 28, 1999 UNTIL MATURITY AND SHALL PAY
THE LIQUIDATED DAMAGES, IF ANY, PAYABLE PURSUANT TO SECTION 5 OF THE
REGISTRATION RIGHTS AGREEMENT REFERRED TO BELOW. THE COMPANY SHALL PAY INTEREST
AND LIQUIDATED DAMAGES SEMI-ANNUALLY IN ARREARS ON JUNE 1 AND DECEMBER 1 OF EACH
YEAR, OR IF ANY SUCH DAY IS NOT A BUSINESS DAY, ON THE NEXT SUCCEEDING BUSINESS
DAY (EACH AN "INTEREST PAYMENT DATE"). INTEREST ON THE NOTES SHALL ACCRUE FROM
THE MOST RECENT DATE TO WHICH INTEREST HAS BEEN PAID OR, IF NO INTEREST HAS BEEN
PAID, FROM THE DATE OF ISSUANCE; PROVIDED THAT IF THERE IS NO EXISTING DEFAULT
IN THE PAYMENT OF INTEREST, AND IF THIS NOTE IS AUTHENTICATED BETWEEN A RECORD
DATE REFERRED TO ON THE FACE HEREOF AND THE NEXT SUCCEEDING INTEREST PAYMENT
DATE, INTEREST SHALL ACCRUE FROM SUCH NEXT SUCCEEDING INTEREST PAYMENT DATE;
PROVIDED, FURTHER, THAT THE FIRST INTEREST PAYMENT DATE SHALL BE DECEMBER 1,
1999. THE COMPANY SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN ANY
PROCEEDING UNDER ANY BANKRUPTCY LAW) ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY,
FROM TIME TO TIME ON DEMAND AT A RATE THAT IS 1% PER ANNUM IN EXCESS OF THE RATE
THEN IN EFFECT; IT SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN ANY
PROCEEDING UNDER ANY BANKRUPTCY LAW) ON OVERDUE INSTALLMENTS OF INTEREST AND
LIQUIDATED DAMAGES (WITHOUT REGARD TO ANY APPLICABLE GRACE PERIODS) FROM TIME TO
TIME ON DEMAND AT THE SAME RATE TO THE EXTENT LAWFUL. INTEREST SHALL BE COMPUTED
ON THE BASIS OF A 360-DAY YEAR OF TWELVE 30-DAY MONTHS.
2. METHOD OF PAYMENT. THE COMPANY SHALL PAY INTEREST ON THE NOTES
(EXCEPT DEFAULTED INTEREST) AND LIQUIDATED DAMAGES TO THE PERSONS WHO ARE
REGISTERED HOLDERS OF NOTES AT THE CLOSE OF BUSINESS ON THE MAY 15 OR NOVEMBER
15 NEXT PRECEDING THE INTEREST PAYMENT DATE, EVEN IF SUCH NOTES ARE CANCELED
AFTER SUCH RECORD DATE AND ON OR BEFORE SUCH INTEREST PAYMENT DATE, EXCEPT AS
PROVIDED IN SECTION 2.12 OF THE INDENTURE WITH RESPECT TO DEFAULTED INTEREST.
THE NOTES SHALL BE PAYABLE AS TO PRINCIPAL, PREMIUM AND LIQUIDATED DAMAGES, IF
ANY, AND INTEREST AT THE OFFICE OR AGENCY OF THE COMPANY MAINTAINED FOR SUCH
PURPOSE WITHIN OR WITHOUT THE CITY AND STATE OF NEW YORK, OR, AT THE OPTION OF
THE COMPANY, PAYMENT OF INTEREST AND LIQUIDATED DAMAGES MAY BE MADE BY CHECK
MAILED TO THE HOLDERS AT THEIR ADDRESSES SET FORTH IN THE REGISTER OF HOLDERS,
AND PROVIDED THAT PAYMENT BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS SHALL
BE REQUIRED WITH RESPECT TO PRINCIPAL OF AND INTEREST, PREMIUM AND LIQUIDATED
DAMAGES ON, ALL GLOBAL NOTES AND ALL OTHER NOTES THE HOLDERS OF WHICH SHALL HAVE
PROVIDED WIRE TRANSFER INSTRUCTIONS TO THE COMPANY OR THE PAYING AGENT. SUCH
PAYMENT SHALL BE IN SUCH COIN OR CURRENCY OF THE UNITED STATES OF AMERICA AS AT
THE TIME OF PAYMENT IS LEGAL TENDER FOR PAYMENT OF PUBLIC AND PRIVATE DEBTS.
3. PAYING AGENT AND REGISTRAR. INITIALLY, U.S. BANK TRUST NATIONAL
ASSOCIATION, THE TRUSTEE UNDER THE INDENTURE, SHALL ACT AS PAYING AGENT AND
REGISTRAR. THE COMPANY MAY CHANGE ANY PAYING AGENT OR REGISTRAR WITHOUT NOTICE
TO ANY HOLDER. THE COMPANY OR ANY OF ITS SUBSIDIARIES MAY ACT IN ANY SUCH
CAPACITY.
4. INDENTURE. THE COMPANY ISSUED THE NOTES UNDER AN INDENTURE DATED
AS OF MAY 28, 1999 ("INDENTURE") BETWEEN THE COMPANY AND THE TRUSTEE. THE TERMS
OF THE NOTES INCLUDE THOSE STATED IN THE INDENTURE AND THOSE MADE PART OF THE
INDENTURE BY REFERENCE TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED (15 U.S.
CODE Sections 77AAA-77BBBB). THE NOTES ARE SUBJECT TO ALL SUCH TERMS, AND
HOLDERS ARE REFERRED TO THE INDENTURE AND SUCH ACT FOR A
A1-3
<PAGE>
STATEMENT OF SUCH TERMS. THE NOTES ARE SUBORDINATED IN RIGHT OF PAYMENT TO THE
PRIOR PAYMENT IN FULL IN CASH OF ALL SENIOR DEBT, TO THE EXTENT AND IN THE
MANNER PROVIDED IN ARTICLE 10 OF THE INDENTURE. TO THE EXTENT ANY PROVISION OF
THIS NOTE CONFLICTS WITH THE EXPRESS PROVISIONS OF THE INDENTURE, THE PROVISIONS
OF THE INDENTURE SHALL GOVERN AND BE CONTROLLING. THE NOTES ARE OBLIGATIONS OF
THE COMPANY LIMITED TO $275 MILLION IN AGGREGATE PRINCIPAL AMOUNT.
5. OPTIONAL REDEMPTION.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE NOTES PRIOR TO JUNE 1, 2004.
THEREAFTER, THE COMPANY SHALL HAVE THE OPTION TO REDEEM THE NOTES, IN WHOLE OR
IN PART, UPON NOT LESS THAN 30 NOR MORE THAN 60 DAYS' NOTICE, AT THE REDEMPTION
PRICES (EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH BELOW PLUS
ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON TO THE APPLICABLE
REDEMPTION DATE, IF REDEEMED DURING THE TWELVE-MONTH PERIOD BEGINNING ON JUNE 1
OF THE YEARS INDICATED BELOW:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004 ........................... 105.7500%
2005 ........................... 103.8333%
2006 ........................... 101.9167%
2007 AND THEREAFTER ............ 100.0000%
</TABLE>
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, AT ANY TIME PRIOR TO JUNE 1, 2002, THE COMPANY MAY REDEEM UP TO 35%
OF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES ORIGINALLY ISSUED UNDER THE INDENTURE
AT A REDEMPTION PRICE OF 111.50 % OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF,
PLUS ACCRUED AND UNPAID INTEREST TO THE REDEMPTION DATE, WITH THE NET CASH
PROCEEDS OF ONE OR MORE EQUITY OFFERINGS; PROVIDED THAT AT LEAST 65% OF THE
AGGREGATE PRINCIPAL AMOUNT OF NOTES ISSUED UNDER THE INDENTURE REMAINS
OUTSTANDING IMMEDIATELY AFTER THE OCCURRENCE OF EACH SUCH REDEMPTION (EXCLUDING
NOTES HELD BY THE COMPANY AND ITS SUBSIDIARIES) AND THE REDEMPTION OCCURS WITHIN
90 DAYS OF THE DATE OF THE CLOSING OF SUCH EQUITY OFFERING.
6. MANDATORY REDEMPTION.
EXCEPT AS SET FORTH IN PARAGRAPH 7 BELOW, THE COMPANY SHALL NOT BE
REQUIRED TO MAKE MANDATORY REDEMPTION PAYMENTS WITH RESPECT TO THE NOTES.
7. REPURCHASE AT OPTION OF HOLDER.
(A) IF THERE IS A CHANGE OF CONTROL, THE COMPANY SHALL BE REQUIRED TO
MAKE AN OFFER (A "CHANGE OF CONTROL OFFER") TO REPURCHASE ALL OR ANY PART (EQUAL
TO $1,000 OR AN INTEGRAL MULTIPLE THEREOF) OF EACH HOLDER'S NOTES AT A PURCHASE
PRICE EQUAL TO 101% OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED AND
UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE DATE OF PURCHASE
(THE "CHANGE OF CONTROL PAYMENT"). WITHIN 30 DAYS FOLLOWING ANY CHANGE OF
CONTROL, THE COMPANY SHALL MAIL A NOTICE TO EACH HOLDER SETTING FORTH THE
PROCEDURES GOVERNING THE CHANGE OF CONTROL OFFER AS REQUIRED BY THE INDENTURE.
(B) WHEN THE AGGREGATE AMOUNT OF EXCESS PROCEEDS FROM ONE OR MORE
ASSET SALES
A1-4
<PAGE>
EXCEEDS $10.0 MILLION, THE COMPANY SHALL COMMENCE AN OFFER TO ALL HOLDERS OF
NOTES (AS "ASSET SALE OFFER") PURSUANT TO SECTION 3.09 OF THE INDENTURE TO
PURCHASE THE MAXIMUM PRINCIPAL AMOUNT OF NOTES (INCLUDING ANY ADDITIONAL NOTES)
THAT MAY BE PURCHASED OUT OF THE EXCESS PROCEEDS AT AN OFFER PRICE IN CASH IN AN
AMOUNT EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED AND UNPAID
INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE DATE FIXED FOR THE
CLOSING OF SUCH OFFER IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE
INDENTURE. TO THE EXTENT THAT THE AGGREGATE AMOUNT OF NOTES (INCLUDING ANY
ADDITIONAL NOTES) TENDERED PURSUANT TO AN ASSET SALE OFFER IS LESS THAN THE
EXCESS PROCEEDS, THE COMPANY (OR SUCH SUBSIDIARY) MAY USE SUCH DEFICIENCY FOR
GENERAL CORPORATE PURPOSES. IF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES
SURRENDERED BY HOLDERS THEREOF EXCEEDS THE AMOUNT OF EXCESS PROCEEDS, THE
TRUSTEE SHALL SELECT THE NOTES TO BE PURCHASED ON A PRO RATA BASIS. HOLDERS OF
NOTES THAT ARE THE SUBJECT OF AN OFFER TO PURCHASE SHALL RECEIVE AN ASSET SALE
OFFER FROM THE COMPANY PRIOR TO ANY RELATED PURCHASE DATE AND MAY ELECT TO HAVE
SUCH NOTES PURCHASED BY COMPLETING THE FORM ENTITLED "OPTION OF HOLDER TO ELECT
PURCHASE" ON THE REVERSE OF THE NOTES.
8. NOTICE OF REDEMPTION. NOTICE OF REDEMPTION SHALL BE MAILED AT
LEAST 30 DAYS BUT NOT MORE THAN 60 DAYS BEFORE THE REDEMPTION DATE TO EACH
HOLDER WHOSE NOTES ARE TO BE REDEEMED AT ITS REGISTERED ADDRESS. NOTES IN
DENOMINATIONS LARGER THAN $1,000 MAY BE REDEEMED IN PART BUT ONLY IN WHOLE
MULTIPLES OF $1,000, UNLESS ALL OF THE NOTES HELD BY A HOLDER ARE TO BE
REDEEMED. ON AND AFTER THE REDEMPTION DATE INTEREST CEASES TO ACCRUE ON NOTES OR
PORTIONS THEREOF CALLED FOR REDEMPTION.
9. DENOMINATIONS, TRANSFER, EXCHANGE. THE NOTES ARE IN REGISTERED
FORM WITHOUT COUPONS IN DENOMINATIONS OF $1,000 AND INTEGRAL MULTIPLES OF
$1,000. THE TRANSFER OF NOTES MAY BE REGISTERED AND NOTES MAY BE EXCHANGED AS
PROVIDED IN THE INDENTURE. THE REGISTRAR AND THE TRUSTEE MAY REQUIRE A HOLDER,
AMONG OTHER THINGS, TO FURNISH APPROPRIATE ENDORSEMENTS AND TRANSFER DOCUMENTS
AND THE COMPANY MAY REQUIRE A HOLDER TO PAY ANY TAXES AND FEES REQUIRED BY LAW
OR PERMITTED BY THE INDENTURE. THE COMPANY NEED NOT EXCHANGE OR REGISTER THE
TRANSFER OF ANY NOTE OR PORTION OF A NOTE SELECTED FOR REDEMPTION, EXCEPT FOR
THE UNREDEEMED PORTION OF ANY NOTE BEING REDEEMED IN PART. ALSO, THE COMPANY
NEED NOT EXCHANGE OR REGISTER THE TRANSFER OF ANY NOTES FOR A PERIOD OF 15 DAYS
BEFORE A SELECTION OF NOTES TO BE REDEEMED OR DURING THE PERIOD BETWEEN A RECORD
DATE AND THE CORRESPONDING INTEREST PAYMENT DATE.
10. PERSONS DEEMED OWNERS. THE REGISTERED HOLDER OF A NOTE MAY
BE TREATED AS ITS OWNER FOR ALL PURPOSES.
11. AMENDMENT, SUPPLEMENT AND WAIVER. SUBJECT TO CERTAIN EXCEPTIONS,
THE INDENTURE OR THE NOTES MAY BE AMENDED OR SUPPLEMENTED WITH THE CONSENT OF
THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING
NOTES AND ADDITIONAL NOTES, IF ANY, VOTING AS A SINGLE CLASS, AND ANY EXISTING
DEFAULT OR COMPLIANCE WITH ANY PROVISION OF THE INDENTURE, THE SUBSIDIARY
GUARANTIES OR THE NOTES AND ADDITIONAL NOTES, IF ANY, MAY BE WAIVED WITH THE
CONSENT OF THE HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING
NOTES VOTING AS A SINGLE CLASS. WITHOUT THE CONSENT OF ANY HOLDER OF A NOTE, THE
INDENTURE OR THE NOTES MAY BE AMENDED OR SUPPLEMENTED TO CURE ANY AMBIGUITY,
DEFECT OR INCONSISTENCY, TO PROVIDE FOR UNCERTIFICATED NOTES IN ADDITION TO OR
IN PLACE OF CERTIFICATED NOTES, TO PROVIDE FOR THE ASSUMPTION OF THE COMPANY'S
OR ANY SUBSIDIARY GUARANTOR'S OBLIGATIONS TO HOLDERS OF THE NOTES IN CASE OF A
MERGER OR CONSOLIDATION, TO
A1-5
<PAGE>
MAKE ANY CHANGE THAT WOULD PROVIDE ANY ADDITIONAL RIGHTS OR BENEFITS TO THE
HOLDERS OF THE NOTES OR THAT DOES NOT ADVERSELY AFFECT THE LEGAL RIGHTS UNDER
THE INDENTURE OF ANY SUCH HOLDER, OR TO COMPLY WITH THE REQUIREMENTS OF THE SEC
IN ORDER TO EFFECT OR MAINTAIN THE QUALIFICATION OF THE INDENTURE UNDER THE
TRUST INDENTURE ACT, TO PROVIDE FOR THE ISSUANCE OF ADDITIONAL NOTES IN
ACCORDANCE WITH THE LIMITATIONS SET FORTH IN THE INDENTURE, OR TO ALLOW ANY
GUARANTOR TO EXECUTE A SUPPLEMENTAL INDENTURE TO THE INDENTURE AND/OR A
SUBSIDIARY GUARANTEE WITH RESPECT TO THE NOTE.
12. DEFAULTS AND REMEDIES. EVENTS OF DEFAULT INCLUDE: (I) DEFAULT FOR
30 DAYS IN THE PAYMENT WHEN DUE OF INTEREST ON OR LIQUIDATED DAMAGES, IF ANY,
WITH RESPECT TO THE NOTES; (II) DEFAULT IN PAYMENT WHEN DUE OF PRINCIPAL OF OR
PREMIUM, IF ANY, ON THE NOTES, (III) FAILURE BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES TO COMPLY WITH SECTION 5.01 OF THE INDENTURE; (IV)
FAILURE BY THE COMPANY OR THE COMPANY'S RESTRICTED SUBSIDIARIES FOR 60 DAYS
AFTER NOTICE TO THE COMPANY BY THE TRUSTEE OR THE HOLDERS OF AT LEAST 25% IN
AGGREGATE PRINCIPAL AMOUNT OF THE NOTES (INCLUDING ADDITIONAL NOTES, IF ANY)
THEN OUTSTANDING VOTING AS A SINGLE CLASS TO COMPLY WITH CERTAIN OTHER
AGREEMENTS IN THE INDENTURE OR THE NOTES; (V) DEFAULT UNDER CERTAIN OTHER
AGREEMENTS RELATING TO INDEBTEDNESS OF THE COMPANY WHICH DEFAULT RESULTS IN THE
ACCELERATION OF SUCH INDEBTEDNESS PRIOR TO ITS EXPRESS MATURITY; (VI) CERTAIN
FINAL JUDGMENTS FOR THE PAYMENT OF MONEY THAT REMAIN UNDISCHARGED FOR A PERIOD
OF 90 DAYS; (VII) EXCEPT AS PERMITTED BY THE INDENTURE, ANY SUBSIDIARY GUARANTY
SHALL BE HELD IN ANY JUDICIAL PROCEEDING TO BE UNENFORCEABLE OR INVALID OR SHALL
CEASE FOR ANY REASON TO BE IN FULL FORCE AND EFFECT OR ANY SUBSIDIARY GUARANTOR
OR ANY PERSON ACTION ON ITS BEHALF SHALL DENY OR DISAFFIRM ITS OBLIGATIONS UNDER
SUCH SUBSIDIARY GUARANTOR'S SUBSIDIARY GUARANTY; AND (VIII) CERTAIN EVENTS OF
BANKRUPTCY OR INSOLVENCY WITH RESPECT TO THE COMPANY OR ANY SUBSIDIARY OR GROUP
OF SUBSIDIARIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY. IF ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING, THE
TRUSTEE OR THE HOLDERS OF AT LEAST 25% IN PRINCIPAL AMOUNT OF THE THEN
OUTSTANDING NOTES MAY DECLARE ALL THE NOTES TO BE DUE AND PAYABLE; PROVIDED,
HOWEVER, THAT SO LONG AS ANY INDEBTEDNESS PERMITTED TO BE INCURRED UNDER THE
INDENTURE AS PART OF THE CREDIT FACILITIES IS OUTSTANDING, NO SUCH ACCELERATION
SHALL BE EFFECTIVE UNTIL THE EARLIER OF (I) FIVE BUSINESS DAYS AFTER THE GIVING
OF WRITTEN NOTICE TO THE COMPANY AND THE ADMINISTRATIVE AGENT UNDER THE CREDIT
FACILITIES OF SUCH ACCELERATION OR (II) ACCELERATION OF ANY SUCH INDEBTEDNESS
UNDER THE CREDIT FACILITIES. NOTWITHSTANDING THE FOREGOING, IN THE CASE OF AN
EVENT OF DEFAULT ARISING FROM CERTAIN EVENTS OF BANKRUPTCY OR INSOLVENCY, ALL
OUTSTANDING NOTES SHALL BECOME DUE AND PAYABLE WITHOUT FURTHER ACTION OR NOTICE.
HOLDERS MAY NOT ENFORCE THE INDENTURE OR THE NOTES EXCEPT AS PROVIDED IN THE
INDENTURE. SUBJECT TO CERTAIN LIMITATIONS, HOLDERS OF A MAJORITY IN PRINCIPAL
AMOUNT OF THE THEN OUTSTANDING NOTES MAY DIRECT THE TRUSTEE IN ITS EXERCISE OF
ANY TRUST OR POWER. THE TRUSTEE MAY WITHHOLD FROM HOLDERS OF THE NOTES NOTICE OF
ANY CONTINUING DEFAULT OR EVENT OF DEFAULT (EXCEPT A DEFAULT OR EVENT OF DEFAULT
RELATING TO THE PAYMENT OF PRINCIPAL OR INTEREST) IF IT DETERMINES THAT
WITHHOLDING NOTICE IS IN THEIR INTEREST. THE HOLDERS OF A MAJORITY IN AGGREGATE
PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING BY NOTICE TO THE TRUSTEE MAY ON
BEHALF OF THE HOLDERS OF ALL OF THE NOTES WAIVE ANY EXISTING DEFAULT OR EVENT OF
DEFAULT AND ITS CONSEQUENCES UNDER THE INDENTURE EXCEPT A CONTINUING DEFAULT OR
EVENT OF DEFAULT IN THE PAYMENT OF INTEREST OR LIQUIDATED DAMAGES ON, OR THE
PRINCIPAL OF, THE NOTES. THE COMPANY IS REQUIRED TO DELIVER TO THE TRUSTEE
ANNUALLY A STATEMENT REGARDING COMPLIANCE WITH THE INDENTURE, AND THE COMPANY IS
REQUIRED UPON BECOMING AWARE OF ANY DEFAULT OR EVENT OF DEFAULT, TO DELIVER TO
THE TRUSTEE A STATEMENT SPECIFYING SUCH DEFAULT OR EVENT OF DEFAULT.
A1-6
<PAGE>
13. TRUSTEE DEALINGS WITH COMPANY. THE TRUSTEE, IN ITS INDIVIDUAL OR
ANY OTHER CAPACITY, MAY MAKE LOANS TO, ACCEPT DEPOSITS FROM, AND PERFORM
SERVICES FOR THE COMPANY OR ITS AFFILIATES, AND MAY OTHERWISE DEAL WITH THE
COMPANY OR ITS AFFILIATES, AS IF IT WERE NOT THE TRUSTEE.
14. NO RECOURSE AGAINST OTHERS. A DIRECTOR, OFFICER, EMPLOYEE,
INCORPORATOR OR STOCKHOLDER, OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR, AS
SUCH, SHALL NOT HAVE ANY LIABILITY FOR ANY OBLIGATIONS OF THE COMPANY OR THE
SUBSIDIARY GUARANTORS UNDER THE NOTES OR THE INDENTURE OR FOR ANY CLAIM BASED
ON, IN RESPECT OF, OR BY REASON OF, SUCH OBLIGATIONS OR THEIR CREATION. EACH
HOLDER BY ACCEPTING A NOTE WAIVES AND RELEASES ALL SUCH LIABILITY. THE WAIVER
AND RELEASE ARE PART OF THE CONSIDERATION FOR THE ISSUANCE OF THE NOTES.
15. AUTHENTICATION. THIS NOTE SHALL NOT BE VALID UNTIL
AUTHENTICATED BY THE MANUAL SIGNATURE OF THE TRUSTEE OR AN AUTHENTICATING
AGENT.
16. ABBREVIATIONS. CUSTOMARY ABBREVIATIONS MAY BE USED IN THE NAME OF
A HOLDER OR AN ASSIGNEE, SUCH AS: TEN COM (= TENANTS IN COMMON), TEN ENT (=
TENANTS BY THE ENTIRETIES), JT TEN (= JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
AND NOT AS TENANTS IN COMMON), CUST (= CUSTODIAN), AND U/G/M/A (= UNIFORM GIFTS
TO MINORS ACT).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. IN ADDITION TO THE RIGHTS PROVIDED TO HOLDERS OF
NOTES UNDER THE INDENTURE, HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES SHALL HAVE ALL THE RIGHTS SET FORTH IN THE REGISTRATION RIGHTS
AGREEMENT DATED AS OF MAY 28, 1999, BETWEEN THE COMPANY AND THE PARTIES NAMED ON
THE SIGNATURE PAGES THEREOF OR, IN THE CASE OF ADDITIONAL NOTES, HOLDERS OF
RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES SHALL HAVE THE RIGHTS
SET FORTH IN ONE OR MORE REGISTRATION RIGHTS AGREEMENTS, IF ANY, BETWEEN THE
COMPANY AND THE OTHER PARTIES THERETO, RELATING TO RIGHTS GIVEN BY THE COMPANY
TO THE PURCHASERS OF ANY ADDITIONAL NOTES (COLLECTIVELY, THE "REGISTRATION
RIGHTS AGREEMENT").
18. CUSIP NUMBERS. PURSUANT TO A RECOMMENDATION PROMULGATED BY THE
COMMITTEE ON UNIFORM SECURITY IDENTIFICATION PROCEDURES, THE COMPANY HAS CAUSED
CUSIP NUMBERS TO BE PRINTED ON THE NOTES AND THE TRUSTEE MAY USE CUSIP NUMBERS
IN NOTICES OF REDEMPTION AS A CONVENIENCE TO HOLDERS. NO REPRESENTATION IS MADE
AS TO THE ACCURACY OF SUCH NUMBERS EITHER AS PRINTED ON THE NOTES OR AS
CONTAINED IN ANY NOTICE OF REDEMPTION AND RELIANCE MAY BE PLACED ONLY ON THE
OTHER IDENTIFICATION NUMBERS PLACED THEREON.
THE COMPANY SHALL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE AND/OR THE REGISTRATION RIGHTS AGREEMENT.
REQUESTS MAY BE MADE TO:
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
ATTENTION: CHIEF FINANCIAL OFFICER
A1-7
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:
(I) OR (WE) ASSIGN AND TRANSFER THIS NOTE TO: (INSERT ASSIGNEE'S LEGAL NAME)
- ----------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
AND IRREVOCABLY APPOINT
----------------------------------------------------
TO TRANSFER THIS NOTE ON THE BOOKS OF THE COMPANY. THE AGENT MAY SUBSTITUTE
ANOTHER TO ACT FOR HIM.
DATE:
YOUR SIGNATURE:
------------------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE FACE OF THIS NOTE)
SIGNATURE GUARANTEE*:
------------------------------------------------------
* PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTEE MEDALLION PROGRAM (OR OTHER
SIGNATURE SUBSIDIARY GUARANTOR ACCEPTABLE TO THE TRUSTEE).
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.10 OR 4.15 OF THE INDENTURE, CHECK THE APPROPRIATE BOX
BELOW:
SECTION 4.10 SECTION 4.15
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10 OR SECTION 4.15 OF THE INDENTURE, STATE THE
AMOUNT YOU ELECT TO HAVE PURCHASED:
$
-----------------------------
DATE:
--------------------
YOUR SIGNATURE:
-----------------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE FACE OF THIS NOTE)
TAX IDENTIFICATION NO.:
-----------
SIGNATURE GUARANTEE*:
------------------------------------------------------
* PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTEE MEDALLION PROGRAM (OR OTHER
SIGNATURE SUBSIDIARY GUARANTOR ACCEPTABLE TO THE TRUSTEE).
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NOTE FOR AN
INTEREST IN ANOTHER GLOBAL NOTE OR FOR A DEFINITIVE NOTE, OR EXCHANGES OF A
PART OF ANOTHER GLOBAL NOTE OR DEFINITIVE NOTE FOR AN INTEREST IN THIS GLOBAL
NOTE, HAVE BEEN MADE:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE SIGNATURE OF
DECREASE IN INCREASE IN FOLLOWING SUCH AUTHORIZED OFFICER
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR) OF TRUSTEE OR
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) NOTE CUSTODIAN
- ---------------- ------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE>
[EXHIBIT A2]
[FACE OF REGULATION S TEMPORARY GLOBAL NOTE]
CUSIP __________
11 1/2% [SERIES A] [SERIES B] SENIOR NOTES DUE 2009
NO. ___ $__________
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
PROMISES TO PAY TO CEDE & CO.
OR REGISTERED ASSIGNS,
THE PRINCIPAL SUM OF
DOLLARS ON JUNE 1, 2009.
INTEREST PAYMENT DATES: JUNE 1, AND DECEMBER 1
RECORD DATES: MAY 15, AND NOVEMBER 15
DATED: MAY 28, 1999
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
BY:
NAME:
TITLE:
BY:
NAME:
TITLE:
THIS IS ONE OF THE NOTES REFERRED TO
IN THE WITHIN-MENTIONED INDENTURE:
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS TRUSTEE
BY:
----------------------------------
AUTHORIZED SIGNATORY
A2-1
<PAGE>
[EXHIBIT A2]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A2-2
<PAGE>
[BACK OF REGULATION S TEMPORARY GLOBAL NOTE]
11 1/2% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2009
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(A) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THE NOTE (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) (A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE NOTES (THE FORM OF SUCH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) OR (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED THAT IN THE CASE OF A TRANSFER
PURSUANT TO CLAUSE (F) SUCH TRANSFER IS EFFECTED BY THE DELIVERY TO THE
TRANSFEREE OF DEFINITIVE SECURITIES REGISTERED IN ITS NAME (OR ITS NOMINEES
NAME) IN THE BOOKS MAINTAINED BY THE REGISTRAR, AND IS SUBJECT TO THE RECEIPT BY
THE REGISTRAR (AND THE COMPANY, IF IT SO REQUESTS) OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (II) TO THE COMPANY OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE,
A2-3
<PAGE>
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO
THEM IN THE INDENTURE REFERRED TO BELOW UNLESS OTHERWISE INDICATED.
1. INTEREST. J. L. FRENCH AUTOMOTIVE CASTINGS, INC., A DELAWARE
CORPORATION (THE "COMPANY"), PROMISES TO PAY INTEREST ON THE PRINCIPAL AMOUNT OF
THIS NOTE AT 11 1/2% PER ANNUM FROM MAY 28 1999 UNTIL MATURITY AND SHALL PAY THE
LIQUIDATED DAMAGES PAYABLE PURSUANT TO SECTION 5 OF THE REGISTRATION RIGHTS
AGREEMENT REFERRED TO BELOW. THE COMPANY SHALL PAY INTEREST AND LIQUIDATED
DAMAGES SEMI-ANNUALLY IN ARREARS ON JUNE 1 AND DECEMBER 1 OF EACH YEAR, OR IF
ANY SUCH DAY IS NOT A BUSINESS DAY, ON THE NEXT SUCCEEDING BUSINESS DAY (EACH AN
"INTEREST PAYMENT DATE"). INTEREST ON THE NOTES SHALL ACCRUE FROM THE MOST
RECENT DATE TO WHICH INTEREST HAS BEEN PAID OR, IF NO INTEREST HAS BEEN PAID,
FROM THE DATE OF ISSUANCE; PROVIDED THAT IF THERE IS NO EXISTING DEFAULT IN THE
PAYMENT OF INTEREST, AND IF THIS NOTE IS AUTHENTICATED BETWEEN A RECORD DATE
REFERRED TO ON THE FACE HEREOF AND THE NEXT SUCCEEDING INTEREST PAYMENT DATE,
INTEREST SHALL ACCRUE FROM SUCH NEXT SUCCEEDING INTEREST PAYMENT DATE; PROVIDED,
FURTHER, THAT THE FIRST INTEREST PAYMENT DATE SHALL BE DECEMBER 1, 1999. THE
COMPANY SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN ANY PROCEEDING
UNDER ANY BANKRUPTCY LAW) ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY, FROM TIME TO
TIME ON DEMAND AT A RATE THAT IS 1% PER ANNUM IN EXCESS OF THE RATE THEN IN
EFFECT; IT SHALL PAY INTEREST (INCLUDING POST-PETITION INTEREST IN ANY
PROCEEDING UNDER ANY BANKRUPTCY LAW) ON OVERDUE INSTALLMENTS OF INTEREST AND
LIQUIDATED DAMAGES (WITHOUT REGARD TO ANY APPLICABLE GRACE PERIODS) FROM TIME TO
TIME ON DEMAND AT THE SAME RATE TO THE EXTENT LAWFUL. INTEREST SHALL BE COMPUTED
ON THE BASIS OF A 360-DAY YEAR OF TWELVE 30-DAY MONTHS.
UNTIL THIS REGULATION S TEMPORARY GLOBAL NOTE IS EXCHANGED FOR ONE OR
MORE REGULATION S PERMANENT GLOBAL NOTES, THE HOLDER HEREOF SHALL NOT BE
ENTITLED TO RECEIVE PAYMENTS OF INTEREST HEREON; UNTIL SO EXCHANGED IN FULL,
THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL IN ALL OTHER RESPECTS BE ENTITLED
TO THE SAME BENEFITS AS OTHER SENIOR SUBORDINATED NOTES UNDER THE INDENTURE.
2. METHOD OF PAYMENT. THE COMPANY SHALL PAY INTEREST ON THE NOTES
(EXCEPT DEFAULTED INTEREST) AND LIQUIDATED DAMAGES TO THE PERSONS WHO ARE
REGISTERED HOLDERS OF NOTES AT THE CLOSE OF BUSINESS ON THE MAY 15 OR NOVEMBER
15 NEXT PRECEDING THE INTEREST PAYMENT DATE, EVEN IF SUCH NOTES ARE CANCELED
AFTER SUCH RECORD DATE AND ON OR BEFORE SUCH INTEREST PAYMENT DATE, EXCEPT AS
PROVIDED IN SECTION 2.12 OF THE INDENTURE WITH RESPECT TO DEFAULTED INTEREST.
THE NOTES SHALL BE PAYABLE AS TO PRINCIPAL, PREMIUM AND LIQUIDATED DAMAGES, IF
ANY, AND INTEREST AT THE OFFICE OR AGENCY OF THE COMPANY MAINTAINED FOR SUCH
PURPOSE WITHIN OR WITHOUT THE CITY AND STATE OF NEW YORK, OR, AT THE OPTION OF
THE COMPANY, PAYMENT OF INTEREST AND LIQUIDATED DAMAGES MAY BE MADE BY CHECK
MAILED TO THE HOLDERS AT THEIR ADDRESSES SET FORTH IN THE REGISTER OF HOLDERS,
AND PROVIDED THAT PAYMENT BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS SHALL
BE REQUIRED WITH RESPECT TO PRINCIPAL OF AND INTEREST, PREMIUM AND LIQUIDATED
DAMAGES ON, ALL GLOBAL NOTES AND ALL OTHER NOTES THE HOLDERS OF WHICH SHALL HAVE
PROVIDED WIRE TRANSFER INSTRUCTIONS TO THE COMPANY OR THE PAYING AGENT. SUCH
PAYMENT SHALL BE IN SUCH COIN OR CURRENCY OF THE UNITED STATES OF AMERICA AS AT
THE TIME OF PAYMENT IS LEGAL TENDER FOR PAYMENT OF PUBLIC AND PRIVATE DEBTS.
A2-4
<PAGE>
3. PAYING AGENT AND REGISTRAR. INITIALLY, U.S. BANK TRUST NATIONAL
ASSOCIATION, THE TRUSTEE UNDER THE INDENTURE, SHALL ACT AS PAYING AGENT AND
REGISTRAR. THE COMPANY MAY CHANGE ANY PAYING AGENT OR REGISTRAR WITHOUT NOTICE
TO ANY HOLDER. THE COMPANY OR ANY OF ITS SUBSIDIARIES MAY ACT IN ANY SUCH
CAPACITY.
4. INDENTURE. THE COMPANY ISSUED THE NOTES UNDER AN INDENTURE
DATED AS OF MAY 28, 1999 ("INDENTURE") BETWEEN THE COMPANY AND THE TRUSTEE.
THE TERMS OF THE NOTES INCLUDE THOSE STATED IN THE INDENTURE AND THOSE MADE
PART OF THE INDENTURE BY REFERENCE TO THE TRUST INDENTURE ACT OF 1939, AS
AMENDED (15 U.S. CODE Sections 77AAA-77BBBB). THE NOTES ARE SUBJECT TO ALL
SUCH TERMS, AND HOLDERS ARE REFERRED TO THE INDENTURE AND SUCH ACT FOR A
STATEMENT OF SUCH TERMS. THE NOTES ARE SUBORDINATED IN RIGHT OF PAYMENT TO
THE PRIOR PAYMENT IN FULL IN CASH OF ALL SENIOR DEBT, TO THE EXTENT AND IN
THE MANNER PROVIDED IN ARTICLE 10 OF THE INDENTURE. TO THE EXTENT ANY
PROVISION OF THIS NOTE CONFLICTS WITH THE EXPRESS PROVISIONS OF THE
INDENTURE, THE PROVISIONS OF THE INDENTURE SHALL GOVERN AND BE CONTROLLING.
THE NOTES ARE OBLIGATIONS OF THE COMPANY LIMITED TO $275 MILLION IN AGGREGATE
PRINCIPAL AMOUNT.
5. OPTIONAL REDEMPTION.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE NOTES PRIOR TO JUNE 1, 2004.
THEREAFTER, THE COMPANY SHALL HAVE THE OPTION TO REDEEM THE NOTES, IN WHOLE OR
IN PART, UPON NOT LESS THAN 30 NOR MORE THAN 60 DAYS' NOTICE, AT THE REDEMPTION
PRICES (EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH BELOW PLUS
ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON TO THE APPLICABLE
REDEMPTION DATE, IF REDEEMED DURING THE TWELVE-MONTH PERIOD BEGINNING ON JUNE 1
OF THE YEARS INDICATED BELOW:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004 ........................... 105.7500%
2005 ........................... 103.8333%
2006 ........................... 101.9167%
2007 AND THEREAFTER ............ 100.0000%
</TABLE>
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, AT ANY TIME PRIOR TO JUNE 1, 2002, THE COMPANY MAY REDEEM UP TO 35%
OF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES ORIGINALLY ISSUED UNDER THE INDENTURE
AT A REDEMPTION PRICE OF 111.50% OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF, PLUS
ACCRUED AND UNPAID INTEREST TO THE REDEMPTION DATE, WITH THE NET CASH PROCEEDS
OF ONE OR MORE EQUITY OFFERINGS; PROVIDED THAT AT LEAST 65% OF THE AGGREGATE
PRINCIPAL AMOUNT OF NOTES ISSUED UNDER THE INDENTURE REMAINS OUTSTANDING
IMMEDIATELY AFTER THE OCCURRENCE OF EACH SUCH REDEMPTION (EXCLUDING NOTES HELD
BY THE COMPANY AND ITS SUBSIDIARIES) AND THE REDEMPTION OCCURS WITHIN 90 DAYS OF
THE DATE OF THE CLOSING OF SUCH EQUITY OFFERING.
6. MANDATORY REDEMPTION.
EXCEPT AS SET FORTH IN PARAGRAPH 7 BELOW, THE COMPANY SHALL NOT BE
REQUIRED TO MAKE MANDATORY REDEMPTION PAYMENTS WITH RESPECT TO THE NOTES.
A2-5
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(A) IF THERE IS A CHANGE OF CONTROL, THE COMPANY SHALL BE REQUIRED TO
MAKE AN OFFER (A "CHANGE OF CONTROL OFFER") TO REPURCHASE ALL OR ANY PART (EQUAL
TO $1,000 OR AN INTEGRAL MULTIPLE THEREOF) OF EACH HOLDER'S NOTES AT A PURCHASE
PRICE EQUAL TO 101% OF THE AGGREGATE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED AND
UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE DATE OF PURCHASE
(THE "CHANGE OF CONTROL PAYMENT"). WITHIN 30 DAYS FOLLOWING ANY CHANGE OF
CONTROL, THE COMPANY SHALL MAIL A NOTICE TO EACH HOLDER SETTING FORTH THE
PROCEDURES GOVERNING THE CHANGE OF CONTROL OFFER AS REQUIRED BY THE INDENTURE.
(B) WHEN THE AGGREGATE AMOUNT OF EXCESS PROCEEDS FROM ONE OR MORE
ASSET SALES EXCEEDS $10.0 MILLION, THE COMPANY SHALL COMMENCE AN OFFER TO ALL
HOLDERS OF NOTES (AS "ASSET SALE OFFER") PURSUANT TO SECTION 3.09 OF THE
INDENTURE TO PURCHASE THE MAXIMUM PRINCIPAL AMOUNT OF NOTES (INCLUDING ANY
ADDITIONAL NOTES) THAT MAY BE PURCHASED OUT OF THE EXCESS PROCEEDS AT AN OFFER
PRICE IN CASH IN AN AMOUNT EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF PLUS
ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE DATE
FIXED FOR THE CLOSING OF SUCH OFFER IN ACCORDANCE WITH THE PROCEDURES SET FORTH
IN THE INDENTURE. TO THE EXTENT THAT THE AGGREGATE AMOUNT OF NOTES (INCLUDING
ANY ADDITIONAL NOTES) TENDERED PURSUANT TO AN ASSET SALE OFFER IS LESS THAN THE
EXCESS PROCEEDS, THE COMPANY (OR SUCH SUBSIDIARY) MAY USE SUCH DEFICIENCY FOR
GENERAL CORPORATE PURPOSES. IF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES
SURRENDERED BY HOLDERS THEREOF EXCEEDS THE AMOUNT OF EXCESS PROCEEDS, THE
TRUSTEE SHALL SELECT THE NOTES TO BE PURCHASED ON A PRO RATA BASIS. HOLDERS OF
NOTES THAT ARE THE SUBJECT OF AN OFFER TO PURCHASE SHALL RECEIVE AN ASSET SALE
OFFER FROM THE COMPANY PRIOR TO ANY RELATED PURCHASE DATE AND MAY ELECT TO HAVE
SUCH NOTES PURCHASED BY COMPLETING THE FORM ENTITLED "OPTION OF HOLDER TO ELECT
PURCHASE" ON THE REVERSE OF THE NOTES.
8. NOTICE OF REDEMPTION. NOTICE OF REDEMPTION SHALL BE MAILED AT
LEAST 30 DAYS BUT NOT MORE THAN 60 DAYS BEFORE THE REDEMPTION DATE TO EACH
HOLDER WHOSE NOTES ARE TO BE REDEEMED AT ITS REGISTERED ADDRESS. NOTES IN
DENOMINATIONS LARGER THAN $1,000 MAY BE REDEEMED IN PART BUT ONLY IN WHOLE
MULTIPLES OF $1,000, UNLESS ALL OF THE NOTES HELD BY A HOLDER ARE TO BE
REDEEMED. ON AND AFTER THE REDEMPTION DATE INTEREST CEASES TO ACCRUE ON NOTES OR
PORTIONS THEREOF CALLED FOR REDEMPTION.
9. DENOMINATIONS, TRANSFER, EXCHANGE. THE NOTES ARE IN REGISTERED
FORM WITHOUT COUPONS IN DENOMINATIONS OF $1,000 AND INTEGRAL MULTIPLES OF
$1,000. THE TRANSFER OF NOTES MAY BE REGISTERED AND NOTES MAY BE EXCHANGED AS
PROVIDED IN THE INDENTURE. THE REGISTRAR AND THE TRUSTEE MAY REQUIRE A HOLDER,
AMONG OTHER THINGS, TO FURNISH APPROPRIATE ENDORSEMENTS AND TRANSFER DOCUMENTS
AND THE COMPANY MAY REQUIRE A HOLDER TO PAY ANY TAXES AND FEES REQUIRED BY LAW
OR PERMITTED BY THE INDENTURE. THE COMPANY NEED NOT EXCHANGE OR REGISTER THE
TRANSFER OF ANY NOTE OR PORTION OF A NOTE SELECTED FOR REDEMPTION, EXCEPT FOR
THE UNREDEEMED PORTION OF ANY NOTE BEING REDEEMED IN PART. ALSO, THE COMPANY
NEED NOT EXCHANGE OR REGISTER THE TRANSFER OF ANY NOTES FOR A PERIOD OF 15 DAYS
BEFORE A SELECTION OF NOTES TO BE REDEEMED OR DURING THE PERIOD BETWEEN A RECORD
DATE AND THE CORRESPONDING INTEREST PAYMENT DATE.
THIS REGULATION S TEMPORARY GLOBAL NOTE IS EXCHANGEABLE IN WHOLE OR
IN PART FOR ONE OR MORE GLOBAL NOTES ONLY (I) ON OR AFTER THE TERMINATION OF THE
40-DAY RESTRICTED PERIOD (AS DEFINED IN REGULATION S) AND (II) UPON PRESENTATION
OF CERTIFICATES (ACCOMPANIED BY
A2-6
<PAGE>
AN OPINION OF COUNSEL, IF APPLICABLE) REQUIRED BY ARTICLE 2 OF THE INDENTURE.
UPON EXCHANGE OF THIS REGULATION S TEMPORARY GLOBAL NOTE FOR ONE OR MORE GLOBAL
NOTES, THE TRUSTEE SHALL CANCEL THIS REGULATION S TEMPORARY GLOBAL NOTE.
10. PERSONS DEEMED OWNERS. THE REGISTERED HOLDER OF A NOTE MAY BE
TREATED AS ITS OWNER FOR ALL PURPOSES.
11. AMENDMENT, SUPPLEMENT AND WAIVER. SUBJECT TO CERTAIN EXCEPTIONS,
THE INDENTURE OR THE NOTES MAY BE AMENDED OR SUPPLEMENTED WITH THE CONSENT OF
THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING
NOTES AND ADDITIONAL NOTES, IF ANY, VOTING AS A SINGLE CLASS, AND ANY EXISTING
DEFAULT OR COMPLIANCE WITH ANY PROVISION OF THE INDENTURE, THE SUBSIDIARY
GUARANTIES OR THE NOTES AND ADDITIONAL NOTES, IF ANY, MAY BE WAIVED WITH THE
CONSENT OF THE HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING
NOTES VOTING AS A SINGLE CLASS. WITHOUT THE CONSENT OF ANY HOLDER OF A NOTE, THE
INDENTURE OR THE NOTES MAY BE AMENDED OR SUPPLEMENTED TO CURE ANY AMBIGUITY,
DEFECT OR INCONSISTENCY, TO PROVIDE FOR UNCERTIFICATED NOTES IN ADDITION TO OR
IN PLACE OF CERTIFICATED NOTES, TO PROVIDE FOR THE ASSUMPTION OF THE COMPANY'S
OR ANY SUBSIDIARY GUARANTOR'S OBLIGATIONS TO HOLDERS OF THE NOTES IN CASE OF A
MERGER OR CONSOLIDATION, TO MAKE ANY CHANGE THAT WOULD PROVIDE ANY ADDITIONAL
RIGHTS OR BENEFITS TO THE HOLDERS OF THE NOTES OR THAT DOES NOT ADVERSELY AFFECT
THE LEGAL RIGHTS UNDER THE INDENTURE OF ANY SUCH HOLDER, OR TO COMPLY WITH THE
REQUIREMENTS OF THE SEC IN ORDER TO EFFECT OR MAINTAIN THE QUALIFICATION OF THE
INDENTURE UNDER THE TRUST INDENTURE ACT, TO PROVIDE FOR THE ISSUANCE OF
ADDITIONAL NOTES IN ACCORDANCE WITH THE LIMITATIONS SET FORTH IN THE INDENTURE,
OR TO ALLOW ANY GUARANTOR TO EXECUTE A SUPPLEMENTAL INDENTURE TO THE INDENTURE
AND/OR A SUBSIDIARY GUARANTEE WITH RESPECT TO THE NOTE.
12. DEFAULTS AND REMEDIES. EVENTS OF DEFAULT INCLUDE: (I) DEFAULT FOR
30 DAYS IN THE PAYMENT WHEN DUE OF INTEREST ON OR LIQUIDATED DAMAGES, IF ANY,
WITH RESPECT TO THE NOTES; (II) DEFAULT IN PAYMENT WHEN DUE OF PRINCIPAL OF OR
PREMIUM, IF ANY, ON THE NOTES, (III) FAILURE BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES TO COMPLY WITH SECTION 5.01 OF THE INDENTURE; (IV)
FAILURE BY THE COMPANY OR THE COMPANY'S RESTRICTED SUBSIDIARIES FOR 60 DAYS
AFTER NOTICE TO THE COMPANY BY THE TRUSTEE OR THE HOLDERS OF AT LEAST 25% IN
AGGREGATE PRINCIPAL AMOUNT OF THE NOTES (INCLUDING ADDITIONAL NOTES, IF ANY)
THEN OUTSTANDING VOTING AS A SINGLE CLASS TO COMPLY WITH CERTAIN OTHER
AGREEMENTS IN THE INDENTURE OR THE NOTES; (V) DEFAULT UNDER CERTAIN OTHER
AGREEMENTS RELATING TO INDEBTEDNESS OF THE COMPANY WHICH DEFAULT RESULTS IN THE
ACCELERATION OF SUCH INDEBTEDNESS PRIOR TO ITS EXPRESS MATURITY; (VI) CERTAIN
FINAL JUDGMENTS FOR THE PAYMENT OF MONEY THAT REMAIN UNDISCHARGED FOR A PERIOD
OF 90 DAYS; (VII) EXCEPT AS PERMITTED BY THE INDENTURE, ANY SUBSIDIARY GUARANTY
SHALL BE HELD IN ANY JUDICIAL PROCEEDING TO BE UNENFORCEABLE OR INVALID OR SHALL
CEASE FOR ANY REASON TO BE IN FULL FORCE AND EFFECT OR ANY SUBSIDIARY GUARANTOR
OR ANY PERSON ACTION ON ITS BEHALF SHALL DENY OR DISAFFIRM ITS OBLIGATIONS UNDER
SUCH SUBSIDIARY GUARANTOR'S SUBSIDIARY GUARANTY; AND (VIII) CERTAIN EVENTS OF
BANKRUPTCY OR INSOLVENCY WITH RESPECT TO THE COMPANY OR ANY SUBSIDIARY OR GROUP
OF SUBSIDIARIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD CONSTITUTE A
SIGNIFICANT SUBSIDIARY. IF ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING, THE
TRUSTEE OR THE HOLDERS OF AT LEAST 25% IN PRINCIPAL AMOUNT OF THE THEN
OUTSTANDING NOTES MAY DECLARE ALL THE NOTES TO BE DUE AND PAYABLE; PROVIDED,
HOWEVER, THAT SO LONG AS ANY INDEBTEDNESS PERMITTED TO BE INCURRED UNDER THE
INDENTURE AS PART OF THE CREDIT FACILITIES IS OUTSTANDING, NO SUCH ACCELERATION
SHALL BE EFFECTIVE UNTIL THE EARLIER OF (I) FIVE BUSINESS DAYS AFTER THE GIVING
OF WRITTEN NOTICE TO THE COMPANY AND THE ADMINISTRATIVE
A2-7
<PAGE>
AGENT UNDER THE CREDIT FACILITIES OF SUCH ACCELERATION OR (II) ACCELERATION OF
ANY SUCH INDEBTEDNESS UNDER THE CREDIT FACILITIES. NOTWITHSTANDING THE
FOREGOING, IN THE CASE OF AN EVENT OF DEFAULT ARISING FROM CERTAIN EVENTS OF
BANKRUPTCY OR INSOLVENCY, ALL OUTSTANDING NOTES SHALL BECOME DUE AND PAYABLE
WITHOUT FURTHER ACTION OR NOTICE. HOLDERS MAY NOT ENFORCE THE INDENTURE OR THE
NOTES EXCEPT AS PROVIDED IN THE INDENTURE. SUBJECT TO CERTAIN LIMITATIONS,
HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE THEN OUTSTANDING NOTES MAY
DIRECT THE TRUSTEE IN ITS EXERCISE OF ANY TRUST OR POWER. THE TRUSTEE MAY
WITHHOLD FROM HOLDERS OF THE NOTES NOTICE OF ANY CONTINUING DEFAULT OR EVENT OF
DEFAULT (EXCEPT A DEFAULT OR EVENT OF DEFAULT RELATING TO THE PAYMENT OF
PRINCIPAL OR INTEREST) IF IT DETERMINES THAT WITHHOLDING NOTICE IS IN THEIR
INTEREST. THE HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES
THEN OUTSTANDING BY NOTICE TO THE TRUSTEE MAY ON BEHALF OF THE HOLDERS OF ALL OF
THE NOTES WAIVE ANY EXISTING DEFAULT OR EVENT OF DEFAULT AND ITS CONSEQUENCES
UNDER THE INDENTURE EXCEPT A CONTINUING DEFAULT OR EVENT OF DEFAULT IN THE
PAYMENT OF INTEREST OR LIQUIDATED DAMAGES ON, OR THE PRINCIPAL OF, THE NOTES.
THE COMPANY IS REQUIRED TO DELIVER TO THE TRUSTEE ANNUALLY A STATEMENT REGARDING
COMPLIANCE WITH THE INDENTURE, AND THE COMPANY IS REQUIRED UPON BECOMING AWARE
OF ANY DEFAULT OR EVENT OF DEFAULT, TO DELIVER TO THE TRUSTEE A STATEMENT
SPECIFYING SUCH DEFAULT OR EVENT OF DEFAULT.
13. TRUSTEE DEALINGS WITH COMPANY. THE TRUSTEE, IN ITS INDIVIDUAL OR
ANY OTHER CAPACITY, MAY MAKE LOANS TO, ACCEPT DEPOSITS FROM, AND PERFORM
SERVICES FOR THE COMPANY OR ITS AFFILIATES, AND MAY OTHERWISE DEAL WITH THE
COMPANY OR ITS AFFILIATES, AS IF IT WERE NOT THE TRUSTEE.
14. NO RECOURSE AGAINST OTHERS. A DIRECTOR, OFFICER, EMPLOYEE,
INCORPORATOR OR STOCKHOLDER, OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR, AS
SUCH, SHALL NOT HAVE ANY LIABILITY FOR ANY OBLIGATIONS OF THE COMPANY OR THE
SUBSIDIARY GUARANTORS UNDER THE NOTES OR THE INDENTURE OR FOR ANY CLAIM BASED
ON, IN RESPECT OF, OR BY REASON OF, SUCH OBLIGATIONS OR THEIR CREATION. EACH
HOLDER BY ACCEPTING A NOTE WAIVES AND RELEASES ALL SUCH LIABILITY. THE WAIVER
AND RELEASE ARE PART OF THE CONSIDERATION FOR THE ISSUANCE OF THE NOTES.
15. AUTHENTICATION. THIS NOTE SHALL NOT BE VALID UNTIL
AUTHENTICATED BY THE MANUAL SIGNATURE OF THE TRUSTEE OR AN AUTHENTICATING
AGENT.
16. ABBREVIATIONS. CUSTOMARY ABBREVIATIONS MAY BE USED IN THE NAME OF
A HOLDER OR AN ASSIGNEE, SUCH AS: TEN COM (= TENANTS IN COMMON), TEN ENT (=
TENANTS BY THE ENTIRETIES), JT TEN (= JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
AND NOT AS TENANTS IN COMMON), CUST (= CUSTODIAN), AND U/G/M/A (= UNIFORM GIFTS
TO MINORS ACT).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. IN ADDITION TO THE RIGHTS PROVIDED TO HOLDERS OF
NOTES UNDER THE INDENTURE, HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES SHALL HAVE ALL THE RIGHTS SET FORTH IN THE RIGHTS AGREEMENT
DATED AS OF MAY 28, 1999, BETWEEN THE COMPANY AND THE PARTIES NAMED ON THE
SIGNATURE PAGES THEREOF OR IN THE CASE OF ADDITIONAL NOTES, HOLDERS OF
RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES SHALL HAVE THE RIGHTS
SET FORTH IN ONE OR MORE REGISTRATION RIGHTS AGREEMENTS, IF ANY, BETWEEN THE
COMPANY AND THE OTHER PARTIES THERETO, RELATING TO RIGHTS GIVEN BY THE COMPANY
TO THE PURCHASERS OF ANY ADDITIONAL NOTES (COLLECTIVELY, THE "REGISTRATION
RIGHTS AGREEMENT").
A2-8
<PAGE>
18. CUSIP NUMBERS. PURSUANT TO A RECOMMENDATION PROMULGATED BY THE
COMMITTEE ON UNIFORM SECURITY IDENTIFICATION PROCEDURES, THE COMPANY HAS CAUSED
CUSIP NUMBERS TO BE PRINTED ON THE NOTES AND THE TRUSTEE MAY USE CUSIP NUMBERS
IN NOTICES OF REDEMPTION AS A CONVENIENCE TO HOLDERS. NO REPRESENTATION IS MADE
AS TO THE ACCURACY OF SUCH NUMBERS EITHER AS PRINTED ON THE NOTES OR AS
CONTAINED IN ANY NOTICE OF REDEMPTION AND RELIANCE MAY BE PLACED ONLY ON THE
OTHER IDENTIFICATION NUMBERS PLACED THEREON.
THE COMPANY SHALL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE AND/OR THE REGISTRATION RIGHTS AGREEMENT.
REQUESTS MAY BE MADE TO:
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
ATTENTION: CHIEF FINANCIAL OFFICER
A2-9
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:
(I) OR (WE) ASSIGN AND TRANSFER THIS NOTE TO: (INSERT ASSIGNEE'S LEGAL NAME)
- ----------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
AND IRREVOCABLY APPOINT
----------------------------------------------------
TO TRANSFER THIS NOTE ON THE BOOKS OF THE COMPANY. THE AGENT MAY SUBSTITUTE
ANOTHER TO ACT FOR HIM.
DATE:
YOUR SIGNATURE:
------------------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE FACE OF THIS NOTE)
SIGNATURE GUARANTEE*:
------------------------------------------------------
* PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTEE MEDALLION PROGRAM (OR OTHER
SIGNATURE SUBSIDIARY GUARANTOR ACCEPTABLE TO THE TRUSTEE).
A2-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.10 OR 4.15 OF THE INDENTURE, CHECK THE APPROPRIATE BOX
BELOW:
SECTION 4.10 SECTION 4.15
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10 OR SECTION 4.15 OF THE INDENTURE, STATE THE
AMOUNT YOU ELECT TO HAVE PURCHASED:
$
-----------------------------
DATE:
--------------------
YOUR SIGNATURE:
-----------------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE FACE OF THIS NOTE)
TAX IDENTIFICATION NO.:
-----------
SIGNATURE GUARANTEE*:
------------------------------------------------------
* PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTEE MEDALLION PROGRAM (OR OTHER
SIGNATURE SUBSIDIARY GUARANTOR ACCEPTABLE TO THE TRUSTEE).
A2-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
THE FOLLOWING EXCHANGES OF A PART OF THIS REGULATION S TEMPORARY
GLOBAL NOTE FOR AN INTEREST IN ANOTHER GLOBAL NOTE, OR OF OTHER RESTRICTED
GLOBAL NOTES FOR AN INTEREST IN THIS REGULATION S TEMPORARY GLOBAL NOTE, HAVE
BEEN MADE:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE SIGNATURE OF
DECREASE IN INCREASE IN FOLLOWING SUCH AUTHORIZED OFFICER
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR) OF TRUSTEE OR
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) NOTE CUSTODIAN
- ---------------- ------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-12
<PAGE>
FORM OF CERTIFICATE OF TRANSFER
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
[REGISTRAR ADDRESS BLOCK]
RE: 11 1/2 % SENIOR SUBORDINATED NOTES DUE 2009
REFERENCE IS HEREBY MADE TO THE INDENTURE, DATED AS OF MAY 28, 1999
(THE "INDENTURE"), BETWEEN J.L. FRENCH AUTOMOTIVE CASTINGS, INC., AS COMPANY
(THE "COMPANY"), AND U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE.
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE INDENTURE.
__________________ , (THE "TRANSFEROR") OWNS AND PROPOSES TO TRANSFER
THE NOTE[S] OR INTEREST IN SUCH NOTE[S] SPECIFIED IN ANNEX A HERETO, IN THE
PRINCIPAL AMOUNT OF $___________ IN SUCH NOTE[S] OR INTERESTS (THE "TRANSFER"),
TO _________________________ (THE "TRANSFEREE"), AS FURTHER SPECIFIED IN
ANNEX A HERETO. IN CONNECTION WITH THE TRANSFER, THE TRANSFEROR HEREBY CERTIFIES
THAT:
[CHECK ALL THAT APPLY]
1. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.
THE TRANSFER IS BEING EFFECTED PURSUANT TO AND IN ACCORDANCE WITH RULE 144A
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, THE TRANSFEROR HEREBY FURTHER CERTIFIES THAT THE
BENEFICIAL INTEREST OR DEFINITIVE NOTE IS BEING TRANSFERRED TO A PERSON THAT
THE TRANSFEROR REASONABLY BELIEVED AND BELIEVES IS PURCHASING THE BENEFICIAL
INTEREST OR DEFINITIVE NOTE FOR ITS OWN ACCOUNT, OR FOR ONE OR MORE ACCOUNTS
WITH RESPECT TO WHICH SUCH PERSON EXERCISES SOLE INVESTMENT DISCRETION, AND
SUCH PERSON AND EACH SUCH ACCOUNT IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN
THE MEANING OF RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A AND SUCH TRANSFER IS IN COMPLIANCE WITH ANY APPLICABLE BLUE SKY
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. UPON CONSUMMATION OF THE
PROPOSED TRANSFER IN ACCORDANCE WITH THE TERMS OF THE INDENTURE, THE
TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL BE SUBJECT TO THE
RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT LEGEND PRINTED
ON THE 144A GLOBAL NOTE AND/OR THE DEFINITIVE NOTE AND IN THE INDENTURE AND
THE SECURITIES ACT.
2. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL
NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. THE TRANSFER IS BEING
EFFECTED PURSUANT TO AND IN ACCORDANCE WITH RULE 903 OR RULE 904 UNDER THE
SECURITIES ACT AND, ACCORDINGLY, THE TRANSFEROR HEREBY FURTHER CERTIFIES THAT
(I) THE TRANSFER IS NOT BEING MADE TO A PERSON INTHE UNITED STATES AND (X) AT
THE TIME THE BUY ORDER WAS ORIGINATED, THE TRANSFEREE WAS OUTSIDE THE UNITED
STATES OR SUCH TRANSFEROR AND ANY PERSON ACTING ON ITS BEHALF REASONABLY
BELIEVED AND BELIEVES THAT THE TRANSFEREE WAS OUTSIDE THE UNITED STATES OR
(Y)
B-1
<PAGE>
THE TRANSACTION WAS EXECUTED IN, ON OR THROUGH THE FACILITIES OF A DESIGNATED
OFFSHORE SECURITIES MARKET AND NEITHER SUCH TRANSFEROR NOR ANY PERSON ACTING
ON ITS BEHALF KNOWS THAT THE TRANSACTION WAS PREARRANGED WITH A BUYER IN THE
UNITED STATES, (II) NO DIRECTED SELLING EFFORTS HAVE BEEN MADE IN
CONTRAVENTION OF THE REQUIREMENTS OF RULE 903(B) OR RULE 904(B) OF REGULATION
S UNDER THE SECURITIES ACT, (III) THE TRANSACTION IS NOT PART OF A PLAN OR
SCHEME TO EVADE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (IV)
IF THE PROPOSED TRANSFER IS BEING MADE PRIOR TO THE EXPIRATION OF THE
RESTRICTED PERIOD, THE TRANSFER IS NOT BEING MADE TO A U.S. PERSON OR FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON (OTHER THAN AN INITIAL PURCHASER). UPON
CONSUMMATION OF THE PROPOSED TRANSFER IN ACCORDANCE WITH THE TERMS OF THE
INDENTURE, THE TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL BE
SUBJECT TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT
LEGEND PRINTED ON THE REGULATION S GLOBAL NOTE, THE TEMPORARY REGULATION S
GLOBAL NOTE AND/OR THE DEFINITIVE NOTE AND IN THE INDENTURE AND THE
SECURITIES ACT.
3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. THE
TRANSFER IS BEING EFFECTED IN COMPLIANCE WITH THE TRANSFER RESTRICTIONS
APPLICABLE TO BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES AND PURSUANT TO AND IN ACCORDANCE WITH THE SECURITIES ACT
AND ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND ACCORDINGLY THE TRANSFEROR HEREBY FURTHER CERTIFIES THAT (CHECK
ONE):
(A) / / SUCH TRANSFER IS BEING EFFECTED PURSUANT TO AND IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT;
OR
(B) / / SUCH TRANSFER IS BEING EFFECTED TO THE COMPANY OR A
SUBSIDIARY THEREOF;
OR
(C) / / SUCH TRANSFER IS BEING EFFECTED PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE
WITH THE PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT;
OR
(D) / / SUCH TRANSFER IS BEING EFFECTED TO AN INSTITUTIONAL
ACCREDITED INVESTOR AND PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OTHER THAN RULE 144A, RULE 144 OR RULE
904, AND THE TRANSFEROR HEREBY FURTHER CERTIFIES THAT IT HAS NOT ENGAGED IN
ANY GENERAL SOLICITATION WITHIN THE MEANING OF REGULATION D UNDER THE
SECURITIES ACT AND THE TRANSFER COMPLIES WITH THE TRANSFER RESTRICTIONS
APPLICABLE TO BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE OR RESTRICTED
DEFINITIVE NOTES AND THE REQUIREMENTS OF THE EXEMPTION CLAIMED, WHICH
CERTIFICATION IS SUPPORTED BY (1) A CERTIFICATE EXECUTED BY THE TRANSFEREE IN
THE FORM OF EXHIBIT D TO THE INDENTURE AND (2) AN OPINION OF COUNSEL PROVIDED
BY THE TRANSFEROR OR THE TRANSFEREE (A COPY OF WHICH THE TRANSFEROR HAS
ATTACHED TO THIS CERTIFICATION), TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT. UPON CONSUMMATION OF THE PROPOSED
TRANSFER IN ACCORDANCE WITH THE TERMS OF
B-2
<PAGE>
THE INDENTURE, THE TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL BE
SUBJECT TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT
LEGEND PRINTED ON THE IAI GLOBAL NOTE AND/OR THE DEFINITIVE NOTES AND IN THE
INDENTURE AND THE SECURITIES ACT.
4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(A) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (I) THE
TRANSFER IS BEING EFFECTED PURSUANT TO AND IN ACCORDANCE WITH RULE 144 UNDER
THE SECURITIES ACT AND IN COMPLIANCE WITH THE TRANSFER RESTRICTIONS CONTAINED
IN THE INDENTURE AND ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES AND (II)THE RESTRICTIONS ON TRANSFER CONTAINED IN THE
INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE NOT REQUIRED IN ORDER TO
MAINTAIN COMPLIANCE WITH THE SECURITIES ACT. UPON CONSUMMATION OF THE
PROPOSED TRANSFER IN ACCORDANCE WITH THE TERMS OF THE INDENTURE, THE
TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL NO LONGER BE SUBJECT
TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT LEGEND
PRINTED ON THE RESTRICTED GLOBAL NOTES, ON RESTRICTED DEFINITIVE NOTES AND IN
THE INDENTURE.
(B) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (I) THE
TRANSFER IS BEING EFFECTED PURSUANT TO AND IN ACCORDANCE WITH RULE 903 OR
RULE 904 UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH THE TRANSFER
RESTRICTIONS CONTAINED IN THE INDENTURE AND ANY APPLICABLE BLUE SKY
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) THE RESTRICTIONS
ON TRANSFER CONTAINED IN THE INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE
NOT REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES ACT. UPON
CONSUMMATION OF THE PROPOSED TRANSFER IN ACCORDANCE WITH THE TERMS OF THE
INDENTURE, THE TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL NO
LONGER BE SUBJECT TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE
PLACEMENT LEGEND PRINTED ON THE RESTRICTED GLOBAL NOTES, ON RESTRICTED
DEFINITIVE NOTES AND IN THE INDENTURE.
(C) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.
(I) THE TRANSFER IS BEING EFFECTED PURSUANT TO AND IN COMPLIANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OTHER THAN
RULE 144, RULE 903 OR RULE 904 AND IN COMPLIANCE WITH THE TRANSFER
RESTRICTIONS CONTAINED IN THE INDENTURE AND ANY APPLICABLE BLUE SKY
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) THE RESTRICTIONS
ON TRANSFER CONTAINED IN THE INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE
NOT REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES ACT. UPON
CONSUMMATION OF THE PROPOSED TRANSFER IN ACCORDANCE WITH THE TERMS OF THE
INDENTURE, THE TRANSFERRED BENEFICIAL INTEREST OR DEFINITIVE NOTE WILL NOT BE
SUBJECT TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT
LEGEND PRINTED ON THE RESTRICTED GLOBAL NOTES OR RESTRICTED DEFINITIVE NOTES
AND IN THE INDENTURE.
THIS CERTIFICATE AND THE STATEMENTS CONTAINED HEREIN ARE MADE FOR YOUR BENEFIT
AND THE BENEFIT OF THE COMPANY.
[INSERT NAME OF TRANSFEROR]
B-3
<PAGE>
BY:
NAME:
TITLE:
DATED:
---------------
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. THE TRANSFEROR OWNS AND PROPOSES TO TRANSFER THE FOLLOWING:
[CHECK ONE OF (A) OR (B)]
(A) / / A BENEFICIAL INTEREST IN THE:
(I) / / 144A GLOBAL NOTE (CUSIP 466-20Q-AA3), OR
(II) / / REGULATION S GLOBAL NOTE (CUSIP UO9-667-AA1); OR
(III) / / IAI GLOBAL NOTE (CUSIP ); OR
(B) / / A RESTRICTED DEFINITIVE NOTE.
2. AFTER THE TRANSFER THE TRANSFEREE WILL HOLD:
[CHECK ONE]
(A) / / A BENEFICIAL INTEREST IN THE:
(I) / / 144A GLOBAL NOTE (CUSIP 466-20Q-AA3), OR
(II) / / REGULATION S GLOBAL NOTE (CUSIP UO9-667-AA1), OR
(III) / / IAI GLOBAL NOTE (CUSIP ); OR
(IV) / / UNRESTRICTED GLOBAL NOTE (CUSIP ); OR
(B) / / A RESTRICTED DEFINITIVE NOTE; OR
(C) / / AN UNRESTRICTED DEFINITIVE NOTE,
IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
[REGISTRAR ADDRESS BLOCK]
RE: 11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
(CUSIP ____________)
REFERENCE IS HEREBY MADE TO THE INDENTURE, DATED AS OF MAY 28, 1999
(THE "INDENTURE"), BETWEEN J.L. FRENCH AUTOMOTIVE CASTINGS, INC., AS COMPANY
(THE "COMPANY"), AND U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE.
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE INDENTURE.
___________________, (THE "OWNER") OWNS AND PROPOSES TO EXCHANGE THE
NOTE[S] OR INTEREST IN SUCH NOTE[S] SPECIFIED HEREIN, IN THE PRINCIPAL AMOUNT OF
______________ IN SUCH NOTE[S] OR INTERESTS (THE "EXCHANGE"). IN CONNECTION WITH
THE EXCHANGE, THE OWNER HEREBY CERTIFIES THAT:
1.EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(A)/ /CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. IN
CONNECTION WITH THE EXCHANGE OF THE OWNER'S BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE IN AN EQUAL
PRINCIPAL AMOUNT, THE OWNER HEREBY CERTIFIES (I) THE BENEFICIAL INTEREST IS
BEING ACQUIRED FOR THE OWNER'S OWN ACCOUNT WITHOUT TRANSFER, (II) SUCH EXCHANGE
HAS BEEN EFFECTED IN COMPLIANCE WITH THE TRANSFER RESTRICTIONS APPLICABLE TO THE
GLOBAL NOTES AND PURSUANT TO AND IN ACCORDANCE WITH THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), (III) THE
RESTRICTIONS ON TRANSFER CONTAINED IN THE INDENTURE AND THE PRIVATE PLACEMENT
LEGEND ARE NOT REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES ACT
AND (IV) THE BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE IS BEING
ACQUIRED IN COMPLIANCE WITH ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES.
(B)/ /CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. IN CONNECTION WITH THE
EXCHANGE OF THE OWNER'S BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE FOR AN
UNRESTRICTED DEFINITIVE NOTE, THE OWNER HEREBY CERTIFIES (I) THE DEFINITIVE NOTE
IS BEING ACQUIRED FOR THE OWNER'S OWN ACCOUNT WITHOUT TRANSFER, (II) SUCH
EXCHANGE HAS BEEN EFFECTED IN COMPLIANCE WITH THE TRANSFER RESTRICTIONS
APPLICABLE TO THE RESTRICTED GLOBAL NOTES AND PURSUANT TO AND IN ACCORDANCE WITH
THE SECURITIES ACT, (III) THE RESTRICTIONS ON TRANSFER CONTAINED IN THE
INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE NOT REQUIRED IN ORDER TO MAINTAIN
COMPLIANCE WITH THE SECURITIES ACT AND (IV) THE DEFINITIVE NOTE IS BEING
ACQUIRED IN
C-1
<PAGE>
EXHIBIT C
COMPLIANCE WITH ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.
(C)/ /CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. IN CONNECTION WITH THE
OWNER'S EXCHANGE OF A RESTRICTED DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE, THE OWNER HEREBY CERTIFIES (I) THE BENEFICIAL INTEREST
IS BEING ACQUIRED FOR THE OWNER'S OWN ACCOUNT WITHOUT TRANSFER, (II) SUCH
EXCHANGE HAS BEEN EFFECTED IN COMPLIANCE WITH THE TRANSFER RESTRICTIONS
APPLICABLE TO RESTRICTED DEFINITIVE NOTES AND PURSUANT TO AND IN ACCORDANCE WITH
THE SECURITIES ACT, (III) THE RESTRICTIONS ON TRANSFER CONTAINED IN THE
INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE NOT REQUIRED IN ORDER TO MAINTAIN
COMPLIANCE WITH THE SECURITIES ACT AND (IV) THE BENEFICIAL INTEREST IS BEING
ACQUIRED IN COMPLIANCE WITH ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES.
(D)/ /CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. IN CONNECTION WITH THE OWNER'S EXCHANGE OF A
RESTRICTED DEFINITIVE NOTE FOR AN UNRESTRICTED DEFINITIVE NOTE, THE OWNER HEREBY
CERTIFIES (I) THE UNRESTRICTED DEFINITIVE NOTE IS BEING ACQUIRED FOR THE OWNER'S
OWN ACCOUNT WITHOUT TRANSFER, (II) SUCH EXCHANGE HAS BEEN EFFECTED IN COMPLIANCE
WITH THE TRANSFER RESTRICTIONS APPLICABLE TO RESTRICTED DEFINITIVE NOTES AND
PURSUANT TO AND IN ACCORDANCE WITH THE SECURITIES ACT, (III) THE RESTRICTIONS ON
TRANSFER CONTAINED IN THE INDENTURE AND THE PRIVATE PLACEMENT LEGEND ARE NOT
REQUIRED IN ORDER TO MAINTAIN COMPLIANCE WITH THE SECURITIES ACT AND (IV) THE
UNRESTRICTED DEFINITIVE NOTE IS BEING ACQUIRED IN COMPLIANCE WITH ANY APPLICABLE
BLUE SKY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
2.EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(A)/ /CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. IN CONNECTION WITH THE
EXCHANGE OF THE OWNER'S BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE FOR A
RESTRICTED DEFINITIVE NOTE WITH AN EQUAL PRINCIPAL AMOUNT, THE OWNER HEREBY
CERTIFIES THAT THE RESTRICTED DEFINITIVE NOTE IS BEING ACQUIRED FOR THE OWNER'S
OWN ACCOUNT WITHOUT TRANSFER. UPON CONSUMMATION OF THE PROPOSED EXCHANGE IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE, THE RESTRICTED DEFINITIVE NOTE
ISSUED WILL CONTINUE TO BE SUBJECT TO THE RESTRICTIONS ON TRANSFER ENUMERATED IN
THE PRIVATE PLACEMENT LEGEND PRINTED ON THE RESTRICTED DEFINITIVE NOTE AND IN
THE INDENTURE AND THE SECURITIES ACT.
(B)CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. IN CONNECTION WITH THE
EXCHANGE OF THE OWNER'S RESTRICTED DEFINITIVE NOTE FOR A BENEFICIAL INTEREST
IN THE [CHECK ONE] / / 144A GLOBAL NOTE, / / REGULATION S GLOBAL NOTE,
/ / IAI GLOBAL NOTE WITH AN EQUAL PRINCIPAL AMOUNT, THE OWNER HEREBY CERTIFIES
(I) THE BENEFICIAL INTEREST IS BEING ACQUIRED FOR THE OWNER'S OWN ACCOUNT
WITHOUT TRANSFER AND (II) SUCH EXCHANGE HAS BEEN EFFECTED IN COMPLIANCE WITH
THE TRANSFER RESTRICTIONS APPLICABLE TO THE RESTRICTED GLOBAL NOTES AND
PURSUANT TO AND IN ACCORDANCE WITH THE SECURITIES ACT, AND IN COMPLIANCE WITH
ANY APPLICABLE BLUE SKY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
UPON CONSUMMATION OF THE PROPOSED EXCHANGE IN ACCORDANCE WITH THE TERMS OF
THE INDENTURE, THE BENEFICIAL INTEREST ISSUED WILL BE SUBJECT TO THE
RESTRICTIONS ON TRANSFER ENUMERATED IN THE PRIVATE PLACEMENT.
C-2
<PAGE>
EXHIBIT C
LEGEND PRINTED ON THE RELEVANT RESTRICTED GLOBAL NOTE AND IN THE INDENTURE AND
THE SECURITIES ACT.
C-3
<PAGE>
THIS CERTIFICATE AND THE STATEMENTS CONTAINED HEREIN ARE MADE FOR YOUR BENEFIT
AND THE BENEFIT OF THE COMPANY.
[INSERT NAME OF TRANSFEROR]
BY:
NAME:
TITLE:
DATED:
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
[REGISTRAR ADDRESS BLOCK]
RE: 11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
REFERENCE IS HEREBY MADE TO THE INDENTURE, DATED AS OF MAY 28 (THE
"INDENTURE"), BETWEEN J.L. FRENCH AUTOMOTIVE CASTINGS, INC., AS COMPANY (THE
"COMPANY"), AND U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE. CAPITALIZED
TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE
INDENTURE.
IN CONNECTION WITH OUR PROPOSED PURCHASE OF $______________ AGGREGATE
PRINCIPAL AMOUNT OF:
(A) / / A BENEFICIAL INTEREST IN A GLOBAL NOTE, OR
(B) / / A DEFINITIVE NOTE,
WE CONFIRM THAT:
1. WE UNDERSTAND THAT ANY SUBSEQUENT TRANSFER OF THE NOTES OR ANY
INTEREST THEREIN IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN
THE INDENTURE AND THE UNDERSIGNED AGREES TO BE BOUND BY, AND NOT TO RESELL,
PLEDGE OR OTHERWISE TRANSFER THE NOTES OR ANY INTEREST THEREIN EXCEPT IN
COMPLIANCE WITH, SUCH RESTRICTIONS AND CONDITIONS AND THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
2. WE UNDERSTAND THAT THE OFFER AND SALE OF THE NOTES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, AND THAT THE NOTES AND ANY INTEREST THEREIN
MAY NOT BE OFFERED OR SOLD EXCEPT AS PERMITTED IN THE FOLLOWING SENTENCE. WE
AGREE, ON OUR OWN BEHALF AND ON BEHALF OF ANY ACCOUNTS FOR WHICH WE ARE ACTING
AS HEREINAFTER STATED, THAT IF WE SHOULD SELL THE NOTES OR ANY INTEREST THEREIN,
WE WILL DO SO ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) IN
ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT TO A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED THEREIN), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED BELOW) THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO YOU AND TO THE COMPANY A SIGNED LETTER
SUBSTANTIALLY IN THE FORM OF THIS LETTER AND AN OPINION OF COUNSEL IN FORM
REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
PROVISIONS OF RULE 144(K) UNDER THE SECURITIES ACT OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND WE FURTHER AGREE
TO PROVIDE TO ANY PERSON PURCHASING THE DEFINITIVE NOTE OR BENEFICIAL INTEREST
IN A GLOBAL NOTE FROM US IN A TRANSACTION MEETING THE REQUIREMENTS OF CLAUSES
(A) THROUGH (E) OF THIS PARAGRAPH A NOTICE ADVISING SUCH PURCHASER THAT RESALES
THEREOF ARE RESTRICTED AS STATED HEREIN.
D-1
<PAGE>
EXHIBIT D
3. WE UNDERSTAND THAT, ON ANY PROPOSED RESALE OF THE NOTES OR
BENEFICIAL INTEREST THEREIN, WE WILL BE REQUIRED TO FURNISH TO YOU AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS AND OTHER INFORMATION AS YOU AND THE
COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT THE PROPOSED SALE COMPLIES WITH
THE FOREGOING RESTRICTIONS. WE FURTHER UNDERSTAND THAT THE NOTES PURCHASED BY US
WILL BEAR A LEGEND TO THE FOREGOING EFFECT.
4. WE ARE AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) AND HAVE
SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS AS TO BE CAPABLE
OF EVALUATING THE MERITS AND RISKS OF OUR INVESTMENT IN THE NOTES, AND WE AND
ANY ACCOUNTS FOR WHICH WE ARE ACTING ARE EACH ABLE TO BEAR THE ECONOMIC RISK OF
OUR OR ITS INVESTMENT.
5. WE ARE ACQUIRING THE NOTES OR BENEFICIAL INTEREST THEREIN
PURCHASED BY US FOR OUR OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS (EACH OF WHICH
IS AN INSTITUTIONAL "ACCREDITED INVESTOR") AS TO EACH OF WHICH WE EXERCISE SOLE
INVESTMENT DISCRETION.
YOU AND THE COMPANY ARE ENTITLED TO RELY UPON THIS LETTER AND ARE
IRREVOCABLY AUTHORIZED TO PRODUCE THIS LETTER OR A COPY HEREOF TO ANY INTERESTED
PARTY IN ANY ADMINISTRATIVE OR LEGAL PROCEEDINGS OR OFFICIAL INQUIRY WITH
RESPECT TO THE MATTERS COVERED HEREBY.
[INSERT NAME OF ACCREDITED INVESTOR]
BY:
NAME:
TITLE:
DATED:
D-2
<PAGE>
EXHIBIT E
[FORM OF NOTATION OF GUARANTY]
FOR VALUE RECEIVED, EACH OF THE UNDERSIGNED, AS A SUBSIDIARY GUARANTOR
(WHICH TERM INCLUDES ANY SUCCESSOR PERSON UNDER THE INDENTURE) HAS, JOINTLY AND
SEVERALLY, UNCONDITIONALLY GUARANTEED, TO THE EXTENT SET FORTH IN THE INDENTURE
DATED AS OF MAY 28, 1999 (THE "INDENTURE") AMONG J.L. FRENCH AUTOMOTIVE
CASTINGS, INC., THE UNDERSIGNED THERETO AND U.S. BANK TRUST NATIONAL
ASSOCIATION, AS TRUSTEE (THE "TRUSTEE") AND SUBJECT TO THE PROVISIONS IN THE
INDENTURE, (A) THE DUE AND PUNCTUAL PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF
ANY, AND INTEREST ON THE NOTES (AS DEFINED IN THE INDENTURE), WHETHER AT
MATURITY, BY ACCELERATION, REDEMPTION OR OTHERWISE, THE DUE AND PUNCTUAL PAYMENT
OF INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, AND, TO THE EXTENT PERMITTED BY
LAW, INTEREST, AND THE DUE AND PUNCTUAL PERFORMANCE OF ALL OTHER OBLIGATIONS OF
THE COMPANY TO THE HOLDERS OR THE TRUSTEE, ALL IN ACCORDANCE WITH THE TERMS OF
THE INDENTURE AND (B) IN CASE OF ANY EXTENSION OF TIME OF PAYMENT OR RENEWAL OF
ANY NOTES OR ANY OF SUCH OTHER OBLIGATIONS, THAT THE SAME WILL BE PROMPTLY PAID
IN FULL WHEN DUE OR PERFORMED IN ACCORDANCE WITH THE TERMS OF THE EXTENSION OR
RENEWAL, WHETHER AT STATED MATURITY, BY ACCELERATION OR OTHERWISE. THE
OBLIGATIONS OF THE SUBSIDIARY GUARANTORS TO THE HOLDERS OF NOTES AND TO THE
TRUSTEE PURSUANT TO THE SUBSIDIARY GUARANTY AND THE INDENTURE ARE EXPRESSLY SET
FORTH IN ARTICLE 11 OF THE INDENTURE AND REFERENCE IS HEREBY MADE TO THE
INDENTURE FOR THE PRECISE TERMS OF THE SUBSIDIARY GUARANTY. EACH HOLDER OF A
NOTE, BY ACCEPTING THE SAME (A) AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS,
(B) AUTHORIZES AND DIRECTS THE TRUSTEE, ON BEHALF OF SUCH HOLDER, TO TAKE SUCH
ACTION AS MAY BE NECESSARY OR APPROPRIATE TO EFFECTUATE THE SUBORDINATION AS
PROVIDED IN THE INDENTURE AND (C) APPOINTS THE TRUSTEE ATTORNEY-IN-FACT OF SUCH
HOLDER FOR SUCH PURPOSE; PROVIDED, HOWEVER, THAT THE INDEBTEDNESS EVIDENCED BY
THIS SUBSIDIARY GUARANTY SHALL CEASE TO BE SO SUBORDINATED AND SUBJECT IN RIGHT
OF PAYMENT UPON ANY DEFEASANCE OF THIS NOTE IN ACCORDANCE WITH THE PROVISIONS OF
THE INDENTURE.
FRENCH HOLDINGS, INC.
BY:
-------------------
NAME:
TITLE:
ALLOTECH INTERNATIONAL,
INC.
BY:
-------------------
NAME:
TITLE:
J.L.FRENCH CORPORATION
BY:
-------------------
NAME:
TITLE:
E-1
<PAGE>
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]
SUPPLEMENTAL INDENTURE (THIS "SUPPLEMENTAL INDENTURE"), DATED AS OF
_________________, AMONG _________________ (THE "GUARANTEEING SUBSIDIARY"), A
SUBSIDIARY OF J.L. FRENCH AUTOMOTIVE CASTINGS, INC. (OR ITS PERMITTED
SUCCESSOR), A DELAWARE CORPORATION (THE "COMPANY"), THE COMPANY, THE OTHER
SUBSIDIARY GUARANTORS (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) AND
U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE UNDER THE INDENTURE REFERRED
TO BELOW (THE "TRUSTEE").
W I T N E S S E T H
WHEREAS, THE COMPANY HAS HERETOFORE EXECUTED AND DELIVERED TO THE
TRUSTEE AN INDENTURE (THE "INDENTURE"), DATED AS OF MAY 28, 1999 PROVIDING
FOR THE ISSUANCE OF THE COMPANY'S 11 1/2% SENIOR SUBORDINATEd NOTES DUE 2009
(THE "NOTES");
WHEREAS, THE INDENTURE PROVIDES THAT UNDER CERTAIN CIRCUMSTANCES THE
GUARANTEEING SUBSIDIARY SHALL EXECUTE AND DELIVER TO THE TRUSTEE A
SUPPLEMENTAL INDENTURE PURSUANT TO WHICH THE GUARANTEEING SUBSIDIARY SHALL
UNCONDITIONALLY GUARANTEE ALL OF THE COMPANY'S OBLIGATIONS UNDER THE NOTES
AND THE INDENTURE ON THE TERMS AND CONDITIONS SET FORTH HEREIN (THE "NOTE
GUARANTY"); AND
WHEREAS, PURSUANT TO SECTION 9.01 OF THE INDENTURE, THE TRUSTEE IS
AUTHORIZED TO EXECUTE AND DELIVER THIS SUPPLEMENTAL INDENTURE.
NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE
GUARANTEEING SUBSIDIARY AND THE TRUSTEE MUTUALLY COVENANT AND AGREE FOR THE
EQUAL AND RATABLE BENEFIT OF THE HOLDERS OF THE NOTES AS FOLLOWS:
1.CAPITALIZED TERMS. CAPITALIZED TERMS USED HEREIN WITHOUT
DEFINITION SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE INDENTURE.
2.AGREEMENT TO GUARANTEE. THE GUARANTEEING SUBSIDIARY HEREBY
AGREES AS FOLLOWS:
(A)ALONG WITH ALL SUBSIDIARY GUARANTORS NAMED IN THE
INDENTURE, TO JOINTLY AND SEVERALLY GUARANTY TO EACH HOLDER OF A
NOTE AUTHENTICATED AND DELIVERED BY THE TRUSTEE AND TO THE TRUSTEE
AND ITS SUCCESSORS AND ASSIGNS, THE NOTES OR THE OBLIGATIONS OF THE
COMPANY HEREUNDER OR THEREUNDER, THAT:
(I)THE PRINCIPAL OF AND INTEREST ON THE NOTES WILL BE
PROMPTLY PAID IN FULL WHEN DUE, WHETHER AT MATURITY, BY
ACCELERATION, REDEMPTION OR OTHERWISE, AND INTEREST ON THE
OVERDUE PRINCIPAL OF AND INTEREST ON THE NOTES, IF ANY, IF
LAWFUL, AND ALL OTHER OBLIGATIONS OF THE COMPANY TO THE
HOLDERS OR THE TRUSTEE HEREUNDER OR THEREUNDER WILL BE
PROMPTLY PAID IN FULL OR PERFORMED, ALL IN ACCORDANCE WITH
THE TERMS HEREOF AND THEREOF; AND
(II)IN CASE OF ANY EXTENSION OF TIME OF PAYMENT OR
RENEWAL OF ANY NOTES
F-1
<PAGE>
OR ANY OF SUCH OTHER OBLIGATIONS, THAT SAME WILL BE PROMPTLY PAID
IN FULL WHEN DUE OR PERFORMED IN ACCORDANCE WITH THE TERMS OF THE
EXTENSION OR RENEWAL, WHETHER AT STATED MATURITY, BY ACCELERATION
OR OTHERWISE. FAILING PAYMENT WHEN DUE OF ANY AMOUNT SO GUARANTEED
OR ANY PERFORMANCE SO GUARANTEED FOR WHATEVER REASON, THE
SUBSIDIARY GUARANTORS SHALL BE JOINTLY AND SEVERALLY OBLIGATED TO
PAY THE SAME IMMEDIATELY.
(B)THE OBLIGATIONS HEREUNDER SHALL BE UNCONDITIONAL,
IRRESPECTIVE OF THE VALIDITY, REGULARITY OR ENFORCEABILITY OF THE
NOTES OR THE INDENTURE, THE ABSENCE OF ANY ACTION TO ENFORCE THE
SAME, ANY WAIVER OR CONSENT BY ANY HOLDER OF THE NOTES WITH
RESPECT TO ANY PROVISIONS HEREOF OR THEREOF, THE RECOVERY OF ANY
JUDGMENT AGAINST THE COMPANY, ANY ACTION TO ENFORCE THE SAME OR
ANY OTHER CIRCUMSTANCE WHICH MIGHT OTHERWISE CONSTITUTE A LEGAL OR
EQUITABLE DISCHARGE OR DEFENSE OF A GUARANTOR.
(C)THE FOLLOWING IS HEREBY WAIVED: DILIGENCE PRESENTMENT,
DEMAND OF PAYMENT, FILING OF CLAIMS WITH A COURT IN THE EVENT OF
INSOLVENCY OR BANKRUPTCY OF THE COMPANY, ANY RIGHT TO REQUIRE
PROCEEDING FIRST AGAINST THE COMPANY, PROTEST, NOTICE AND ALL
DEMANDS WHATSOEVER.
(D)THIS NOTE GUARANTY SHALL NOT BE DISCHARGED EXCEPT BY
COMPLETE PERFORMANCE OF THE OBLIGATIONS CONTAINED IN THE NOTES
AND THE INDENTURE, AND THE GUARANTEEING SUBSIDIARY ACCEPTS ALL
OBLIGATIONS OF A SUBSIDIARY GUARANTOR UNDER THE INDENTURE.
(E)IF ANY HOLDER OR THE TRUSTEE IS REQUIRED BY ANY COURT OR
OTHERWISE TO RETURN TO THE COMPANY, THE SUBSIDIARY GUARANTORS, OR
ANY CUSTODIAN, TRUSTEE, LIQUIDATOR OR OTHER SIMILAR OFFICIAL
ACTING IN RELATION TO EITHER THE COMPANY OR THE SUBSIDIARY
GUARANTORS, ANY AMOUNT PAID BY EITHER TO THE TRUSTEE OR SUCH
HOLDER, THIS NOTE GUARANTY, TO THE EXTENT THERETOFORE DISCHARGED,
SHALL BE REINSTATED IN FULL FORCE AND EFFECT.
(F)THE GUARANTEEING SUBSIDIARY SHALL NOT BE ENTITLED TO ANY
RIGHT OF SUBROGATION IN RELATION TO THE HOLDERS IN RESPECT OF ANY
OBLIGATIONS GUARANTEED HEREBY UNTIL PAYMENT IN FULL OF ALL
OBLIGATIONS GUARANTEED HEREBY.
(G)AS BETWEEN THE SUBSIDIARY GUARANTORS, ON THE ONE HAND,
AND THE HOLDERS AND THE TRUSTEE, ON THE OTHER HAND, (X) THE
MATURITY OF THE OBLIGATIONS GUARANTEED HEREBY MAY BE ACCELERATED
AS PROVIDED IN ARTICLE 6 OF THE INDENTURE FOR THE PURPOSES OF
THIS NOTE GUARANTY, NOTWITHSTANDING ANY STAY, INJUNCTION OR OTHER
PROHIBITION PREVENTING SUCH ACCELERATION IN RESPECT OF THE
OBLIGATIONS GUARANTEED HEREBY, AND (Y) IN THE EVENT OF ANY
DECLARATION OF ACCELERATION OF SUCH OBLIGATIONS AS PROVIDED IN
ARTICLE 6 OF THE INDENTURE, SUCH OBLIGATIONS (WHETHER OR NOT DUE
AND PAYABLE) SHALL FORTHWITH BECOME DUE AND PAYABLE BY THE
SUBSIDIARY GUARANTORS FOR THE PURPOSE OF THIS NOTE GUARANTY.
(H)THE SUBSIDIARY GUARANTORS SHALL HAVE THE RIGHT TO SEEK
CONTRIBUTION FROM ANY NON-PAYING SUBSIDIARY GUARANTOR SO LONG AS
THE EXERCISE OF SUCH RIGHT DOES NOT IMPAIR THE RIGHTS OF THE
HOLDERS
F-2
<PAGE>
(I)PURSUANT TO SECTION 11.03 OF THE INDENTURE, AFTER
GIVING EFFECT TO ANY MAXIMUM AMOUNT AND ANY OTHER CONTINGENT AND
FIXED LIABILITIES THAT ARE RELEVANT UNDER ANY APPLICABLE
BANKRUPTCY OR FRAUDULENT CONVEYANCE LAWS, AND AFTER GIVING EFFECT
TO ANY COLLECTIONS FROM, RIGHTS TO RECEIVE CONTRIBUTION FROM OR
PAYMENTS MADE BY OR ON BEHALF OF ANY OTHER SUBSIDIARY GUARANTOR IN
RESPECT OF THE OBLIGATIONS OF SUCH OTHER SUBSIDIARY GUARANTOR
UNDER ARTICLE 11 OF THE INDENTURE, THIS NEW NOTE GUARANTY SHALL BE
LIMITED TO THE MAXIMUM AMOUNT PERMISSIBLE SUCH THAT THE
OBLIGATIONS OF SUCH SUBSIDIARY GUARANTOR UNDER THIS NOTE GUARANTY
WILL NOT CONSTITUTE A FRAUDULENT TRANSFER OR CONVEYANCE.
(J)THE OBLIGATIONS OF EACH SUBSIDIARY GUARANTOR
HEREUNDER AND UNDER ARTICLE 11 OF THE INDENTURE SHALL BE JUNIOR
AND SUBORDINATED IN RIGHT OF PAYMENT TO ANY SENIOR DEBT OF SUCH
SUBSIDIARY GUARANTOR AS PROVIDED IN SECTION 11.02 OF THE INDENTURE.
3.EXECUTION AND DELIVERY. EACH GUARANTEEING SUBSIDIARY AGREES
THAT THE NOTE GUARANTIES SHALL REMAIN IN FULL FORCE AND EFFECT
NOTWITHSTANDING ANY FAILURE TO ENDORSE ON EACH NOTE A NOTATION OF SUCH
NOTE GUARANTY.
4.GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(A)THE GUARANTEEING SUBSIDIARY MAY NOT CONSOLIDATE WITH OR
MERGE WITH OR INTO (WHETHER OR NOT SUCH SUBSIDIARY GUARANTOR IS
THE SURVIVING PERSON) ANOTHER CORPORATION, PERSON OR ENTITY
WHETHER OR NOT AFFILIATED WITH SUCH SUBSIDIARY GUARANTOR UNLESS:
(I)SUBJECT TO SECTIONS 11.04 AND 11.05 OF THE
INDENTURE, THE PERSON FORMED BY OR SURVIVING ANY SUCH
CONSOLIDATION OR MERGER (IF OTHER THAN A SUBSIDIARY
GUARANTOR OR THE COMPANY) UNCONDITIONALLY ASSUMES ALL THE
OBLIGATIONS OF SUCH SUBSIDIARY GUARANTOR, PURSUANT TO A
SUPPLEMENTAL INDENTURE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE TRUSTEE, UNDER THE NOTES, THE INDENTURE
AND THE NOTE GUARANTY ON THE TERMS SET FORTH HEREIN OR
THEREIN; AND
(II)IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION,
NO DEFAULT OR EVENT OF DEFAULT EXISTS.
(B)IN CASE OF ANY SUCH CONSOLIDATION, MERGER, SALE OR
CONVEYANCE AND UPON THE ASSUMPTION BY THE SUCCESSOR CORPORATION,
BY SUPPLEMENTAL INDENTURE, EXECUTED AND DELIVERED TO THE TRUSTEE
AND SATISFACTORY IN FORM TO THE TRUSTEE, OF THE NOTE GUARANTY
ENDORSED UPON THE NOTES AND THE DUE AND PUNCTUAL PERFORMANCE OF
ALL OF THE COVENANTS AND CONDITIONS OF THE INDENTURE TO BE
PERFORMED BY THE SUBSIDIARY GUARANTOR, SUCH SUCCESSOR CORPORATION
SHALL SUCCEED TO AND BE SUBSTITUTED FOR THE SUBSIDIARY GUARANTOR
WITH THE SAME EFFECT AS IF IT HAD BEEN NAMED HEREIN AS A
GUARANTOR. SUCH SUCCESSOR CORPORATION THEREUPON MAY CAUSE TO BE
SIGNED ANY OR ALL OF THE NOTE GUARANTIES TO BE ENDORSED UPON ALL
OF THE NOTES ISSUABLE HEREUNDER WHICH THERETOFORE SHALL NOT HAVE
BEEN SIGNED BY THE COMPANY AND DELIVERED TO THE TRUSTEE. ALL THE
NOTE GUARANTIES SO ISSUED SHALL IN ALL RESPECTS HAVE THE SAME
LEGAL RANK AND BENEFIT UNDER THE INDENTURE AS THE NOTE GUARANTIES
THERETOFORE AND THEREAFTER ISSUED IN ACCORDANCE WITH THE TERMS OF
THE INDENTURE AS THOUGH ALL OF SUCH NOTE GUARANTIES HAD BEEN
ISSUED AT THE DATE OF THE EXECUTION HEREOF.
F-3
<PAGE>
(C)EXCEPT AS SET FORTH IN ARTICLES 4 AND 5 OF THE INDENTURE,
AND NOTWITHSTANDING CLAUSES (A) AND (B) ABOVE, NOTHING CONTAINED
IN THE INDENTURE OR IN ANY OF THE NOTES SHALL PREVENT ANY
CONSOLIDATION OR MERGER OF A SUBSIDIARY GUARANTOR WITH OR INTO
THE COMPANY OR ANOTHER SUBSIDIARY GUARANTOR, OR SHALL PREVENT ANY
SALE OR CONVEYANCE OF THE PROPERTY OF A SUBSIDIARY GUARANTOR AS
AN ENTIRETY OR SUBSTANTIALLY AS AN ENTIRETY TO THE COMPANY OR
ANOTHER SUBSIDIARY GUARANTOR.
5.RELEASES.
(A)IN THE EVENT OF A SALE OR OTHER DISPOSITION OF ALL OF THE
ASSETS OF ANY SUBSIDIARY GUARANTOR, BY WAY OF MERGER,
CONSOLIDATION OR OTHERWISE, OR A SALE OR OTHER DISPOSITION OF ALL
TO THE CAPITAL STOCK OF ANY SUBSIDIARY GUARANTOR, IN EACH CASE TO
A PERSON THAT IS NOT (EITHER BEFORE OR AFTER GIVING EFFECT TO
SUCH TRANSACTION) A RESTRICTED SUBSIDIARY OF THE COMPANY, THEN
SUCH SUBSIDIARY GUARANTOR (IN THE EVENT OF A SALE OR OTHER
DISPOSITION, BY WAY OF MERGER, CONSOLIDATION OR OTHERWISE, OF ALL
OF THE CAPITAL STOCK OF SUCH SUBSIDIARY GUARANTOR) OR THE
CORPORATION ACQUIRING THE PROPERTY (IN THE EVENT OF A SALE OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
SUCH SUBSIDIARY GUARANTOR) WILL BE RELEASED AND RELIEVED OF ANY
OBLIGATIONS UNDER ITS NOTE GUARANTY; PROVIDED THAT THE NET
PROCEEDS OF SUCH SALE OR OTHER DISPOSITION ARE APPLIED IN
ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE INDENTURE,
INCLUDING WITHOUT LIMITATION SECTION 4.10 OF THE INDENTURE. UPON
DELIVERY BY THE COMPANY TO THE TRUSTEE OF AN OFFICERS'
CERTIFICATE AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH
SALE OR OTHER DISPOSITION WAS MADE BY THE COMPANY IN ACCORDANCE
WITH THE PROVISIONS OF THE INDENTURE, INCLUDING WITHOUT
LIMITATION SECTION 4.10 OF THE INDENTURE, THE TRUSTEE SHALL
EXECUTE ANY DOCUMENTS REASONABLY REQUIRED IN ORDER TO EVIDENCE
THE RELEASE OF ANY SUBSIDIARY GUARANTOR FROM ITS OBLIGATIONS
UNDER ITS NOTE GUARANTY.
(B)ANY SUBSIDIARY GUARANTOR NOT RELEASED FROM ITS
OBLIGATIONS UNDER ITS NOTE GUARANTY SHALL REMAIN LIABLE FOR THE
FULL AMOUNT OF PRINCIPAL OF AND INTEREST ON THE NOTES AND FOR THE
OTHER OBLIGATIONS OF ANY SUBSIDIARY GUARANTOR UNDER THE INDENTURE
AS PROVIDED IN ARTICLE 11 OF THE INDENTURE.
6.NO RECOURSE AGAINST OTHERS. NO PAST, PRESENT OR FUTURE DIRECTOR,
OFFICER, EMPLOYEE, INCORPORATOR, STOCKHOLDER OR AGENT OF THE
GUARANTEEING SUBSIDIARY, AS SUCH, SHALL HAVE ANY LIABILITY FOR ANY
OBLIGATIONS OF THE COMPANY OR ANY GUARANTEEING SUBSIDIARY UNDER THE
NOTES, ANY NOTE, GUARANTIES, THE INDENTURE OR THIS SUPPLEMENTAL
INDENTURE OR FOR ANY CLAIM BASED ON, IN RESPECT OF, OR BY REASON OF,
SUCH OBLIGATIONS OR THEIR CREATION. EACH OF THE NOTES BY ACCEPTING A
NOTE WAIVES AND RELEASES ALL SUCH LIABILITY. THE WAIVER AND RELEASE ARE
PART OF THE CONSIDERATION FOR ISSUANCE OF THE NOTES. SUCH WAIVER MAY NOT
BE EFFECTIVE TO WAIVE LIABILITIES UNDER THE FEDERAL SECURITIES LAWS AND
IT IS THE VIEW OF THE SEC THAT SUCH A WAIVER IS AGAINST PUBLIC POLICY.
7.NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
8.COUNTERPARTS THE PARTIES MAY SIGN ANY NUMBER OF COPIES OF THIS
SUPPLEMENTAL
F-4
<PAGE>
INDENTURE. EACH SIGNED COPY SHALL BE AN ORIGINAL, BUT ALL OF THEM TOGETHER
REPRESENT THE SAME AGREEMENT.
9.EFFECT OF HEADINGS. THE SECTION HEADINGS HEREIN ARE FOR
CONVENIENCE ONLY AND SHALL NOT AFFECT THE CONSTRUCTION HEREOF.
10.THE TRUSTEE. THE TRUSTEE SHALL NOT BE RESPONSIBLE IN ANY MANNER
WHATSOEVER FOR OR IN RESPECT OF THE VALIDITY OR SUFFICIENCY OF THIS
SUPPLEMENTAL INDENTURE OR FOR OR IN RESPECT OF THE RECITALS CONTAINED
HEREIN, ALL OF WHICH RECITALS ARE MADE SOLELY BY THE GUARANTEEING
SUBSIDIARY AND THE COMPANY.
F-5
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS SUPPLEMENTAL
INDENTURE TO BE DULY EXECUTED AND ATTESTED, ALL AS OF THE DATE FIRST ABOVE
WRITTEN.
DATED: _______________, ____
[GUARANTEEING SUBSIDIARY]
BY:
--------------------
NAME:
TITLE:
J.L. FRENCH AUTOMOTIVE
CASTINGS, INC.
BY:
--------------------
NAME:
TITLE:
FRENCH HOLDINGS, INC.
BY:
---------------------
NAME:
TITLE:
ALLOTECH INTERNATIONAL,
INC.
BY:
---------------------
NAME:
TITLE:
J.L. FRENCH CORPORATION
BY:
---------------------
NAME:
TITLE:
U.S. BANK TRUST NATIONAL
ASSOCIATION, AS TRUSTEE
BY:
---------------------
AUTHORIZED SIGNATORY
F-6
<PAGE>
SCHEDULE I
SCHEDULE OF SUBSIDIARY GUARANTORS
THE FOLLOWING SCHEDULE LISTS EACH SUBSIDIARY GUARANTOR UNDER THE
INDENTURE AS OF THE ISSUE DATE:
FRENCH HOLDINGS, INC.
ALLOTECH INTERNATIONAL, INC.
J.L. FRENCH CORPORATION
<PAGE>
F-1
<PAGE>
SERIES A AND SERIES B
$175,000,000
11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 28, 1999
BY AND AMONG
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
FRENCH HOLDINGS, INC.
J. L. FRENCH CORPORATION
ALLOTECH INTERNATIONAL, INC.
AND
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of May 28, 1999, by and among J. L. French Automotive Castings,
Inc., a Delaware corporation (the "COMPANY"), French Holdings, Inc., J. L.
French Corporation and Allotech International, Inc. (each a "GUARANTOR" and,
collectively, the "GUARANTORS"), Banc of America Securities LLC and Chase
Securities Inc. (each an "INITIAL PURCHASER" and, collectively, the "INITIAL
PURCHASERS"), each of whom has agreed to purchase the Company's 11 1/2% Series A
Senior Subordinated Notes due 2009 (the "SERIES A NOTES") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated May
25, 1999 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
5 of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Indenture, dated May 28,
1999, by and among the Company, the Guarantors and U.S. Bank Trust National
Association, as Trustee (the "INDENTURE"), relating to the Series A Notes and
the Series B Notes (as defined below).
The parties hereby agree as follows:
SECTION
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 under the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York on which banks are authorized or ordered to close.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the
Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange
<PAGE>
Offer Registration Statement relating to the Series B Notes to be issued in the
Exchange Offer, (b) the maintenance of such Exchange Offer Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the period required pursuant to Section 3(b) hereof and
(c) the delivery by the Company to the Registrar under the Indenture of Series B
Notes in the same aggregate principal amount as the aggregate principal amount
of Series A Notes tendered by Holders thereof pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act and pursuant to Regulation S
under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
<PAGE>
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 11 1/2% Series B Senior Subordinated
Notes due 2009 to be issued pursuant to the Indenture: (i) in the Exchange
Offer or (ii) as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each (A) Series A Note, until the
earliest to occur of (i) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes without restrictions), or
(iii) the date on which such Series A Note is eligible for distribution without
restriction to the public pursuant to Rule 144 under the Act and each (B) Series
B Note held by a Broker-Dealer until the date on which such Series B Note is
disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 1.0.1 HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such person owns Transfer Restricted Securities.
SECTION 1.0.2 REGISTERED EXCHANGE OFFER
A. Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 90 days after the
Closing Date (such 90th day being the "FILING DEADLINE"), (ii) use their
respective reasonable best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 180 days after the Closing Date (such 180th day being the
"EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all
<PAGE>
necessary filings, if any, in connection with the registration and qualification
of the Series B Notes to be made under the Blue Sky laws of such jurisdictions
as are necessary to permit Consummation of the Exchange Offer and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting (i) registration of the Series B Notes to be offered in exchange
for the Series A Notes that are Transfer Restricted Securities and (ii) resales
of Series B Notes by Broker-Dealers that tendered into the Exchange Offer Series
A Notes that such Broker-Dealer acquired for its own account as a result of
market making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) as contemplated by
Section 3(c) below.
B. The Company and the Guarantors shall use their respective
reasonable best efforts to cause the Exchange Offer Registration Statement to be
effective continuously, and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no
event shall such period be less than 20 Business Days. The Company and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Series B Notes shall be
included in the Exchange Offer Registration Statement. The Company and the
Guarantors shall use their respective best efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter (such 30th day being the "CONSUMMATION DEADLINE").
C. The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and the
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree, in the
event any one of them receives notice from a Broker-Dealer within ten Business
Days of the consummation of the Exchange Offer that such Broker-Dealer holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities, to use their respective
reasonable best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented,
<PAGE>
amended and current as required by and subject to the provisions of Section 6(a)
and (c) hereof and in conformity with the requirements of this Agreement, the
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of 180 days from the Consummation Deadline or such
shorter period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold pursuant thereto. The Company and
the Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than two Business Days after such request, at any time during such period.
SECTION
1. SHELF REGISTRATION
A. SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company in writing within 20 Business
Days following the Consummation Deadline that (A) such Holder was prohibited by
law or Commission policy from participating in the Exchange Offer or (B) such
Holder may not resell the Series B Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:
(x) use their respective reasonable best efforts to cause to
be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause
(a)(i) above and (ii) the date on which the Company receives
the notice specified in clause (a)(ii) above (such earlier
date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment
to the Exchange Offer Registration Statement (the "SHELF
REGISTRATION STATEMENT")), relating to all Transfer Restricted
Securities (provided, however, that nothing in this Section
4(a)(x) shall require the filing of the Shelf Registration
Statement prior to the Filing Deadline for the Exchange Offer
Registration Statement, and
(y) shall use their respective reasonable best efforts to
cause such Shelf Registration Statement to become effective on
or prior to 90 days after the Filing Deadline for the Shelf
Registration Statement (such 90th day the "EFFECTIVENESS
DEADLINE").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
PROVIDED that, in such
<PAGE>
event, the Company shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period
as will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
1. PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading. The Company
shall not be obligated to supplement such Shelf Registration Statement after it
has been declared effective by the Commission more than one time per quarterly
period to reflect additional Holders.
SECTION
1. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within five Business
Days by a post-effective amendment to such Registration Statement that cures
such failure and that is itself declared effective immediately (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby (subject to Section
4(b)) liquidated damages in an amount equal to $0.05 per week per $1,000 in
principal amount of Transfer Restricted Securities held by such Holder for each
week or portion thereof that the Registration Default continues for
<PAGE>
the first 90-day period immediately following the occurrence of such
Registration Default. The amount of the liquidated damages shall increase by an
additional $0.05 per week per $1,000 in principal amount of the Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $0.50 per week per $1,000 in principal amount of Transfer Restricted
Securities; PROVIDED that the Company and the Guarantors shall in no event be
required to pay liquidated damages for more than one Registration Default at any
given time. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Exchange Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement), in the case of (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay liquidated damages with respect to securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
SECTION 1.0.1 REGISTRATION PROCEDURES
1. EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective reasonable
best efforts to effect such exchange and to permit the resale of Series B Notes
by Broker-Dealers that tendered Series A Notes in the Exchange Offer that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by applicable
federal law, the Company and the Guarantors hereby agree to seek a no-action
letter or other favorable decision from the Commission allowing the Company and
the Guarantors to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company and the Guarantors hereby agree to pursue the issuance
of such a decision to the Commission staff level. In connection with the
foregoing, the Company and the Guarantors hereby agree to take all such other
reasonable actions as may be requested by the
<PAGE>
Commission or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases, if
any, upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be favorable)
by the Commission staff.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker-Dealer) shall furnish, upon the request
of the Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the Series B
Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B
Notes in its ordinary course of business. As a condition to its participation in
the Exchange Offer each Holder using the Exchange Offer to participate in a
distribution of the Series B Notes shall acknowledge and agree that, if the
resales are of Series B Notes obtained by such Holder in exchange for Series A
Notes acquired directly from the Company or an Affiliate thereof, it (1) could
not, under Commission policy as in effect on the date of this Agreement, rely on
the position of the Commission enunciated in MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May
13, 1988), as interpreted in the Commission's letter to SHEARMAN & STERLING
dated July 2, 1993, and similar no-action letters (including, if applicable, any
no-action letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement containing
the selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Company and the
Guarantors are registering the Exchange Offer in reliance on the position of the
Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) as interpreted in
the Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that neither the Company nor any Guarantor has
entered into any arrangement or understanding with any person to distribute the
Series B Notes to be received in the Exchange Offer and that, to the Company's
and each Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes in its ordinary course of
business and has no arrangement or understanding with any person to participate
in the distribution of the Series B Notes received in the Exchange Offer and (C)
any other undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above, if applicable.
<PAGE>
2. SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and
use their respective reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Guarantors will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
3. GENERAL PROVISIONS. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would cause any
such Registration Statement or the Prospectus contained therein (A) to contain
an untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company and the Guarantors shall file
promptly an appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use their respective reasonable
best efforts to cause such amendment to be declared effective as soon as
practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of all
securities covered by such Registration
<PAGE>
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) with respect to a Shelf Registration Statement, advise
the selling Holders promptly and, if requested by such persons, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any applicable
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement
under the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (D) of the existence of any fact or the happening of any event that
makes any statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions to or
changes in the Registration Statement in order to make the statements therein
not misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company and the Guarantors shall use their respective
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare
a supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(v) furnish to the Initial Purchasers and with respect to a
Shelf Registration Statement, each selling Holder named in any Registration
Statement or Prospectus in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to the
review and comment of such Holders in connection with such sale, if any, for a
period of at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents incorporated
by reference) to which the selling Holders of the Transfer Restricted Securities
<PAGE>
covered by such Registration Statement in connection with such sale, if any,
shall reasonably object within five Business Days after the receipt thereof. A
selling Holder shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission or fails
to comply with the applicable requirements of the Act;
(vi) with respect to a Shelf Registration Statement, make
available at reasonable times during normal business hours for inspection by the
selling Holders participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such selling Holders, all
financial and other records, pertinent corporate documents of the Company and
cause the Company's officers, directors and employees to supply all information
reasonably requested under the circumstances by any such selling Holder,
attorney or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness;
(vii) with respect to a Shelf Registration Statement, if
requested by any selling Holders in connection with such sale, if any, promptly
include in any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling Holders
may reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is notified of
the matters to be included in such Prospectus supplement or post-effective
amendment;
(viii) with respect to a Shelf Registration Statement, furnish
to each selling Holder in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including, upon request, all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) with respect to a Shelf Registration Statement, deliver
to each selling Holder without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Holder reasonably may request; the Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any amendment
or supplement thereto by each selling Holder in connection with the offering and
the sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(x) upon the request of any Holders who collectively hold an
aggregate principal amount of Series A Notes in excess of 10% of the aggregate
principal amount of the outstanding Transfer Restricted Securities (the
"Requesting Holders"), enter into an underwriting agreement on one occasion and
make such representations and warranties and take all such other actions as are
reasonably customary in underwritten offerings in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by the Requesting
<PAGE>
Holders in connection with any sale or resale pursuant to any applicable
Registration Statement. In such connection, the Company and the Guarantors
shall:
(A) upon request of the Requesting Holders, furnish (or in the
case of paragraphs (2) and (3) below, use their reasonable
best efforts to cause to be furnished) to each Requesting
Holder, upon Consummation of the Exchange Offer or upon the
effectiveness of the Shelf Registration Statement, as the case
may be:
(1) a certificate, dated such date, signed on behalf
of the Company and each Guarantor by (x) the
President or any Vice President and (y) a principal
financial or accounting officer of the Company and
such Guarantor, confirming, as of the date thereof,
the matters set forth in Sections 1(k), 5(b) and 5(e)
of the Purchase Agreement and such other similar
matters as such Holders may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for
the Company and the Guarantors covering matters similar to
those set forth in the opinion delivered pursuant to
paragraph (c) of Section 5 of the Purchase Agreement and
such matters as such Holder may reasonably request, and in
any event including a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of the Company and the Guarantors,
representatives of the independent public accountants for
the Company and the Guarantors and have considered the
matters required to be stated therein and the statements
contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate
upon the statements of officers and other representatives of
the Company and the Guarantors and without independent check
or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation of
the Exchange Offer, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in
such Registration Statement as of its date and, in the case
of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has
<PAGE>
not independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules
and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in
the customary form and covering matters of the type
customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming in all
material respects the matters set forth in the comfort
letters delivered pursuant to Section 5(a) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence
compliance with the matters covered in clause (A) above and with
any customary conditions contained in any agreement entered into
by the Company and the Guarantors pursuant to this clause (x);
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in connection
with the registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
PROVIDED, HOWEVER, that neither the Company nor any Guarantor shall be required
to register or qualify as a foreign corporation where it is not so qualified at
such time or to take any action that would subject it to the service of process
in suits or to taxation, other than as to matters and transactions relating to
the Registration Statement, in any jurisdiction where it is not so subject at
such time;
(xii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiii) use their respective best efforts to cause the
disposition of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xi) above;
(xiv) provide CUSIP numbers, as applicable, for all Transfer
Restricted Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the Trustee
under the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with The Depository Trust
<PAGE>
Company;
(xv) otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement (as such
term is defined in paragraph (c) of Rule 158 under the Act);
(xvi) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xvii) provide promptly to each Holder, upon request, each
document filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
4. RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION
1. REGISTRATION EXPENSES
<PAGE>
1. All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Series B Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) (A) all fees
and disbursements of counsel for the Company and the Guarantors and (B) one
counsel for the Holders of Transfer Restricted Securities in connection with an
underwritten offering; (v) all application and filing fees in connection with
listing the Series B Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company and the
Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any person, including special
experts, retained by the Company or the Guarantors.
2. In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel selected by the Initial Purchasers,
who shall be Latham & Watkins or Gardner, Carton & Douglas or, if the Initial
Purchasers are not Holders of Transfer Restricted Securities such other firm as
shall be chosen by the Requesting Holders for whose benefit such Registration
Statement is being prepared.
SECTION
1. INDEMNIFICATION
1. The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments (including without limitation, any legal
or other expenses incurred in connection with investigating or defending any
matter, including any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Company to any Holder for use in connection with the resale of
Series B Notes or registered
<PAGE>
Series A Notes, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by such Holder.
2. Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, or the Guarantors to the same extent as the foregoing indemnity
from the Company and the Guarantors set forth in Section (a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
3. In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all reasonable fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any failure to promptly notify the indemnifying party will not
relieve the indemnifying party from any liability it may have to an indemnified
party under this Section 8, except to the extent such failure prejudices the
indemnifying party. Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party within a reasonable period of
time after notification by the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general
<PAGE>
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
indemnified parties and all such fees and expenses shall be reimbursed as they
are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company and Guarantors, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than 20 Business Days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request or given its good faith objection to such indemnification
request. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
4. To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holders, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holders, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Guarantor, on the one hand, or by the Holders, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
judgments referred to above shall be deemed to include, subject to the
limitations set forth in Section 8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the
<PAGE>
Holders were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 8, no Holder, its directors, its officers or any
person, if any, who controls such Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder, its directors, officers or any person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION
1. RULE 144A and RULE 144
The Company and each Guarantor agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of
the Exchange Act, to make available within a reasonable period of time, upon
written request of any Holder, to such Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make
all filings required thereby in a timely manner in order to permit resales of
such Transfer Restricted Securities pursuant to Rule 144.
SECTION 1.0.1 MISCELLANEOUS
1. REMEDIES. The Company and the Guarantors acknowledge and agree that
any failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and the Guarantors' obligations under Sections 3 and 4 hereof. The
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
<PAGE>
2. NO INCONSISTENT AGREEMENTS. Neither the Company nor any Guarantor
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantors' securities under any agreement in effect on the date hereof.
3. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
4. THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights.
5. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
J. L. French Automotive Castings, Inc.
4508 IDS Center
Minneapolis, MN 55402
<PAGE>
Telecopier No.: (612) 332-2012
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Telecopier No.: (312) 861-2200
Attention: Carter W. Emerson, P.C.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to the Initial
Purchasers in the form attached hereto as Exhibit A.
A. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders; PROVIDED, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
person shall be entitled to receive the benefits hereof.
B. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
C. HEADINGS. The headings in this Agreement are for convenience of
reference only
<PAGE>
and shall not limit or otherwise affect the meaning hereof.
D. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
E. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
F. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
J. L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: ___________________________________
/s/ Charles M. Waldon
President and Chief Executive Officer
FRENCH HOLDINGS,
By: _____________________________________
/s/ Charles M. Waldon
President and Chief Executive Officer
J. L. FRENCH CORPORATION
By: _____________________________________
/s/ Charles M. Waldon
President and Chief Executive Officer
ALLOTECH INTERNATIONAL, INC.
By: _____________________________________
/s/ Charles M. Waldon
President and Chief Executive Officer
<PAGE>
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
By: BANC OF AMERICA SECURITIES LLC
By:/s/ Anthony W. Maniscalco
Name: Anthony W. Maniscalco
Title: Vice President
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Banc of America Securities LLC
Bank of America Corporate Center
100 North Tryon Street
NC1-007-07-01
Charlotte, North Carolina 28255
Attention: Keith DeLeon (Legal Department)
Fax: (704) 386-6453
From: J. L. French Automotive Castings, Inc.
11 1/2% Senior Subordinated Notes due 2009
Date: ___, 1999
For your information only (NO ACTION REQUIRED):
Today, ____________, 1999, we filed [an Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission. We currently expect this registration statement to be declared
effective within _____ business days of the date hereof.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of
April 21, 1999
among
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.,
AS US BORROWER,
AUTOMOTIVE COMPONENTS INVESTMENTS LIMITED,
AS ENGLISH BIDCO,
MORRIS ASHBY LIMITED,
AS ENGLISH BORROWER AND EURO BORROWER,
The Several Lenders
from Time to Time Parties Hereto
BANK OF AMERICA NT & SA,
AS SYNDICATION AGENT
CHASE MANHATTAN INTERNATIONAL LIMITED,
AS ENGLISH AGENT AND EURO AGENT
AND
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
----------------------
----------------------
CHASE SECURITIES INC.
and
NATIONSBANC MONTGOMERY SECURITIES LLC,
AS LEAD ARRANGERS AND JOINT BOOK MANAGERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT 10.1
CREDIT AGREEMENT, dated as of April 21, 1999, among J.L.
FRENCH AUTOMOTIVE CASTINGS, INC., a Delaware corporation (the "US BORROWER"),
AUTOMOTIVE COMPONENTS INVESTMENTS LIMITED, a private limited company
incorporated under the laws of England and Wales ("ENGLISH BIDCO"), MORRIS ASHBY
LIMITED, a private limited company incorporated under the laws of England and
Wales (in its capacity as the borrower of Pounds Sterling hereunder, the
"ENGLISH BORROWER" and in its capacity as the borrower of euro hereunder, the
"EURO BORROWER"), the several banks and other financial institutions from time
to time parties to this agreement (the "LENDERS"), BANK OF AMERICA NT & SA, as
syndication agent for the Lenders (in such capacity, the "SYNDICATION AGENT"),
CHASE MANHATTAN INTERNATIONAL LIMITED, as administrative agent for the English
Lenders (in such capacity, the "ENGLISH AGENT") and as administrative agent for
the Euro Lenders (in such capacity, the "EURO AGENT") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("CHASE"), as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, pursuant to the Recapitalization Agreement, dated as
of March 29, 1999, among the US Borrower, the stockholders parties thereto and
JLF Acquisition LLC (together with any of its assignees in accordance with the
Recapitalization Agreement, the "BUYER"), the Buyer has agreed to acquire (the
"ACQUISITION") at least 80% of the outstanding common stock of the US Borrower;
WHEREAS, the Borrowers have requested that the Lenders provide
the credit facilities described herein to respective Borrowers in order to (i)
finance the Acquisition, (ii) refinance substantially all existing indebtedness
of the US Borrower and its Subsidiaries (the "REFINANCING"; and together with
the Acquisition and the other transactions in connection therewith, the
"TRANSACTIONS"), (iii) pay certain premiums, fees and expenses related to the
Transactions, and (iv) finance the working capital needs and other general
corporate purposes (including Permitted Acquisitions) of the Borrowers and their
respective Subsidiaries on the terms herein; and
WHEREAS, the Lenders are willing to provide such credit
facilities to the Borrowers, but only upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
<PAGE>
"ACCOMMODATIONS": the collective reference to the Letters of
Credit (including, without limitation, the Bank Guarantee Letters of
Credit) and bankers acceptances issued or created for the accounts of
the Specified Borrowers by the Specified Agents in accordance with the
terms hereof pursuant to the Accommodation Commitments.
"ACCOMMODATION COMMITMENT": (a) as to any Specified Issuing
Lender, its obligation to issue or accept Accommodations for the
account of the Specified Borrower as identified in the Administrative
Schedule and (b) as to any Specified Participating Lender, its
unconditional obligation to participate in Accommodations of such
Specified Borrower.
"ACCOMMODATION OBLIGATION": in respect of any Specified
Borrower, the obligation of such Specified Borrower to reimburse the
Specified Issuing Lender in accordance with the terms of this Agreement
and any related Letter of Credit Application for any payment made or
honored by such Specified Issuing Lender under any Accommodation.
"ACCOMMODATION OUTSTANDINGS": as to any Specified Borrower, at
any date, the sum of (a) the aggregate amount then available to be
drawn or the amount issued under all outstanding Specified
Accommodations and (b) the aggregate amount of drawings or payments
under Specified Accommodations which have not then been reimbursed
pursuant to subsection 3.5.
"ACCOMMODATION PARTICIPATING INTEREST": with respect to any
Accommodation, (a) in the case of the Specified Issuing Lender with
respect thereto, its interest in such Accommodation after giving effect
to the granting of participating interests therein, if any, pursuant
hereto and (b) in the case of each Specified Participating Lender, its
undivided participating interest in such Accommodation relating
thereto.
"ADMINISTRATIVE AGENT": as defined in the preamble hereto.
"ADMINISTRATIVE SCHEDULE": the Administrative Schedule
attached hereto, as amended, supplemented or otherwise modified from
time to time.
"AFFECTED EUROCURRENCY LOANS": as defined in subsection
2.9(h).
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or
otherwise.
"AGENTS": the collective reference to the Administrative
Agent, the Collateral Agent, the Syndication Agent, the English Agent
and the Euro Agent.
"AGREEMENT": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
<PAGE>
"APPLICABLE MARGIN": for each Type of Loan and for purposes of
subsection 2.3, the rate per annum set forth under the relevant column
heading below:
BASE RATE LOANS
<TABLE>
<CAPTION>
TYPES APPLICABLE MARGIN
----- -----------------
<S> <C>
US Tranche A Term Loans 1.50%
US Tranche B Term Loans 1.75%
English Term Loans and US Sterling Term Loans 1.50%
Revolving Credit Loans 1.50%
(including Swing Line Loans)
</TABLE>
<TABLE>
<CAPTION>
EUROCURRENCY LOANS AND B/AS
TYPE APPLICABLE MARGIN
----- -----------------
<S> <C>
US Tranche A Term Loans 2.50%
US Tranche B Term Loans 2.75%
English Term Loans and US Sterling Term Loans 2.50%
Revolving Credit Loans 2.50%
(including Letters of Credit and
Accommodations)
</TABLE>
<TABLE>
<CAPTION>
COMMITMENT FEE APPLICABLE MARGIN
-------------- -----------------
<S> <C>
0.50%
</TABLE>
; PROVIDED that (i) in the event that the Leverage Ratio, as most
recently determined in accordance with subsection 8.1(b), is as set
forth in the relevant column heading below for any quarterly period and
so long as no Event of Default has occurred and is then continuing, any
such Applicable Margin with respect to US Tranche A Term Loans, English
Term Loans, US Sterling Term Loans and Revolving Credit Loans
(including Swing Line Loans) and Commitment Fee shall be as provided in
the relevant column heading below but in no event shall any such
reductions be effective prior to September 30, 1999:
<PAGE>
<TABLE>
<CAPTION>
Applicable
Margin For Applicable Applicable
Eurocurrency Margin for Margin for
LEVERAGE RATIO Loans or B/As Base Rate Loans Commitment Fee
- -------------- ------------- --------------- ---------------
<S> <C> <C> <C>
greater than 4.50 to 1.00 2.50% 1.50% 0.50%
less than or equal to 4.50 to 2.25% 1.25% 0.50%
1.00, but greater than 4.00 to
1.00
less than or equal to 4.00 to 2.00% 1.00% 0.50%
1.00, but greater than 3.50 to
1.00
less than or equal to 3.50 to 1.75% 0.75% 0.375%
1.00, but greater than 3.00 to
1.00
less than or equal to 3.00 to 1.50% 0.50% 0.30%
1.00
</TABLE>
if and in the event the financial statements required to be delivered
pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related
compliance certificate required to be delivered pursuant to subsection
7.2(b), are delivered on or prior to the date when due (or, in the case
of the fourth quarterly period of each fiscal year of the US Borrower,
if financial statements which satisfy the requirements of, and are
delivered within the time period specified in, subsection 7.l(b) and a
related compliance certificate which satisfies the requirements of, and
is delivered within the time period specified in, subsection 7.2(b),
with respect to any such quarterly period are so delivered within such
time periods), then the Applicable Margin in respect of the Revolving
Credit Loans, the English Term Loans, the US Sterling Term Loans and
the US Tranche A Term Loans and the Commitment Fee during the period
from the date upon which such financial statements were delivered shall
be the Applicable Margin as set forth in the relevant column heading
above; PROVIDED, HOWEVER, that in the event that the financial
statements delivered pursuant to subsection 7.1(a) or 7.1(b), as
applicable, and the related compliance certificate required to be
delivered pursuant to subsection 7.2(b), are not delivered when due,
then:
(a) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered (without giving
effect to any applicable cure period) and the Applicable
Margin increases from that previously in effect as a result of
the delivery of such financial statements, then the Applicable
Margin in respect of Revolving Credit Loans (including in the
case of Base Rate Loans, Swing Line Loans), the English Term
Loans, the US Sterling Term Loans and US Tranche A Term Loans
and the Commitment Fee during the period from the date upon
which such financial statements were required to be delivered
(without
<PAGE>
giving effect to any applicable cure period) until the date
upon which they actually are delivered shall, except as
otherwise provided in clause (c) below, be the Applicable
Margin as so increased;
(b) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered and the Applicable
Margin decreases from that previously in effect as a result of
the delivery of such financial statements, then such decrease
in the Applicable Margin shall not become applicable until the
date upon which the financial statements and certificate
actually are delivered; and
(c) if such financial statements and certificate are
not delivered prior to the expiration of the applicable cure
period, then, effective upon such expiration, for the period
from the date upon which such financial statements and
certificate were required to be delivered (after the
expiration of the applicable cure period) until the date upon
which they actually are delivered, the Applicable Margin in
respect of Revolving Credit Loans (including in the case of
Base Rate Loans, Swing Line Loans), English Term Loans, the US
Sterling Term Loans and US Tranche A Term Loans shall be
2.50%, in the case of Eurocurrency Loans, and 1.50%, in the
case of Base Rate Loans, and 0.50%, in the case of Commitment
Fees payable under subsection 2.3 (it being understood that
the foregoing shall not limit the rights of each of the Agents
and the Lenders set forth in Section 9).
"ASSET SALE": any sale, transfer or other disposition
(including any sale and leaseback of assets) by the US Borrower or any
of its Subsidiaries of any property of the US Borrower or any such
Subsidiary (including property subject to any Lien under any Loan
Document), other than as permitted pursuant to (w) subsections 8.6(a)
through (c), (x) subsection 8.6(d) to the extent Net Cash Proceeds from
such sale or transfer does not exceed the Equivalent Amount of
$2,500,000 in any fiscal year and (y) subsections 8.6(e) through (j).
"ASSET SALE PREPAYMENT PERCENTAGE": 100%; PROVIDED, that in
the event that the Leverage Ratio as most recently determined in
accordance with subsection 8.1(b) is less than or equal to 3.50 to
1.00, then the Asset Sale Prepayment Percentage shall be 0%.
"ASSIGNEE": as defined in subsection 12.6(c).
"ASSIGNMENT AND ACCEPTANCE": an assignment and acceptance
entered into by a Lender and an assignee, substantially in the form of
Exhibit D.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Specified
Revolving Credit Lender, with respect to any Specified Borrower at any
time, an amount equal to the excess, if any, of (a) the amount of such
Specified Revolving Credit Lender's Specified Revolving Credit
Commitment OVER (b) the sum of (i) the aggregate unpaid principal
amount at such time of all Specified Revolving Credit Loans made by
such Specified Revolving Credit Lender to such Specified Borrower, (ii)
an amount equal to such Specified Revolving Credit Lender's Specified
Revolving Credit Commitment Percentage of the aggregate unpaid
principal amount at such
<PAGE>
time of all Specified Swing Line Loans of the Specified Borrower (which
for purposes of subsection 2.3 shall be deemed to be zero), and (iii)
an amount equal to such Specified Revolving Credit Lender's Specified
Revolving Credit Commitment Percentage of the Specified Accommodation
Outstandings of the Specified Lender at such time; collectively, as to
all the Specified Revolving Credit Lenders, the "AVAILABLE REVOLVING
CREDIT COMMITMENTS."
"BANK GUARANTEE LETTERS OF CREDIT": Standby Letters of Credit
issued by the English Issuing Lender in favor of the Guarantor in
respect of the Guaranteed Loan Notes in an aggregate amount not to
exceed (pound)17,823,330.80 and maturing January 13, 2003.
"BASE CAPEX AMOUNT": as defined in subsection 8.8(a).
"BASE RATE": as to any Specified Borrower in any Specified
currency, the interest rate identified as the Base Rate therefor in the
Administrative Schedule.
"BASE RATE LOAN": any Loan bearing interest by reference to
the applicable Base Rate.
"BASE RATE PAYMENT DATE": as to any Specified Borrower, the
Specified Interest Payment Date for the Specified Base Rate Loans set
forth in the Administrative Schedule.
"BENEFITTED SPECIFIED LENDER": as defined in subsection 12.7.
"BOARD": the Board of Governors of the Federal Reserve System
(or any successor thereto).
"BORROWER PERCENTAGE": with respect to any Specified Borrower,
at any date of determination, the percentage of the Term Loans at such
date constituted by the Specified Term Loans of such Specified Borrower
at such time.
"BORROWERS": the collective reference to the US Borrower, the
Foreign Subsidiary Borrowers and, with respect to the Bank Guarantee
Letters of Credit only, English Bidco.
"BORROWING DATE": any Business Day specified in a notice
pursuant to subsection 2.2, 2.6 or 2.12 as a date on which the
Specified Borrower requests the Specified Lenders to make Specified
Loans hereunder.
"BUSINESS DAY": as to any Borrower, a day other than a
Saturday, Sunday or other day on which commercial banks in the city in
which the principal office of the Specified Agent is located are
authorized or required by law to close, PROVIDED that when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also
exclude any day on which commercial banks are not open for dealing in
deposits in the London interbank market in the applicable currency,
PROVIDED further, that when such term is used for the purpose of
determining the date on which the Eurocurrency Base Rate is determined
under this Agreement for any Loan denominated in euro for any Interest
<PAGE>
Period therefor and for purposes of determining the first and last day
of any Interest Period, references in this Agreement to Business Days
shall be deemed to be references to Target Operating Days, PROVIDED
further, that with respect to any day on which any payments are to be
made under this Agreement in a particular currency, the term Business
Day shall also exclude a day on which commercial banks in the principal
financial center of the country of the applicable currency are located
are authorized or required by law to close.
"BUYER": as defined in the recitals hereto.
"CAPEX ROLLOVER": as defined in subsection 8.8(a).
"CAPITAL EXPENDITURES": expenditures (including, without
limitation, obligations created under Financing Leases and purchase
money Indebtedness in the year in which created but excluding payments
made thereon) of the US Borrower and its Subsidiaries in respect of the
purchase or other acquisition of fixed or capital assets (excluding any
such asset acquired (w) in connection with ordinary (in the reasonable
judgment of the US Borrower consistent with past practice) replacement
and maintenance programs properly expensed in accordance with GAAP, (x)
with the proceeds of any casualty insurance or condemnation award, (y)
with the cash proceeds of any asset sale made pursuant to subsections
8.6(c), applied within twelve (12) months from receipt of such proceeds
and (z) in any Permitted Acquisition).
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"CASH EQUIVALENTS": as to any currency, the investments set
forth on the Administrative Schedule for such currency.
"CHANGE OF CONTROL": either (a) J2R Partners III and Onex
Corporation (acting directly or through any Wholly Owned Subsidiary of
Onex Corporation which owns Capital Stock of the US Borrower) shall
cease to have the power, directly or indirectly, to vote or direct the
voting of securities having 51% of the voting power for the election of
directors of the US Borrower, PROVIDED that after the consummation of
an Initial Public Offering, the occurrence of the foregoing event shall
not be deemed a Change of Control if at any time and for any reason
whatever, (y) no "Person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), excluding J2R Partners III and Onex Corporation (acting
directly or through any Wholly Owned Subsidiary of Onex
Corporation which owns Capital Stock of the US Borrower), shall become
the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under
such Act), directly or indirectly, of more than the lesser of (A) 30%
of the shares outstanding or (B) the percentage of the then outstanding
voting stock of the US Borrower owned by J2R Partners III and Onex
Corporation (acting directly or through any Wholly Owned Subsidiary of
Onex Corporation which owns Capital Stock of the US Borrower), and (z)
the board of the US Borrower shall consist of a majority of
<PAGE>
Continuing Directors, or (b) a Change of Control as defined in any
Subordinated Debt Document.
"CHASE": as defined in the preamble hereto.
"CLOSING DATE": the date of the satisfaction or waiver of all
conditions precedent in subsection 6.1.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
"COLLATERAL AGENT": Chase in its capacity as collateral agent
for the Secured Parties under the Loan Documents and the Sharing
Agreement.
"COMMITMENTS": the collective reference to the Revolving
Credit Commitments, the Swing Line Commitments and the Accommodation
Commitments; individually, a "COMMITMENT."
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the US Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the US Borrower and which is treated as a single employer
under Section 414 of the Code.
"CONSOLIDATED CURRENT ASSETS": at any date, the amount which,
in conformity with GAAP, would be set forth opposite the caption "Total
Current Assets" (or any like caption) on a consolidated balance sheet
of the US Borrower and its Subsidiaries at such date, except that there
shall be excluded therefrom cash and Cash Equivalents and equipment and
other fixed assets held for sale and deferred income taxes to the
extent otherwise included therein.
"CONSOLIDATED CURRENT LIABILITIES": at any date, the amount
which, in conformity with GAAP, would be set forth opposite the caption
"Total Current Liabilities" (or any like caption) on a consolidated
balance sheet of the US Borrower and its Subsidiaries at such date,
except that there shall be excluded therefrom the current portion of
(a) all Loans, (b) all long-term Indebtedness for borrowed money
(including Financing Leases) and (c) deferred income taxes, in each
case, to the extent included therein.
"CONSOLIDATED EBITDA": for any period, with respect to any
Person, Consolidated Net Income of such Person for such period (A)
PLUS, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum
of (i) total income and franchise tax expense (including, without
duplication, foreign withholding taxes and any state single business,
unitary or similar taxes), (ii) interest expense, amortization or
writeoff of debt discount and debt issuance costs and commissions and
discounts and other fees and charges associated with Indebtedness
(including customary payments made to obtain Interest Rate Agreements),
(iii) depreciation and amortization expense, (iv) amortization of
intangibles (including, but not limited to, goodwill and organization
costs), (v) other noncash charges (including any
<PAGE>
writeoffs of purchased technology and stock-related compensation
expense), (vi) any extraordinary and unusual losses (including losses
on sales of assets other than inventory sold in the ordinary course of
business) other than any loss from any discontinued operation, and
(vii) non-recurring fees and expenses in connection with the
Transactions in an aggregate amount not to exceed $25,000,000, and (B)
MINUS, without duplication, (i) any extraordinary and unusual gains
(including gains on the sales of assets, other than inventory sold in
the ordinary course of business) other than any income from
discontinued operations and (ii) noncash gains included in Consolidated
Net Income.
"CONSOLIDATED NET INCOME": for any period, with respect to any
Person, the amount which, in conformity with GAAP, would be set forth
opposite the caption "Net Income/(Loss)" (or any like caption) on a
consolidated statement of operations of such Person and its
Subsidiaries for such period.
"CONSOLIDATED SENIOR DEBT": at any date, with respect to the
US Borrower, the aggregate principal amount of Indebtedness under this
Agreement.
"CONSOLIDATED TOTAL ASSETS": at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "Total
Assets" (or any like caption) on a consolidated balance sheet of the US
Borrower and its Subsidiaries at such date, except that there shall be
excluded therefrom cash and Cash Equivalents and equipment and other
fixed assets held for sale.
"CONSOLIDATED TOTAL DEBT": without duplication, at any date,
with respect to the US Borrower, the aggregate principal amount of (a)
Indebtedness under this Agreement, (b) Financing Leases, (c) purchase
money Indebtedness (including, without limitation, seller financing),
(d) the Interim Loans, (e) the Exchange Notes, (f) the Senior
Subordinated Notes and (g) any other Indebtedness for borrowed money of
the US Borrower and its Subsidiaries at such date on a consolidated
basis in conformity with GAAP.
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of
Consolidated Current Assets at such date over Consolidated Current
Liabilities at such date.
"CONTINUING DIRECTORS": the directors of the US Borrower on
the Closing Date and each other director, if, in each case, such other
director's election or nomination for election to the board of
directors of the US Borrower was approved by a majority of the then
Continuing Directors or such other director is nominated for election
or is elected to the board of directors with the affirmative vote of
J2R Partners III and Onex Corporation (acting directly or through any
Wholly Owned Subsidiary of Onex Corporation which owns Capital Stock of
the US Borrower).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"CREDIT PARTIES": the collective reference to each of the
Borrowers and each of their respective Subsidiaries which from time to
time is a party to (or, in the case
<PAGE>
of the English Subsidiaries of the US Borrower, is required to become
a party to) any Loan Document.
"CSI": Chase Securities Inc.
"CUSTOMERS": those customers and prospective customers of the
Borrowers and their subsidiaries identified as such from time to time
by the US Borrower to the Administrative Agent in writing and
acknowledged as such by the Administrative Agent.
"DEBT PREPAYMENT PERCENTAGE": 100%.
"DEFAULT": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DENOMINATED CURRENCY": as defined in subsection 12.11.
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"DOMESTIC OBLIGATIONS": the unpaid principal of and interest
on (including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the Loans and all other obligations and liabilities of the US Borrower
to the Secured Parties, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any Notes, the Guarantee and Collateral Agreement, or the
other Loan Documents, or any Interest Rate Agreement entered into with
a Lender or any of its Affiliates and any other document made,
delivered or given in connection therewith or herewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all
reasonable fees and disbursements of counsel to the Secured Parties
that are required to be paid by the US Borrower pursuant to the terms
of this Agreement) or otherwise.
"DOMESTIC SUBSIDIARY": as to any Person, any Subsidiary of
such Person other than a Foreign Subsidiary of such Person.
"ECF PREPAYMENT PERCENTAGE": 50%; PROVIDED, that in the event
that the Leverage Ratio as determined in accordance with subsection
8.1(b) as of the last day of any fiscal year is less than or equal to
3.50 to 1.00, then the ECF Prepayment Percentage for such fiscal year
shall be 0%.
"EMU LEGISLATION": legislative measures of the European Union
for the introduction of, changeover to or operation of the euro in one
or more member states.
<PAGE>
"ENGLISH ACCOMMODATIONS": the collective reference to (a)
Accommodations issued by the English Issuing Lender for the account of
the English Borrower and (b) the Bank Guarantee Letters of Credit.
"ENGLISH AGENT": as defined in the preamble hereto.
"ENGLISH BIDCO": as defined in the preamble hereto.
"ENGLISH BORROWER": as defined in the preamble hereto.
"ENGLISH ISSUING LENDER": Chase, acting through its London
Branch.
"ENGLISH LENDERS": the collective reference to Lenders holding
English Loans or English Revolving Credit Commitments.
"ENGLISH LOANS": any loan made to the English Borrower by any
English Lender pursuant to this Agreement.
"ENGLISH OBLIGATIONS": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the English Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the English Borrower or
English Bidco, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the English Loans and all other
obligations and liabilities of the English Borrower or English Bidco to
the English Issuing Lender, the English Agent, or the English Lenders,
whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any notes thereunder or the
other Specified Loan Documents, any Interest Rate Agreement entered
into with an English Lender or any of its Affiliates, or any
obligations of English Bidco in respect of the Bank Guarantee Letters
of Credit and any other document made, delivered or given in connection
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursements of counsel to the
English Agent or to the English Lenders that are required to be paid by
the English Borrower or the English Bidco pursuant to the terms of this
Agreement) or otherwise.
"ENGLISH REVOLVING CREDIT COMMITMENT": as to any English
Lender, its obligation to make English Revolving Credit Loans to the
English Borrower pursuant to subsection 2.1 and to participate in
English Accommodations in an aggregate Equivalent Amount not to exceed
at any one time outstanding the sum of (x) the amount set forth
opposite such English Lender's name in Schedule 1.1 under the heading
"English Revolving Credit Commitment", as such amount may be reduced
from time to time as provided herein and (y) such English Lender's
English Revolving Credit Commitment Percentage of the Bank Guarantee
Letters of Credit; collectively, as to all the English Lenders, the
"ENGLISH REVOLVING CREDIT COMMITMENTS."
<PAGE>
"ENGLISH REVOLVING CREDIT LENDER": any English Lender having
an English Revolving Credit Commitment or that holds outstanding
English Revolving Credit Loans or Specified Accommodation Participating
Interests hereunder.
"ENGLISH REVOLVING CREDIT LOANS": as to the English Borrower,
any revolving credit loans made to such Borrower by the English
Revolving Credit Lenders pursuant to subsection 2.1(a).
"ENGLISH SWING LINE LENDER": any English Lender having a Swing
Line Commitment or that holds outstanding Swing Line Loans.
"ENGLISH TERM LOANS": as to the English Borrower, any term
loans made to such Borrower by the English Term Loan Lenders pursuant
to subsection 2.5(d).
"ENGLISH TERM LOAN LENDERS": as to the English Borrower, any
Lenders holding outstanding English Term Loans.
"ENVIRONMENTAL LAWS": any applicable foreign, federal, state,
provincial, local, or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, legally binding requirements of
any Governmental Authority or other Requirements of Law (including
common law) regulating, relating to or imposing liability or standards
of conduct concerning protection of human health or the environment, as
now or may at any time hereafter be in effect.
"EQUITY PREPAYMENT PERCENTAGE": 50%; PROVIDED, that in the
event that the Leverage Ratio as most recently determined in accordance
with subsection 8.1(b) is less than or equal to 3.50 to 1.00, then the
Equity Prepayment Percentage shall be 0%.
"EQUIVALENT AMOUNT": at any time of determination, with
respect to any amount in any currency denominated in a different
currency, the amount at which such amount of different currency could
be converted into the determination currency at such time as reasonably
determined by the Specified Agent.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time and the regulations promulgated and
rulings issued thereunder.
"EURO": the single currency of the participating member states
in the Third Stage.
"EURO AGENT": as defined in the preamble hereto.
"EURO BORROWER": as defined in the preamble hereto.
"EURO LENDERS": the collective reference to Lenders holding
Euro Loans or Euro Revolving Credit Commitments.
"EURO LOANS": any loan made to the Euro Borrower by any Euro
Lender pursuant to this Agreement.
<PAGE>
"EURO OBLIGATIONS": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Euro Loans and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Euro Borrower, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding) the Euro Loans and all other obligations and liabilities of
the Euro Borrower to the Euro Issuing Lender, the Euro Agent, or the
Euro Lenders, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement, any notes
thereunder or the other Specified Loan Documents, any Interest Rate
Agreement entered into with a Euro Lender or any of its Affiliates, and
any other document made, delivered or given in connection therewith,
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including, without limitation, all
reasonable fees and disbursements of counsel to the Euro Agent or to
the Euro Lenders that are required to be paid by the Euro Borrower
pursuant to the terms of this Agreement) or otherwise.
"EURO REVOLVING CREDIT COMMITMENT": as to any Euro Lender, its
obligation to make Euro Revolving Credit Loans to the Euro Borrower
pursuant to subsection 2.1 in an aggregate Equivalent Amount not to
exceed at any one time outstanding the amount set forth opposite such
Euro Lender's name in Schedule 1.1 under the heading "Euro Revolving
Credit Commitment", as such amount may be reduced from time to time as
provided herein; collectively, as to all the Euro Lenders, the "EURO
REVOLVING CREDIT COMMITMENTS."
"EURO REVOLVING CREDIT LENDER": any Euro Lender having a Euro
Revolving Credit Commitment or that holds outstanding Euro Revolving
Credit Loans or Specified Accommodation Participating Interests
hereunder.
"EURO REVOLVING CREDIT LOANS": as to the Euro Borrower, any
revolving credit loans made to such Borrower by the Euro Revolving
Credit Lenders pursuant to subsection 2.1(a).
"EURO UNIT": the currency unit of the euro as defined in the
EMU Legislation.
"EUROCURRENCY BASE RATE": as to any Specified Borrower in any
Specified currency, the interest rate identified as the Eurocurrency
Base Rate therefor in the Administrative Schedule.
"EUROCURRENCY RATE": with respect to each day during each
Interest Period pertaining to a Eurocurrency Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
EUROCURRENCY BASE RATE
1.00 - Eurocurrency Reserve Requirements
<PAGE>
"EUROCURRENCY LOAN": any Loan bearing interest by reference to
the applicable Eurocurrency Rate.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to
any Eurocurrency Loan, the aggregate (without duplication) of the
maximum rates (expressed as a decimal fraction) of reserve requirements
in effect on such day (including, without limitation, basic,
supplemental, marginal, and emergency reserves) under any regulations
of any applicable Governmental Authority for the Specified Lender
dealing with reserve requirements prescribed for eurocurrency funding
(in the case of the US Borrower, currently referred to as "EUROCURRENCY
LIABILITIES" in Regulation D of the Board).
"EVENT OF DEFAULT": any of the events specified in Section 9,
PROVIDED that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of the US Borrower,
the excess of (a) the sum, without duplication, of (i) Consolidated
EBITDA for such fiscal year, (ii) the amount of returned surplus assets
(net of cash costs associated therewith, including income, excise and
other taxes payable thereon) of any Plan during such fiscal year to the
extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year (other than any return of
amounts representing overestimates of amounts due under any Plan
(domestic or foreign)), (iii) decreases in Consolidated Working Capital
of the US Borrower and its Subsidiaries for such fiscal year, (iv) cash
dividends, cash interest and other similar cash
payments (other than intercompany items) received by the US Borrower in
respect of investments to the extent not included in Consolidated Net
Income to determine Consolidated EBITDA for such fiscal year and (v)
any purchase price adjustments resulting in a payment to the US
Borrower or any of its Subsidiaries in connection with a Permitted
Acquisition permitted hereunder, over (b) the sum, without duplication,
of (i) the aggregate amount of cash Capital Expenditures (including
with respect to any CapEx Rollover) made by the US Borrower and its
Subsidiaries during such fiscal year and permitted hereunder or
committed in such fiscal year to be made in the subsequent fiscal year,
PROVIDED THAT, the Excess Cash Flow of any subsequent year shall not be
reduced by the amount of such commitments, (ii) any purchase price
adjustments resulting in a payment by the US Borrower or any of its
Subsidiaries in connection with a Permitted Acquisition permitted
hereunder, (iii) the aggregate amount of all reductions of the
Revolving Credit Commitments or payments or prepayments of the Term
Loans during such fiscal year other than pursuant to subsection 2.9(a),
(b) or (c), (iv) the aggregate amount of payments of principal in
respect of any Indebtedness permitted hereunder during such fiscal year
(other than under this Agreement), (v) increases in Consolidated
Working Capital of the US Borrower and its Subsidiaries for such fiscal
year, (vi) cash interest expense of the US Borrower and its
Subsidiaries for such fiscal year, (vii) taxes actually paid in such
fiscal year or to be paid in the subsequent fiscal year on account of
such fiscal year to the extent added to Consolidated Net Income to
determine Consolidated EBITDA for such fiscal year, (viii)
extraordinary cash losses to the extent added to Consolidated Net
Income to determine Consolidated EBITDA for such fiscal year, (ix) the
amount of all
<PAGE>
Investments made in such fiscal year as permitted by clauses (d), (h),
(j), and, to the extent such Investments are financed by cash from
business operations of the US Borrower and its Subsidiaries, (k) of
subsection 8.9 and (x) cash payments made during such fiscal year with
respect to noncurrent liabilities, PROVIDED that (x) increases or
decreases in Consolidated Working Capital resulting from any
acquisition shall be excluded from the calculation of Excess Cash Flow
and (y) net income of any Foreign Subsidiary of the US Borrower which
is not a Credit Party will only be included to the extent distributed
to a Credit Party. Notwithstanding the foregoing, all payments made and
received in connection with the Transactions shall be excluded from the
calculation of Excess Cash Flow.
"EXCHANGE NOTE INDENTURE": any indenture to be entered into
pursuant to Section 2.3 of the Interim Loan Agreement among the US
Borrower, as issuer, certain of its Subsidiaries, as guarantors, and
the trustee named therein, together with all instruments and other
agreements entered into by the US Borrower and its Subsidiaries in
connection therewith, all as entered into in accordance with subsection
8.10(e) and as the same may be amended, supplemented or otherwise
modified in accordance with subsection 8.10.
"EXCHANGE NOTES": the senior subordinated exchange notes of
the US Borrower to be issued in exchange for the Interim Loans pursuant
to Section 2.3 of the Interim Loan Agreement.
"EXPENDITURE USE AMOUNTS": at any date, the amount equal to
the sum of (a) all amounts utilized by Subsidiaries of the US Borrower
to finance Capital Expenditures, other than Capital Expenditures which
are not in excess of the Base CapEx Amount for the relevant fiscal year
and any CapEx Rollover to such fiscal year and (b) all amounts utilized
by the US Borrower and its Subsidiaries to finance investments
permitted pursuant to subsection 8.9(k), except to the extent that the
consideration for all such investments made since the Closing Date does
not exceed the aggregate of the amounts set forth in clauses (A), (B),
(C) and (D) thereof.
"FEE PROPERTIES": the collective reference to the real
properties owned in fee by the US Borrower and its Subsidiaries
described on Part I of Schedule 5.19, including all buildings,
improvements, structures, and fixtures now or subsequently located
thereon.
"FINANCING LEASE": any lease of property, real or personal,
the obligations of the lessee in respect of which are required to be
capitalized on a balance sheet of the lessee in accordance with GAAP.
"FOREIGN SUBSIDIARY": as to any Person, any Subsidiary of such
Person which is organized under the laws of any jurisdiction outside of
the United States of America.
"FOREIGN SUBSIDIARY ACCOMMODATIONS": any Accommodation issued
for the account of any Foreign Subsidiary Borrower by the Specified
Issuing Lender.
<PAGE>
"FOREIGN SUBSIDIARY AGENTS": the collective reference to the
English Agent and the Euro Agent.
"FOREIGN SUBSIDIARY BORROWERS": the collective reference to
the English Borrower and the Euro Borrower.
"FOREIGN SUBSIDIARY LENDERS": the collective reference to the
English Lenders and the Euro Lenders.
"FOREIGN SUBSIDIARY OBLIGATIONS": the collective reference to
the English Obligations and the Euro Obligations.
"FOREIGN SUBSIDIARY REVOLVING CREDIT COMMITMENTS": the
collective reference to the English Revolving Credit Commitments and
the Euro Revolving Credit Commitments.
"FOREIGN SUBSIDIARY REVOLVING CREDIT LENDERS": the collective
reference to the English Revolving Credit Lenders and the Euro
Revolving Credit Lenders.
"FOREIGN SUBSIDIARY REVOLVING CREDIT LOANS": the collective
reference to the English Revolving Credit Loans and the Euro Revolving
Credit Loans.
"GAAP": the generally accepted accounting principles in the
United States of America (or, in the case of financial statements for
any period prior to the date it became a Foreign Subsidiary Borrower,
any Foreign Subsidiary Borrower and its Subsidiaries and in the case of
subsections 7.3, 8.3(b), 5.1(b), and 5.10, in the country of
organization of such Foreign Subsidiary Borrower) as in effect from
time to time set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board (or in the case of a Foreign
Subsidiary Borrower, for any period prior to the date it became a
Foreign Subsidiary Borrower and in the case of subsections 7.3, 8.3(b),
5.1(b) and (c), and 5.10, the applicable authority in such country of
organization of such Foreign Subsidiary Borrower), or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances of the US Borrower as of the date of determination except
that for purposes of subsection 8.1, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent
with those used in the preparation of the financial statements referred
to in subsections 5.1(a) and (b), as the case may be. In the event that
any "Accounting Change" (as defined below) shall occur and such change
results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrowers and
the Administrative Agent agree to enter into negotiations in order to
amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for
evaluating the US Borrowers' financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been
executed and delivered by the Borrowers, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in
this
<PAGE>
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "ACCOUNTING CHANGES" means:
changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions).
"GOVERNMENTAL AUTHORITY": any nation or government, any state,
province, municipality, or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and
Collateral Agreement, made by the US Borrower and its Domestic
Subsidiaries in favor of the Collateral Agent for the ratable benefit
of the Secured Parties, substantially in the form of Exhibit G-1, as
the same may be amended, supplemented or otherwise modified from time
to time.
"GUARANTEED LOAN NOTE INSTRUMENTS": the Deed Polls
constituting the Guaranteed Unsecured Floating Rate Loan Notes due 2003
Series A, Series B, Series C and Series D, and the relevant Deed Polls
constituting the guarantees granted by the Guarantor in relation
thereto, dated January 26, 1998, February 4, 1998, February 16, 1998
and February 25, 1998, respectively, as amended, supplemented or
otherwise modified from time to time.
"GUARANTEED LOAN NOTES": loan notes of English Bidco issued
pursuant to the offer for the outstanding capital stock of the English
Borrower at the election of holders of such capital stock having the
terms contained in the Guaranteed Loan Note Instruments and guaranteed
by Guarantor.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "PRIMARY OBLIGATIONS") of
any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that
the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any
<PAGE>
Guarantee Obligation of any guaranteeing person shall be deemed to be
the lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee Obligation
is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability (assuming such Person is required to perform) in respect
thereof as determined by such Person in good faith.
"GUARANTOR": Barclays Bank PLC.
"HIDDEN CREEK": Hidden Creek Industries, a New York general
partnership.
"INDEBTEDNESS": of any Person at any date, without duplication
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices and accrued expenses
incurred in the ordinary course of business) or which is evidenced by a
note, bond, debenture or similar instrument, (b) all net obligations of
such Person under Interest Rate Agreements, (c) all obligations of such
Person under Financing Leases to the extent such obligations are
required to be capitalized in accordance with GAAP, (d) all obligations
of such Person in respect of letters of credit, bankers' acceptances or
similar instruments issued or created for the account of such Person,
and (e) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof; provided however, that the amount of
such Indebtedness of any Person described in this clause (e) shall, for
purposes of this Agreement, be deemed to be equal to the lesser of (i)
the aggregate unpaid amount of such Indebtedness and (ii) the fair
market value of the property or asset encumbered, as determined by such
Person in good faith.
"INITIAL PUBLIC OFFERING": means an underwritten public
offering of common stock of the US Borrower pursuant to a registration
statement filed with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": as defined in subsection 5.9.
"INTERCOMPANY NOTE": a promissory note made by a Subsidiary of
the US Borrower in favor of a Credit Party, substantially in the form
of Exhibit J.
<PAGE>
"INTEREST COVERAGE RATIO": for any period, with respect to the
US Borrower, the ratio of (a) Consolidated EBITDA to (b) consolidated
cash interest expense (including any such cash interest expense in
respect of Indebtedness under Financing Leases and purchase money
Indebtedness permitted under subsection 8.2(e)) of the US Borrower and
its Subsidiaries (such consolidated cash interest expense to include
commissions, discounts and other fees payable on account of letters of
credit and banker's acceptances but to exclude amortization of debt
discount (including discount of liabilities and reserves established
under Accounting Principles Board Opinion No. 16 as in effect on the
date hereof) and costs of debt issuance)); PROVIDED that (i) for the
four fiscal quarters ended June 30, 1999, consolidated cash interest
expense shall be deemed to be consolidated cash interest expense for
the fiscal quarter ended June 30, 1999 multiplied by 4, (ii) for the
four fiscal quarters ended September 30, 1999, consolidated cash
interest expense shall be deemed to be consolidated cash interest
expense for the two fiscal quarters ended September 30, 1999 multiplied
by 2, and (iii) for the four fiscal quarters ended December 31, 1999,
consolidated cash interest expense shall be deemed to be consolidated
cash interest expense for the three fiscal quarters ended December 31,
1999 multiplied by 4/3.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the
Base Rate Payment Date set forth on the Administrative Schedule, (b) as
to any Eurocurrency Loan having an Interest Period of three (3) months
or less, the last day of such Interest Period and (c) as to any
Eurocurrency Loan having an Interest Period longer than three (3)
months, each day which is three (3) months or a whole multiple thereof,
after the first day of such Interest Period as well as the last day of
such Interest Period.
"INTEREST PERIOD": with respect to any Eurocurrency Loan:
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurocurrency Loan and ending at the end of any Permitted
Interest Period, as selected by the Specified Borrower in its
notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and
(b) thereafter, each period commencing on the last
day of the immediately preceding Interest Period applicable to
such Eurocurrency Loan and ending at the end of any Permitted
Interest Period, as selected by the Specified Borrower by
irrevocable notice to the Specified Agent not less than three
Business Days prior to the last day of the then current
Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurocurrency Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar
<PAGE>
month in which event such Interest Period shall end on the
immediately preceding Business Day;
(2) no Interest Period shall extend beyond the
Scheduled Revolving Credit Commitment Termination Date in the
case of Revolving Credit Loans or the scheduled date final
payment is due on any tranche or class of Term Loans in the
case of such tranche or class of Term Loans;
(3) no Interest Period with respect to any tranche or
class of the Term Loans shall extend beyond any date upon
which repayment of principal thereof is required to be made
if, after giving effect to the selection of such Interest
Period, the aggregate principal amount of such tranche or
class of Term Loans with Interest Periods ending after such
date would exceed the aggregate principal amount of such
tranche or class of Term Loans permitted to be outstanding
after such scheduled repayment; and
(4) any Interest Period pertaining to a Eurocurrency
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"INTEREST RATE AGREEMENT": any interest rate protection
agreement, interest rate, commodity or currency future, interest rate
option, interest rate cap or other interest rate, commodity or currency
hedge arrangement, to or under which any Lender (or any Affiliate
thereof) and the US Borrower or its Subsidiaries are parties on the
date hereof or become parties after the date hereof.
"INTERIM LOAN AGREEMENT": the Bridge Loan Agreement, dated as
of April 21, 1999, among the US Borrower and certain of its
Subsidiaries, NationsBanc Montgomery Securities LLC and Chase
Securities Inc., as arrangers, NationsBridge, L.L.C. and The Chase
Manhattan Bank, as co-agents and lenders, and NationsBridge, L.L.C., as
administrative agent, in connection with the Interim Loans, together
with all instruments and other agreements entered into by the US
Borrower and its Subsidiaries in connection therewith, as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with subsection 8.10.
"INTERIM LOANS": the interim loans made to the US Borrower
pursuant to the Interim Loan Agreement (including rollover bridge loans
made pursuant to Section 2.2 of the Interim Loan Agreement).
"INVESTMENTS": as defined in subsection 8.9.
"ISSUING LENDERS": the collective reference to the US Issuing
Lender and the English Issuing Lender.
"JUDGMENT CONVERSION DATE": as defined in subsection 12.11(a).
"JUDGMENT CURRENCY": as defined in subsection 12.11(a).
<PAGE>
"LEASED PROPERTIES": the collective reference to the real
properties leased by the US Borrower and its Subsidiaries described on
Part II of Schedule 5.19 including all buildings, improvements,
structures and fixtures now or subsequently located thereon.
"LENDERS": the collective reference to the US Lenders and the
Foreign Subsidiary Lenders.
"LETTER OF CREDIT": any Standby L/C or Trade L/C,
collectively, the "LETTERS OF CREDIT."
"LETTER OF CREDIT APPLICATION": with respect to (a) a Standby
L/C, a Standby L/C Application and (b) a Trade L/C, a Trade L/C
Application; collectively, the "LETTER OF CREDIT APPLICATIONS".
"LEVERAGE RATIO": at any date, the ratio of (a) Consolidated
Total Debt of the US Borrower and its Subsidiaries to (b) Consolidated
EBITDA of the US Borrower and its Subsidiaries for the period of four
consecutive fiscal quarters most recently ended.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"LOAN DOCUMENTS": the collective reference to this Agreement,
the Notes, the Letter of Credit Applications, the Guarantee and
Collateral Agreement, the Mortgages, any other document, instrument or
agreement guaranteeing, or granting a Lien to secure any Obligations
and, as it relates to the Secured Parties only, the Sharing Agreement.
"LOANS": the collective reference to the US Loans, the English
Loans and the Euro Loans.
"MAJORITY CLASS LENDERS": as defined in subsection 12.1.
"MATERIAL ADVERSE CHANGE": any event, development, or
circumstance that has had or could reasonably be expected to have a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the Transactions, (b) the business, operations, property or financial
condition of the US Borrower and its Subsidiaries, taken as a whole, or
(c) the validity or enforceability of this Agreement or any of the
other Loan Documents or the rights or remedies of the Secured Parties
hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic
<PAGE>
substances, materials or wastes, defined or regulated as such in or
under any Environmental Law, including, without limitation, friable
asbestos, polychlorinated biphenyls and ureaformaldehyde insulation.
"MATERIAL SUBSIDIARY": of any Person means, at any time, a
Subsidiary of such Person (a) having (i) at least the Equivalent Amount
of 5% of the consolidated total assets (determined as of the last day
of the most recent fiscal quarter) of the US Borrower and its
Subsidiaries or (ii) at least the Equivalent Amount of 5% of the
consolidated total revenues for the twelve month period ending on the
last day of the most recent fiscal quarter of such Person or (b) which
guarantees or is a party to any Subordinated Debt Document or a Loan
Document; PROVIDED, that, in no event may Subsidiaries which have in
the aggregate more than 10% of the consolidated total assets or 10% of
the consolidated total revenues (as so computed) of the US Borrower be
excluded from this definition and notwithstanding the foregoing each
Foreign Subsidiary Borrower shall be a Material Subsidiary.
"MORTGAGED PROPERTIES": the collective reference to the Fee
Properties owned by the US Borrower and its Subsidiaries listed on Part
IV of Schedule 5.19.
"MORTGAGES": the collective reference to the mortgages and
deeds of trust encumbering each of the Mortgaged Properties to be
executed and delivered by the US Borrower or its Domestic Subsidiaries,
substantially in the form of Exhibit G-2, with such modifications as
are determined by the Administrative Agent as necessary or desirable to
create a valid and enforceable first mortgage Lien securing the
obligations and liabilities of any Borrower or any guarantor under any
Loan Document, as the same may be amended, supplemented, replaced,
restated, or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NATIONAL CURRENCY UNIT": the unit of currency (other than a
euro unit) of a Participating Member State.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale
(including any sale and leaseback of assets and any sale of accounts
receivable in connection with a receivables financing transaction) or
any casualty or condemnation event the cash proceeds (including any
cash payments received by way of deferred payment of principal pursuant
to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset
Sale or such casualty or condemnation event net of all reasonable legal
fees, notarial fees, accountants' fees, investment banking fees, survey
costs, title insurance premiums, required debt payments (other than
pursuant hereto) and other customary fees actually incurred in
connection therewith and net of taxes paid or reserved to be paid or
reasonably expected to be payable as a result thereof and net of
purchase price adjustments reasonably expected to be payable in
connection therewith and net of any other reserves reasonably estimated
by the US Borrower or any Subsidiary in connection with such Asset Sale
or such casualty or condemnation
<PAGE>
event and (b) in connection with any issuance by the US Borrower or any
of its Subsidiaries of equity or debt securities or instruments or the
incurrence of loans other than Indebtedness permitted by subsection
8.2, the cash proceeds received from such issuance, net of all
reasonable investment banking fees, legal fees, notarial fees,
accountants fees, underwriting discounts and commissions and other
customary fees and expenses (including, but not limited to, filing and
printing costs), actually incurred in connection therewith; PROVIDED
HOWEVER that (y) with respect to any reserves described in clause (a)
above, any amount released from such reserves (other than for the
purpose for which it was created) shall constitute "Net Cash Proceeds"
when released and (z) with respect to any issuance of debt instruments
or securities as described in clause (b) above, only to the extent that
such net cash proceeds are used to refinance any Indebtedness permitted
by this Agreement, then such net cash proceeds shall not constitute
"Net Cash Proceeds" for the purpose of this Agreement..
"NON-EXCLUDED TAXES": as defined in subsection 4.7.
"NON-FUNDING LENDER": as defined in subsection 4.4(c).
"NOTES": the collective reference to the Revolving Credit
Notes, the Swing Line Notes, and the Term Notes.
"NOTICE TIME": as to any notice of borrowing, prepayment,
conversion or rollover by any Specified Borrower, the Specified Notice
Time set forth in the Administrative Schedule.
"OBLIGATIONS": the collective reference to the Domestic
Obligations and the Foreign Subsidiary Obligations.
"PARTICIPATING LENDER": as to any Accommodation, any Specified
Revolving Credit Lender (other than the Specified Issuing Lender) with
respect to its Specified Accommodation Participating Interest in such
Accommodation.
"PARTICIPATING MEMBER STATE": any member state which has the
euro as its lawful currency.
"PARTICIPATION CERTIFICATE": a certificate in substantially
the form of Exhibit B.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"PERMITTED ACQUISITION": the acquisition by the US Borrower or
a Subsidiary of the US Borrower of a business that is similar, related
or supportive to the US Borrower and its Subsidiaries' business or
those consented to by the Required Lenders.
"PERMITTED EXPENDITURE AMOUNTS": at any date, the amount equal
to (a) the sum of (i) the Net Cash Proceeds of any issuance of Capital
Stock of the US Borrower which was not required to be applied pursuant
to the provisions of
<PAGE>
subsection 2.9(a) (other than Net Cash Proceeds of Capital Stock
described in the first parenthetical clause of subsection 2.9(a)),
(ii) the Net Cash Proceeds of any Asset Sale which was not required to
be applied pursuant to the provisions of subsection 2.9(b) and (iii)
any portion of the Excess Cash Flow of the US Borrower for fiscal
years completed since the Closing Date which was not required to be
applied pursuant to the provisions of subsection 2.9(c) MINUS (b) the
aggregate amount of Expenditure Use Amounts as of such date.
"PERMITTED INTEREST PERIOD": as to any Eurocurrency Loan, the
permitted interest period lengths set forth in the Administrative
Schedule and shall include, in any event, during any period prior to
the primary syndication of the Loans, any shorter period as may be
agreed to by the Lenders.
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which a Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"PLEDGED SECURITIES": as defined in the Guarantee and
Collateral Agreement.
"POUNDS STERLING OR (pound)": legal currency of the United
Kingdom.
"PROCESS AGENT": as defined in subsection 12.13(f).
"PROPERTIES": as defined in subsection 5.15.
"QUALIFIED ISSUER": as defined in Section VI of the
Administrative Schedule.
"RATABLE PORTION": for each Specified Lender, the amount of
such Lender's PRO RATA portion of any applicable Specified Loan.
"RECAPITALIZATION": the transactions to be consummated
pursuant to the Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT": the Recapitalization Agreement,
dated as of March 29, 1999, among the US Borrower, the stockholders
parties thereto and JLF Acquisition LLC, as amended, supplemented or
otherwise modified in accordance with subsection 8.10.
"REGULATION T, U OR X": Regulation T, U or X of the Board as
in effect from time to time.
"RELATED BUSINESS": Any business involving, ancillary to or
related to the business in which the US Borrower or any of its
Subsidiaries is engaged on the date hereof, the production of castings
or casting systems.
<PAGE>
"RELATED FUND": with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by
an affiliate of such investment advisor.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA and the regulations thereunder, other than those
events as to which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615.
"REQUIRED LENDERS": at any time, Lenders the Total Credit
Percentages of which aggregate at least a majority.
"REQUIREMENT OF LAW": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, statute, rule,
regulation, common law or determination of an arbitrator or a court or
other Governmental Authority and all official directives, consents,
approvals, authorizations, restrictions and policies of any
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"RESPONSIBLE OFFICER": as to any Person, the chief executive
officer, the president, the chief financial officer, managing or other
director, any vice president, secretary, any assistant secretary,
treasurer or any assistant treasurer of such Person.
"RESTRICTED PAYMENTS": as defined in subsection 8.7.
"REVOLVING CREDIT COMMITMENTS": the collective reference to
the US Revolving Credit Commitments and the Foreign Subsidiary
Revolving Credit Commitments.
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Specified
Revolving Credit Lender, the percentage of the aggregate Specified
Revolving Credit Commitments constituted by its Specified Revolving
Credit Commitment.
"REVOLVING CREDIT COMMITMENT PERIOD": with respect to any
Specified Borrower, the Specified Revolving Credit Commitment Period
set forth in the Administrative Schedule.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE": with respect
to any Specified Borrower, the Specified Revolving Credit Commitment
Termination Date set forth in the Administrative Schedule.
"REVOLVING CREDIT LENDERS": the collective reference to the US
Revolving Credit Lenders and the Foreign Subsidiary Revolving Credit
Lenders.
<PAGE>
"REVOLVING CREDIT LOANS": the collective reference to the US
Revolving Credit Loans and the Foreign Subsidiary Revolving Credit
Loans.
"REVOLVING CREDIT NOTE" and "REVOLVING CREDIT NOTES": as
defined in subsection 2.7(e).
"SCHEDULED REVOLVING CREDIT COMMITMENT TERMINATION DATE":
April 21, 2005 or, if such date is not a Business Day, the Business Day
next preceding such date.
"SECURED PARTIES": the collective reference to the Collateral
Agent, the Administrative Agent, the Foreign Subsidiary Agents, and the
Lenders.
"SENIOR DEBT RATIO": at any date, the ratio of (a)
Consolidated Senior Debt of the US Borrower and its Subsidiaries to (b)
Consolidated EBITDA of the US Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters most recently ended.
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture to be
entered into by the US Borrower in connection with the issuance of the
Senior Subordinated Notes, together with all instruments and other
agreements entered into by the US Borrower in connection therewith, all
as entered into in accordance with subsection 8.10(e) and as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with subsection 8.10.
"SENIOR SUBORDINATED NOTES": the subordinated notes of the US
Borrower to be issued pursuant to the Senior Subordinated Note
Indenture.
"SHARING AGREEMENT": the Sharing Agreement, among the
Collateral Agent, the Administrative Agent and the Foreign Subsidiary
Agents, substantially in the form of Exhibit I, as the same may be
amended, supplemented or otherwise modified from time to time.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SOLVENT" and "SOLVENCY": with respect to any Person on a
particular date, that on such date, (a) the fair value of the property
(on a going concern basis) of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the
assets (on a going concern basis) of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature, and (d) such Person is not engaged in business
or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital; PROVIDED for purposes of any Person
organized under the laws of England and Wales, the term "SOLVENT" shall
mean that with respect to such Person on a particular date, that on
<PAGE>
such date, such Person has the ability to pay its debts as and when
they fall due and could not be deemed to be unable to pay its debts for
purposes of the Insolvency Act of 1986.
"SPECIFIED": when used in relation to any Borrower, any Loans
(or portion, type or class thereof), Accommodations, Assignee,
Commitment, Agent, Issuing Lender, Lenders (or subclass thereof),
Obligations (or portion thereof), Accommodation Outstandings and/or any
other defined term herein, the applicable Borrower and/or the Loans to,
Accommodations for the benefit of, Commitments to, Agent in respect of,
Issuing Lender in respect of, Lenders to, Obligations owing by, and
other terms relating to such Borrower or defined term, as the context
may require.
"SPECIFIED PARTICIPANT": as defined in subsection 12.6(b).
"SPECIFIED REFUNDED SWING LINE LOANS": as defined in
subsection 2.12(b).
"SPECIFIED REGISTER": as defined in subsection 12.6(d).
"STANDBY L/C": an irrevocable letter of credit issued by a
Specified Issuing Lender pursuant to this Agreement for the account of
the related Specified Borrower in respect of obligations of such
Specified Borrower incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to
which such Specified Borrower is or proposes to become a party,
including, without limiting the foregoing, for insurance, trade payable
or Indebtedness support purposes.
"STANDBY L/C APPLICATION": as defined in subsection 3.2.
"SUBORDINATED DEBT DOCUMENTS": the Interim Loan Agreement, the
Exchange Note Indenture and the Senior Subordinated Note Indenture.
"SUBSEQUENT PARTICIPANT": any member state that adopts the
euro as its lawful currency after January 1, 1999.
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company, or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, directly or indirectly through
one or more intermediaries, or both, by such Person, including, as to
any Person incorporated in England or Wales, (A) a subsidiary within
the meaning of Section 736 of the Companies Act 1985, and (B) unless
the context otherwise requires, any Person being a subsidiary
undertaking within the meaning of Section 258 of the Companies Act 1985
AND (for all purposes of this Agreement other than the calculation of
financial condition covenants under section 8.1) the affairs and
policies of which the US Borrower or any other Subsidiary of the US
Borrower
<PAGE>
controls or has the power to control. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the US Borrower.
"SWING LINE COMMITMENT": any Specified Swing Line Lender's
obligation to make Specified Swing Line Loans pursuant to subsection
2.12 as set forth in the Administrative Schedule.
"SWING LINE LENDERS": the collective reference to the US Swing
Line Lenders and the English Swing Line Lenders.
"SWING LINE LOAN PARTICIPATION CERTIFICATE": a certificate in
substantially the form of Exhibit C.
"SWING LINE LOANS": as to any Specified Swing Line Lender, any
swing line loans made to the Specified Borrower by such Lender.
"SWING LINE NOTE": as defined in subsection 2.7(e).
"TARGET OPERATING DAY": any day that is not (a) a Saturday or
Sunday, (b) Christmas Day or New Year's Day or (c) any other day on
which the Trans-European Real-time Gross Settlement Operating System
(or any successor settlement system) is not operating (as determined by
the Euro Agent).
"TERM LOANS": the collective reference to the US Term Loans
and the English Term Loans.
"TERM LOAN LENDERS": the collective reference to the US Term
Loan Lenders and the English Term Loan Lenders.
"TERM NOTE" and "TERM NOTES": as defined in subsection 2.7(e).
"THIRD STAGE": the third stage of the European economic and
monetary union pursuant to the Treaty establishing the European
Community (as amended from time to time).
"TOTAL CREDIT PERCENTAGE": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments and
outstanding Term Loans then constituted by its Revolving Credit
Commitments and its outstanding Term Loans (or, if the Revolving Credit
Commitments have terminated or expired, the percentage of the aggregate
outstanding Loans and risk interests in the aggregate Accommodation
Outstandings and Swing Line Loans then constituted by its outstanding
Loans, and its risk interests in Accommodation Outstandings and Swing
Line Loans).
"TRADE L/C": a commercial documentary letter of credit issued
by a Specified Issuing Lender pursuant to subsection 3.1 for the
account of a Specified Borrower for the purchase of materials, goods or
services in the ordinary course of business.
<PAGE>
"TRADE L/C APPLICATION": as defined in subsection 3.2.
"TRANCHE": the reference to Eurocurrency Loans of a Specified
Borrower the Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day); Tranches may be
identified as "EUROCURRENCY TRANCHES."
"TRANSACTION DOCUMENTS": the Recapitalization Agreement and all
other agreements, instruments or certificates delivered in connection
with the Transactions.
"TRANSACTIONS": as defined in the recitals hereto.
"TRANSFEREE": as defined in subsection 12.6(f).
"TREATY ON EUROPEAN UNION": the Treaty of Rome of March 25, 1957,
as amended by the Single European Act 1986 and the Maastricht Treaty
(which was signed at Maastricht on February 7, 1992, and came into
force on November 1, 1993), as amended from time to time.
"TYPE": as to any Loan, its nature as a Base Rate Loan or a
Eurocurrency Loan.
"UNDERLYING LEASE": as defined in subsection 5.8.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any revisions thereof.
"US BORROWER": as defined in the preamble hereto.
"US BORROWER PRO FORMA BALANCE SHEET": as defined in subsection
5.1(c).
"US ISSUING LENDER": Chase.
"US LENDERS": the collective reference to Lenders holding US Loans
or US Revolving Credit Commitments.
"US LETTERS OF CREDIT": any Letter of Credit issued for the
account of the US Borrower by the US Issuing Lender.
"US LOAN": any loan made to the US Borrower by any US Lender
pursuant to this Agreement.
"US REVOLVING CREDIT COMMITMENT": as to any US Revolving Credit
Lender, its obligation to make US Revolving Credit Loans to the US
Borrower pursuant to subsection 2.1 and to participate in Swing Line
Loans and US Letters of Credit in an aggregate amount not to exceed at
any one time outstanding the amount set forth opposite such Revolving
Credit Lender's name in Schedule 1.1 under the heading
<PAGE>
"US Revolving Credit Commitment", as such amount may be reduced
from time to time as provided herein; collectively, as to all the US
Revolving Credit Lenders, the "US REVOLVING CREDIT COMMITMENTS."
"US REVOLVING CREDIT LENDER": any US Lender having a US Revolving
Credit Commitment or that holds outstanding US Revolving Credit Loans
or Specified Accommodation Participating Interests hereunder.
"US REVOLVING CREDIT LOANS": as to the US Borrower, any revolving
credit loans made to the US Borrower by the US Revolving Credit Lenders
pursuant to subsection 2.1(a).
"US STERLING TERM LOANS": as to the US Borrower, any term loans
made to such Borrower by the US Sterling Term Loan Lenders pursuant to
subsection 2.5(c).
"US STERLING TERM LOAN LENDERS": as to the US Borrower, any
Lenders holding outstanding US Sterling Term Loans.
"US SWING LINE LENDER": any US Lender having a Swing Line
Commitment or that holds outstanding Swing Line Loans.
"U.S. TAX COMPLIANCE CERTIFICATE": as defined in subsection
4.7(b)(ii).
"US TERM LOANS": the collective reference to the US Tranche A Term
Loans, the US Tranche B Term Loans and the US Sterling Term Loans.
"US TERM LOAN LENDERS": the collective reference to the US Tranche
A Term Loan Lenders, the US Tranche B Term Loan Lenders and the US
Sterling Term Loan Lenders.
"US TRANCHE A TERM LOANS": as to the US Borrower, any term loans
made to such Borrower by the US Tranche A Term Loan Lenders pursuant to
subsection 2.5(a).
"US TRANCHE A TERM LOAN LENDERS": as to the US Borrower, any
Lenders holding outstanding US Tranche A Term Loans.
"US TRANCHE B TERM LOANS": as to the US Borrower, any term loans
made to such Borrower by the US Tranche B Term Loan Lenders pursuant to
subsection 2.5(b).
"US TRANCHE B TERM LOAN LENDERS": as to the US Borrower, any
Lenders holding outstanding US Tranche B Term Loans.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any Subsidiary of
which such Person owns, directly or indirectly, all of the Capital
Stock of such Subsidiary other than directors' qualifying shares or any
shares held by nominees.
<PAGE>
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Note or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Note, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the US
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Whenever any amount denominated in a currency other than
Dollars needs to be determined for purposes of Section 8 (other than subsection
8.1) such determination shall be made on the Equivalent Amount of such other
currency on the date on which the particular transaction giving rise to the need
to calculate such Equivalent Amount occurred.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. (a) THE LENDERS' REVOLVING
CREDIT COMMITMENTS. Subject to the terms and conditions hereof, each Specified
Revolving Credit Lender severally agrees to make Specified Revolving Credit
Loans to the related Specified Borrower from time to time during the Specified
Revolving Credit Commitment Period in an aggregate principal amount or
Equivalent Amount thereof in the relevant currency, if applicable, at any one
time outstanding, when added to such Specified Lender's Specified Revolving
Credit Commitment Percentage of all Specified Accommodation Outstandings and
outstanding Specified Swing Line Loans, not to exceed, after giving effect to
the use of the proceeds thereof, the amount of such Specified Lender's Specified
Revolving Credit Commitment; PROVIDED, that (i) the Specified Borrower shall not
request and the Specified Revolving Credit Lender shall not make any Specified
Revolving Credit Loan if, after giving effect to the making thereof, the
Equivalent Amount of the aggregate Revolving Credit Loans, Accommodation
Outstandings and Swing Line Loans would exceed the US Revolving Credit
Commitments and (ii) neither the English Borrower nor the Euro Borrower shall
request and neither the English Revolving Credit Lenders nor the Euro Revolving
Credit Lenders shall make any English Revolving Credit Loans or Euro Revolving
Credit Loans, as the case may be, if, after giving effect to the making thereof,
the Equivalent Amount of the aggregate of the English Revolving Credit Loans,
the Accommodations issued by the English Issuing Lender for the account of the
English Borrower, the Swing Line Loans made to the English Borrower and the Euro
Revolving Credit Loans, in each case, then outstanding would exceed $20,000,000.
During the Specified Revolving Credit Commitment Period, the Specified Borrower
may use the
<PAGE>
Specified Revolving Credit Commitments by borrowing, prepaying the
Specified Revolving Credit Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof.
The Specified Revolving Credit Loans may from time to time be of
any available Type, as determined by the Specified Borrower and notified to the
Specified Agent in accordance with subsections 2.2 and 2.10.
(b) ENGLISH BIDCO'S CONFIRMATION. English Bidco acknowledges and
confirms that (i) Chase issued the Bank Guarantee Letters of Credit with an
aggregate face amount not exceeding (pound)17,823,330.80 to the Guarantor in
respect of the Guaranteed Loan Notes and (ii) English Bidco agreed to reimburse
Chase on each date on which Chase notifies English Bidco of (x) the date and
amount of a demand presented under the Bank Guarantee Letters of Credit, (y) the
amount of such demand paid by Chase, and (z) any taxes, fees, charges or other
costs or expenses incurred by Chase in connection with such payment. English
Bidco hereby represents, warrants, agrees, covenants and reaffirms that:
(i) it has no (and it permanently and irrevocably waives, and releases Chase
from, any, to the extent arising on or prior to the Closing Date) defense,
setoff, claim, or counterclaim against Chase with regard to its English
Obligations in respect of the Bank Guarantee Letters of Credit and (ii)
reaffirms its obligation to reimburse Chase as set forth above.
2.2 PROCEDURE FOR REVOLVING CREDIT BORROWING. Any Specified
Borrower may borrow under the related Specified Revolving Credit Commitment
during the Specified Revolving Credit Commitment Period on any Business Day,
PROVIDED that such Specified Borrower shall give the Specified Agent irrevocable
notice by the Specified Notice Time specifying (i) the amount and currency to be
borrowed, (ii) the requested Borrowing Date, (iii) the Type or Types of Loan,
and (iv) if the borrowing is to be entirely or partly of Eurocurrency Loans, the
respective amounts of each such Type of Specified Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing under the
Specified Revolving Credit Commitments shall be in a minimum amount equal to (A)
in the case of Base Rate Loans, the Equivalent Amount of $250,000 (or, if the
then Specified Available Revolving Credit Commitments are less than the
Equivalent Amount of $1,000,000, such lesser amount) and (B) in the case of
Eurocurrency Loans, the Equivalent Amount of $1,000,000. Upon receipt of any
such notice from the Specified Borrower, the Specified Agent shall promptly
notify each Specified Revolving Credit Lender thereof. Each Specified Revolving
Credit Lender will make the amount of its pro rata share of each borrowing
available to the Specified Agent for the account of the Specified Borrower at
the office of the Specified Agent specified in subsection 12.2 prior to 11:00
a.m. local time of the Specified Agent, on the Borrowing Date requested by the
Specified Borrower in funds immediately available to the Specified Agent. Such
borrowing will then be made available to the Specified Borrower by the Specified
Agent crediting the account of the Specified Borrower on the books of such
office with the aggregate of the amounts made available to the Specified Agent
by the Specified Revolving Credit Lenders and in like funds as received by the
Specified Agent.
2.3 COMMITMENT FEE; ADMINISTRATIVE AGENT FEES. (a) The US Borrower
agrees to pay to the Administrative Agent for the account of each Revolving
Credit Lender a commitment fee for the period from and including the Closing
Date to, but not including,
<PAGE>
the Scheduled Revolving Credit Commitment Termination Date or such
other earlier date on which the Revolving Credit Commitments are terminated
(whether pursuant to Section 9 or otherwise), computed at a rate per annum equal
to the Applicable Margin for Commitment Fees on the average daily excess, if
any, during the period for which payment is made, of (i) the amount of such
Revolving Credit Lender's US Revolving Credit Commitment OVER (ii) the sum of
the Equivalent Amount of (A) the aggregate unpaid principal amount at such time
of all Revolving Credit Loans made by such Revolving Credit Lender, and (B) an
amount equal to such Revolving Credit Lender's Revolving Credit Commitment
Percentage of the Accommodation Outstandings at such time, payable quarterly in
arrears on the last day of each March, June, September, and December and on the
Scheduled Revolving Credit Commitment Termination Date.
(b) Each Borrower shall pay to Chase for the accounts of the
Agents the amounts payable by it set forth in the Fee Letter dated March 24,
1999 or in any subsequent agreement in the amounts and on the dates set forth
therein.
2.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. (a)
Any Specified Borrower shall have the right, upon not less than three (3)
Business Days' notice to the Specified Agent, to terminate the Specified
Revolving Credit Commitments or, from time to time, reduce the unutilized
portion of the amount of the Specified Revolving Credit Commitments, PROVIDED
that any such termination of the Specified Revolving Credit Commitments shall be
accompanied by prepayment (or payment of cash collateral, as applicable in the
case of Specified Accommodations) in full of the Specified Revolving Credit
Loans, Specified Swing Line Loans and Specified Accommodation Obligations then
outstanding in excess of the Specified Revolving Credit Commitments as so
reduced, together with accrued interest thereon to the date of such prepayment,
cancellation of all Specified Accommodations and the payment of any unpaid
commitment fee then accrued hereunder. Any such reduction shall be in a minimum
Equivalent Amount of $1,000,000, and shall reduce permanently the amount of the
Specified Revolving Credit Commitments then in effect and shall further include
any amounts due in respect thereof under subsection 4.8. Upon termination of the
Specified Revolving Credit Commitments, any Specified Accommodation then
outstanding which has been fully cash collateralized shall no longer be
considered an "Accommodation" as defined in subsection 1.1, and any Specified
Accommodation Participating Interest heretofore granted by the Specified Issuing
Lender to the Specified Revolving Credit Lenders in such Specified Accommodation
shall be deemed terminated but the fees payable under subsection 3.3 shall
continue to accrue to the Specified Issuing Lender with respect to such
Specified Letter of Credit until the expiry thereof.
(b) In the case of any reduction of any Specified Revolving Credit
Commitments hereunder, to the extent, if any, that the sum of the Specified
Revolving Credit Loans, Specified Swing Line Loans and the Specified
Accommodation Outstandings exceeds the Specified Revolving Credit Commitments as
so reduced, the Specified Borrower shall make a prepayment equal to such excess
amount, the proceeds of which shall be applied FIRST, to payment of the
Specified Swing Line Loans then outstanding, SECOND, to payment of the Specified
Revolving Credit Loans then outstanding, THIRD, to payment of any Specified
Accommodation Obligations then outstanding and LAST, to cash collateralize any
outstanding Specified Accommodation on terms reasonably satisfactory
<PAGE>
to the Specified Lenders holding a majority of the Specified Revolving Credit
Commitments.
(c) Any Specified Revolving Credit Commitments once terminated or
reduced may not be reinstated.
2.5 TERM LOANS. (a) US TRANCHE A TERM LOANS. (i) Subject to the
terms and conditions hereof, each US Tranche A Term Loan Lender severally agrees
to make US Tranche A Term Loans to the US Borrower on the Closing Date in an
amount not to exceed the amount set forth under the heading "US Tranche A Term
Loan Commitment" opposite such Lender's name on Schedule 1.1. The US Tranche A
Term Loans may from time to time be (a) Eurocurrency Loans, (b) Base Rate Loans
or (b) a combination thereof, as determined by the US Borrower and notified to
the Administrative Agent in accordance with subsection 2.10.
(ii) AMORTIZATION OF US TRANCHE A TERM LOANS. The aggregate US
Tranche A Term Loans of all US Tranche A Term Loan Lenders shall be payable in
21 consecutive quarterly installments (except with respect to the last
installment which shall be due and payable on April 21, 2005) on the dates and
in a principal amount equal to the amount set forth below (together with all
accrued interest thereon) opposite the applicable installment date (or, if less,
the aggregate amount of the US Tranche A Term Loans then outstanding):
<TABLE>
<CAPTION>
INSTALLMENT AMOUNT
----------- ------
<S> <C>
March 31, 2000 $3,333,333
June 30, 2000 $1,666,667
September 30, 2000 $1,666,667
December 31, 2000 $1,666,667
March 31, 2001 $1,666,667
June 30, 2001 $3,333,333
September 30, 2001 $3,333,333
December 31, 2001 $3,333,333
March 31, 2002 $3,333,333
June 30, 2002 $3,333,333
September 30, 2002 $3,333,333
December 31, 2002 $3,333,333
March 31, 2003 $3,333,333
June 30, 2003 $4,166,667
September 30, 2003 $4,166,667
December 31, 2003 $4,166,667
March 31, 2004 $4,166,667
June 30, 2004 $4,166,667
September 30, 2004 $4,166,667
December 31, 2004 $4,166,667
April 21, 2005 $4,166,666
</TABLE>
(b) US TRANCHE B TERM LOANS. (i) Subject to the terms and
conditions hereof, each US Tranche B Term Loan Lender severally agrees to make
US Tranche B Term
<PAGE>
Loans to the US Borrower on the Closing Date in an amount not
to exceed the amount set forth under the heading "US Tranche B Term Loan
Commitment" opposite such Lender's name on Schedule 1.1. The US Tranche B Term
Loans may from time to time be (a) Eurocurrency Loans, (b) Base Rate Loans or
(b) a combination thereof, as determined by the US Borrower and notified to the
Administrative Agent in accordance with subsection 2.10.
(ii) AMORTIZATION OF US TRANCHE B TERM LOANS. The aggregate US
Tranche B Term Loans of all US Tranche B Term Loan Lenders shall be payable in
28 consecutive quarterly installments (except with respect to the last
installment which shall be due and payable on October 21, 2006) on the dates and
in a principal amount equal to the amount set forth below (together with all
accrued interest thereon) opposite the applicable installment date (or, if less,
the aggregate amount of the US Tranche B Term Loans then outstanding):
<TABLE>
<CAPTION>
INSTALLMENT AMOUNT
----------- ------
<S> <C>
March 31, 2000 $ 1,000,000
June 30, 2000 $ 250,000
September 30, 2000 $ 250,000
December 31, 2000 $ 250,000
March 31, 2001 $ 250,000
June 30, 2001 $ 250,000
September 30, 2001 $ 250,000
December 31, 2001 $ 250,000
March 31, 2002 $ 250,000
June 30, 2002 $ 250,000
September 30, 2002 $ 250,000
December 31, 2002 $ 250,000
March 31, 2003 $ 250,000
June 30, 2003 $ 250,000
September 30, 2003 $ 250,000
December 31, 2003 $ 250,000
March 31, 2004 $ 250,000
June 30, 2004 $ 250,000
September 30, 2004 $ 250,000
December 31, 2004 $ 250,000
March 31, 2005 $ 250,000
June 30, 2005 $ 250,000
September 30, 2005 $ 250,000
December 31, 2005 $ 250,000
March 31, 2006 $ 250,000
June 30, 2006 $ 250,000
September 30, 2006 $ 250,000
October 21, 2006 $182,500,000
</TABLE>
(c) US STERLING TERM LOANS. (i) Subject to the terms and
conditions hereof, each US Sterling Term Loan Lender severally agrees to make US
Sterling Term Loans to
<PAGE>
the US Borrower on the Closing Date in an amount not to
exceed the amount set forth under the heading "US Sterling Term Loan Commitment"
opposite such Lender's name on Schedule 1.1. The US Sterling Term Loans may from
time to time be (a) Eurocurrency Loans, (b) Base Rate Loans or (b) a combination
thereof, as determined by the US Borrower and notified to the Administrative
Agent in accordance with subsection 2.10.
(ii) AMORTIZATION OF US STERLING TERM LOANS. The aggregate US
Sterling Term Loans of all US Sterling Term Loan Lenders shall be payable in 21
consecutive quarterly installments (except with respect to the last installment
which shall be due and payable on April 21, 2005) on the dates and in a
principal amount equal to the amount set forth below (together with all accrued
interest thereon) opposite the applicable installment date (or, if less, the
aggregate amount of the US Sterling Term Loans then outstanding):
<TABLE>
<CAPTION>
INSTALLMENT AMOUNT
----------- ------
<S> <C>
March 31, 2000 (pound)516,190
June 30, 2000 (pound)258,095
September 30, 2000 (pound)258,095
December 31, 2000 (pound)258,095
March 31, 2001 (pound)258,095
June 30, 2001 (pound)516,190
September 30, 2001 (pound)516,190
December 31, 2001 (pound)516,190
March 31, 2002 (pound)516,190
June 30, 2002 (pound)516,190
September 30, 2002 (pound)516,190
December 31, 2002 (pound)516,190
March 31, 2003 (pound)516,190
June 30, 2003 (pound)645,238
September 30, 2003 (pound)645,238
December 31, 2003 (pound)645,239
March 31, 2004 (pound)645,239
June 30, 2004 (pound)645,239
September 30, 2004 (pound)645,239
December 31, 2004 (pound)645,239
April 21, 2005 (pound)645,239
</TABLE>
(d) ENGLISH TERM LOANS. (i) Subject to the terms and conditions
hereof, each English Term Loan Lender severally agrees to make English Term
Loans to the English Borrower on the Closing Date in an amount not to exceed the
amount of the amount set forth under the heading "English Term Loan Commitment"
opposite such Lender's name on Schedule 1.1. The English Term Loans may from
time to time be (a) Eurocurrency Loans, (b) Base Rate Loans or (b) a combination
thereof, as determined by English Borrower and notified to the English Agent in
accordance with subsection 2.10.
(ii) AMORTIZATION OF ENGLISH TERM LOANS. The aggregate English
Term Loans of all English Term Loan Lenders shall be payable in 21 consecutive
quarterly installments (except with respect to the last installment which shall
be due and payable on April 21, 2005) on the dates and in a principal amount
equal to the amount set forth below
<PAGE>
(together with all accrued interest thereon) opposite the applicable installment
date (or, if less, the aggregate amount of the English Term Loans then
outstanding):
<TABLE>
<CAPTION>
INSTALLMENT AMOUNT
----------- ------
<S> <C>
March 31, 2000 (pound)516,190
June 30, 2000 (pound)258,095
September 30, 2000 (pound)258,095
December 31, 2000 (pound)258,095
March 31, 2001 (pound)258,095
June 30, 2001 (pound)516,190
September 30, 2001 (pound)516,190
December 31, 2001 (pound)516,190
March 31, 2002 (pound)516,190
June 30, 2002 (pound)516,190
September 30, 2002 (pound)516,190
December 31, 2002 (pound)516,190
March 31, 2003 (pound)516,190
June 30, 2003 (pound)645,238
September 30, 2003 (pound)645,238
December 31, 2003 (pound)645,239
March 31, 2004 (pound)645,239
June 30, 2004 (pound)645,239
September 30, 2004 (pound)645,239
December 31, 2004 (pound)645,239
April 21, 2005 (pound)645,239
</TABLE>
2.6 PROCEDURE FOR TERM LOAN BORROWINGS. The Specified Subsidiary
Borrower shall give the Specified Agent irrevocable notice by the Specified
Notice Time requesting that the Specified Term Loan Lenders make the Specified
Term Loans on the requested Borrowing Date and specifying (i) the amount and
currency to be borrowed, (ii) the requested Borrowing Date, (iii) the Type or
Types of Loan, and (iv) if the borrowing is to be entirely or partly of
Eurocurrency Loans, the respective amounts of each such Type of Specified Loan
and the respective lengths of the initial Interest Periods therefor. Upon
receipt of such notice the Specified Agent shall promptly notify each Specified
Term Loan Lender thereof. Each Specified Term Loan Lender will make an amount
equal to the Specified Term Loans to be made by such Lender available to the
Specified Agent for the account of the Specified Borrower at the office of the
Specified Agent specified in subsection 12.2 prior to 11:00 a.m. local time of
the Specified Agent, on the Borrowing Date requested by the Specified Borrower
in funds immediately available to the Specified Agent. Such borrowing will then
be made available to the Specified Borrower by the Specified Agent crediting the
account of the Specified Borrower on the books of such office with the aggregate
of the amounts made available to the Specified Agent by the Specified Term Loan
Lenders and in like funds as received by the Specified Agent.
2.7 REPAYMENT OF LOANS. (a) Each Specified Borrower hereby
unconditionally promises to pay to the Specified Agent for the account of: (i)
each Specified Revolving Credit Lender, the then unpaid principal amount of each
Specified
<PAGE>
Revolving Credit Loan of such Specified Lender, on the Specified Revolving
Credit Commitment Termination Date (or such earlier date on which the
Specified Revolving Credit Loans become due and payable pursuant to Section
9); (ii) each Specified Swing Line Lender, the then unpaid principal amount
of the Specified Swing Line Loans of such Swing Line Lender, on the Specified
Revolving Credit Commitment Termination Date (or such earlier date on which
the Specified Swing Line Loans become due and payable pursuant to Section 9);
(iii) each US Tranche A Term Loan Lender, such Lender's Ratable Portion of
the amounts specified in subsection 2.5(a)(ii) (or, if less, the aggregate
amount of the US Tranche A Term Loans of such Lender then outstanding), on
the dates specified in subsection 2.5(a)(ii) (or such earlier date on which
the US Tranche A Term Loans become due and payable pursuant to Section 9);
(iv) each US Tranche B Term Loan Lender, such Lender's Ratable Portion of the
amounts specified in subsection 2.5(b)(ii) (or, if less, the aggregate amount
of the US Tranche B Term Loans of such Lender then outstanding), on the dates
specified in subsection 2.5(b)(ii) (or such earlier date on which the US
Tranche B Term Loans become due and payable pursuant to Section 9); (v) each
US Sterling Term Loan Lender, such Lender's Ratable Portion of the amounts
specified in subsection 2.5(c)(ii) (or, if less, the aggregate amount of the
US Sterling Term Loans of such Lender then outstanding), on the dates
specified in subsection 2.5(c)(ii) (or such earlier date on which the US
Sterling Term Loans become due and payable pursuant to Section 9); and (vi)
each English Term Loan Lender, such Lender's Ratable Portion of the amounts
specified in subsection 2.5(c)(ii) (or, if less, the aggregate amount of the
English Term Loans of such Lender then outstanding), on the dates specified
in subsection 2.5(c)(ii) (or such earlier date on which the English Term
Loans become due and payable pursuant to Section 9). Each Specified Borrower
hereby further agrees to pay interest on the unpaid principal amount of its
Specified Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth
in subsection 4.1.
(b) Each Specified Lender (including each Specified Swing Line
Lender) shall maintain in accordance with its usual practice an account or
accounts evidencing indebtedness of the Specified Borrower to such Specified
Lender resulting from each Specified Loan of such Specified Lender from time to
time, including the amounts of principal and interest payable and paid to such
Specified Lender from time to time under this Agreement.
(c) Each Specified Agent shall maintain a Specified Register
pursuant to subsection 12.6(d), and a subaccount therein for each Specified
Lender, in which shall be recorded (i) the amount of each Specified Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Specified Borrower to each
Specified Lender hereunder and (iii) both the amount of any sum received by such
Specified Agent hereunder from each Specified Borrower and each Specified
Lender's share thereof.
(d) The entries made in each Specified Register and the accounts
of each Specified Lender maintained pursuant to subsection 2.7(b) shall, to the
extent permitted by applicable law andabsent manifest error, be PRIMA FACIE
evidence of the existence and amounts of the obligations of each Specified
Borrower therein recorded; PROVIDED, HOWEVER, that the failure of any Specified
Lender or any Specified Agent to maintain the
<PAGE>
applicable Specified Register or any such account, or any error therein,
shall not in any manner affect the obligation of each Specified Borrower to
repay (with applicable interest) its Specified Loans owing to the Specified
Lender in accordance with the terms of this Agreement.
(e) The US Borrower agrees that, upon request to the US Agent by
any Specified Lender, the US Borrower will execute and deliver to such Specified
Lender (i) a promissory note of the US Borrower evidencing the Specified
Revolving Credit Loans of such Specified Lender, substantially in the form of
Exhibit A-1 with appropriate insertions as to date and principal amount (each as
amended, supplemented, replaced or otherwise modified from time to time, a
"REVOLVING CREDIT NOTE"), and/or (ii) a promissory note of the Specified
Borrower evidencing the Specified Term Loan of such Specified Lender,
substantially in the form of Exhibit A-2 with appropriate insertions as to
Borrower, currency, date, and principal amount (each as amended, supplemented,
replaced or otherwise modified from time to time, a "TERM NOTE"), and/or (iii) a
promissory note of such Specified Borrower evidencing the Specified Swing Line
Loans of the Specified Swing Line Lender, substantially in the form of Exhibit
A-3 with appropriate insertions as to date and principal amount (as amended,
supplemented, replaced or otherwise modified from time to time, the "SWING LINE
NOTE").
2.8 OPTIONAL PREPAYMENTS. Any Borrower may, at any time and from
time to time, prepay such Specified Borrower's Specified Loans, in whole or in
part, without premium or penalty except as set forth in subsection 4.8, upon at
least three (3) Business Days' irrevocable notice to the Specified Agent,
specifying the date and amount of prepayment and whether the prepayment is of
(i) a specific Type of Loan and, if of a combination thereof, the amount
allocable to each and (ii) (1) Specified Term Loans, (2) Specified Revolving
Credit Loans, or (3) a combination thereof, as the case may be, and if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Specified Agent shall promptly notify each Specified Term Loan Lender
or Specified Revolving Credit Lender, as the case may be, thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with, in the case of prepayments of the
Eurocurrency Loans only, accrued interest to such date on the amount prepaid.
Optional prepayments of the Term Loans shall be applied to each
class or tranche of Term Loans and to the installments thereof as the US
Borrower shall so elect. Amounts prepaid on account of any Term Loans may not be
reborrowed. Partial prepayments shall be in an aggregate principal Equivalent
Amount of at least $1,000,000 and shall include any amounts due in respect
thereof under subsection 4.8.
2.9 MANDATORY PREPAYMENTS.
(a) Subsequent to the Closing Date, unless the Required Lenders
and the US Borrower shall otherwise agree, if the US Borrower or any of its
Subsidiaries shall issue any class of Capital Stock for cash (other than (i) any
Capital Stock issued to finance a Permitted Acquisition permitted hereunder,
(ii) Capital Stock issued by any Subsidiary pursuant to a capital contribution
to such Subsidiary by the US Borrower or any other Subsidiary, (iii) Capital
Stock issued to officers, directors or employees as compensation or as part of
an incentive program or (iv) Capital Stock issued by the US Borrower to any
Affiliate, as
<PAGE>
determined prior to the making of such capital contribution, of the US
Borrower pursuant to a capital contribution to the US Borrower by such
Affiliate) or incur any Indebtedness other than any Indebtedness permitted
pursuant to subsection 8.2 (other than clause (n) thereof), within five (5)
Business Days of the date of such issuance or incurrence, each Borrower shall
prepay an amount of its Specified Term Loans equal to its Specified Borrower
Percentage of the Equity Prepayment Percentage, in the case of the issuance
of any such Capital Stock, or the Debt Prepayment Percentage, in the case of
the incurrence of any such Indebtedness, of the Net Cash Proceeds thereof as
set forth in paragraph (d) of this subsection 2.9; PROVIDED, that if at the
time any Capital Stock (other than Capital Stock described in clauses (i)
through (iv) above) or Senior Subordinated Notes are issued there are any
amounts outstanding under the Interim Loan Agreement, the Net Cash Proceeds
from the issuance thereof shall, subject to the subordination provisions of
the Interim Loan Agreement, be applied first to prepay such amounts and any
remaining amount shall be applied in accordance with the last sentence of
subsection 2.9(d).
(b) Unless the Required Lenders and the US Borrower shall
otherwise agree, if the US Borrower or any of its Subsidiaries shall consummate
any Asset Sale or receive any cash proceeds of any casualty or condemnation, on
the date which is twelve months after the date of consummation of such Asset
Sale or receipt of such proceeds, each Borrower shall prepay an amount of its
Specified Term Loans equal to its Specified Borrower Percentage of the Asset
Sale Prepayment Percentage of the Net Cash Proceeds thereof as set forth in
paragraph (d) of this subsection 2.9 to the extent that such Net Cash Proceeds
from the Asset Sale or casualty or condemnation event have not been reinvested
in the business of the US Borrower or any of its Subsidiaries within twelve
months of the date of such Asset Sale or such casualty or condemnation event.
Notwithstanding the foregoing, in the event that at the time of consummation of
any Asset Sale or the occurrence of any casualty or condemnation event, the
Interim Loan Agreement prohibits the Borrowers from so reinvesting the Net Cash
Proceeds from any such Asset Sale or casualty or condemnation event or requires
that such Net Cash Proceeds be used to repay the Interim Loan, such Net Cash
Proceeds shall be applied to the prepayment of the Term Loans as set forth in
paragraph (d) of this subsection 2.9.
(c) Unless the Required Lenders and the US Borrower shall
otherwise agree, if for any fiscal year, commencing with the fiscal year ending
December 31, 2000, there shall be Excess Cash Flow for such fiscal year, each
Borrower shall prepay an amount of its Specified Term Loans equal to its
Specified Borrower Percentage of the ECF Prepayment Percentage of such Excess
Cash Flow as set forth in paragraph (d) of this subsection 2.9. Each such
prepayment shall be made on or before the date which is seven (7) Business Days
after the earlier of (A) the date on which the financial statements referred to
in subsection 7.1(a) are required to be delivered to the Lenders and (B) the
date on which said financial statements are actually delivered.
(d) Mandatory prepayments of the Term Loans shall be applied (i)
PRO RATA to each class or tranche of Term Loans ratably based upon the then
outstanding principal amounts of the Term Loans (with each class or tranche of
Term Loan to be allocated that percentage of the amount to be applied as is
equal to a fraction (expressed as a percentage), the NUMERATOR of which is the
then outstanding principal amount of such class or tranche of Term Loans, as the
case may be, and the DENOMINATOR of which is equal to the then outstanding
principal amount of all Term Loans); (ii) to reduce the then
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remaining installments of such Term Loans ratably based upon the then amounts
of such installments of such Term Loans; and (iii) subject to clauses (i) and
(ii), prepayments shall be applied FIRST to Base Rate Loans and SECOND, PRO
RATA, to Eurocurrency Loans, PROVIDED, that in the event the mandatory
prepayment of any class or tranche of Term Loans as a result of an asset sale
or disposition by any Foreign Subsidiary Borrower or any of its Subsidiaries
would result in any adverse tax impact to the US Borrower or any other
Foreign Subsidiary Borrower, the portion allocable to the Term Loans of each
affected Borrower shall instead be applied to the Term Loans of the
applicable Foreign Subsidiary Borrower. Amounts prepaid on account of any of
the Term Loans may not be reborrowed. Notwithstanding the foregoing but
subject to the proviso contained in subsection 2.9(a), the Net Cash Proceeds
from the issuance of any Senior Subordinated Notes in excess of the amounts
then outstanding under the Interim Loan Agreement shall be applied first to
the prepayment of the US Tranche B Term Loans and to the installments thereof
in the inverse order of maturity.
(e) Notwithstanding anything to the contrary in subsections 2.9(d)
or 4.4, with respect to the amount of any mandatory prepayment described in
subsection 2.9 that is allocated to US Tranche B Term Loans (such amount, the
"US TRANCHE B PREPAYMENT AMOUNT"), at any time when US Tranche A Term Loans
remain outstanding, the relevant Borrower will, in lieu of applying such amount
to the prepayment of US Tranche B Term Loans, as provided in paragraph (d)
above, on the date specified in subsection 2.9 for such prepayment, give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each US Tranche
B Term Loan Lender a notice (each, a "PREPAYMENT OPTION NOTICE") as described
below. As promptly as practicable after receiving such notice from the relevant
Borrower, the Administrative Agent will send to each Tranche B Term Loan Lender
a Prepayment Option Notice, which shall be in the form of Exhibit R, and shall
include an offer by the relevant Borrower to prepay on the date (each a
"MANDATORY PREPAYMENT DATE") that is 10 Business Days after the date of the
Prepayment Option Notice, the relevant Term Loans of such Lender by an amount
equal to the portion of the Prepayment Amount indicated in such Lender's
Prepayment Option Notice as being applicable to such Lender's US Tranche B Term
Loans. On the Mandatory Prepayment Date, (i) the relevant Borrower shall pay to
the Administrative Agent the aggregate amount necessary to prepay that portion
of the outstanding relevant US Tranche B Term Loans in respect of which US
Tranche B Lenders have accepted prepayment as described above (such Lenders, the
"ACCEPTING LENDERS"), and such amount shall be applied to reduce the US Tranche
B Prepayment Amounts with respect to each Accepting Lender and (ii) the relevant
Borrower shall pay to the Administrative Agent an amount equal to the portion of
the US Tranche B Prepayment Amount not accepted by the Accepting Lenders, and
such amount shall be applied to the prepayment of the US Tranche A Term Loans.
(f) With respect to any Specified Borrower, if at any time the sum
of its Specified Revolving Credit Loans, Specified Swing Line Loans and
Specified Accommodation Outstandings exceeds the Specified Revolving Credit
Commitments (including at any time after any reduction of the Specified
Revolving Credit Commitments pursuant to subsection 2.4), the Specified Borrower
shall make a payment in the amount of such excess which payment shall be applied
in the order and in the manner set forth in subsection 2.4(b). To the extent
that after giving effect to any prepayment of the Specified Loans required by
the preceding sentence, the sum of the Specified Revolving Credit
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Loans, Specified Swing Line Loans and Specified Accommodation Outstandings
exceeds the Specified Revolving Credit Commitments then in effect, the
Specified Borrower shall, without notice or demand, immediately cash
collateralize the then outstanding Specified Accommodation Obligations in an
amount equal to such excess upon terms reasonably satisfactory to the
Specified Agent.
(g) If at any time the sum of the Equivalent Amount of the
Revolving Credit Loans, Swing Line Loans and Accommodation Outstandings exceeds
the US Revolving Credit Commitments (including at any time after any reduction
of the US Revolving Credit Commitments pursuant to subsection 2.4), the
Borrowers shall make a payment in the amount of such excess which payment shall
be applied in the order and in the manner set forth in subsection 2.4(b). To the
extent that after giving effect to any prepayment of the Loans required by the
preceding sentence, the sum of the Equivalent Amount of the Revolving Credit
Loans, Swing Line Loans and Accommodation Outstandings exceeds the Revolving
Credit Commitments then in effect, the Borrowers shall, without notice or
demand, immediately cash collateralize the then outstanding Accommodation
Obligations in an amount equal to such excess upon terms reasonably satisfactory
to the Specified Agent with respect to the relevant Accommodation Obligations.
(h) The provisions of this subsection 2.9 shall not be in
derogation of any other covenant or obligation of the US Borrower and its
Subsidiaries under the Loan Documents and shall not be construed as a waiver of,
or a consent to departure from, any such covenant or obligation.
(i) Notwithstanding the foregoing provisions of this subsection
2.9, if at any time the mandatory prepayment of any Specified Term Loans
pursuant to this Agreement would result, after giving effect to the procedures
set forth in this Agreement, in the Specified Borrower incurring costs, under
subsection 4.5, 4.6 or 4.7 as a result of Eurocurrency Loans ("AFFECTED
EUROCURRENCY LOANS") being prepaid other than on the last day of an Interest
Period applicable thereto, which costs are required to be paid pursuant to
subsection 4.8, then the Specified Borrower may, in its sole discretion,
initially deposit a portion (up to 100%) of the amounts that otherwise would
have been paid in respect to the Affected Eurocurrency Loans with the Specified
Agent (which deposit must be equal in amount to the amount of the Affected
Eurocurrency Loans not immediately prepaid) to be held as security for the
obligations of the Specified Borrower to make such mandatory prepayment pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Specified Agent, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Specified Term Loan
that is a Eurocurrency Loan (or such earlier date or dates as shall be requested
by the Specified Borrower), to repay an aggregate principal amount of such
Specified Term Loan equal to the Affected Eurocurrency Loans not initially
repaid pursuant to this sentence.
(j) Notwithstanding anything to the contrary contained herein,
nothing herein shall require any Foreign Subsidiary Borrower to make any payment
to any Lenders (other than its Specified Lenders), it being acknowledged that no
Foreign Subsidiary Borrower is in any way liable for any of the Domestic
Obligations or any Obligations of any other Foreign Subsidiary Borrower (other
than the English Borrower with respect to the
<PAGE>
Bank Guarantee Letters of Credit and the English Term Loans to the extent
assumed or guaranteed by it).
2.10 CONVERSION AND CONTINUATION OPTIONS. (a) Subject to the terms
and conditions hereof and to the extent available to it, any Specified Borrower
may elect from time to time to convert its Base Rate Loans to Eurocurrency Loans
by giving the Specified Agent at least three (3) Business Days' prior
irrevocable notice of such election; PROVIDED that at no time may any Specified
Borrower elect to convert any or all of its Specified Swing Line Loans from Base
Rate Loans to Eurocurrency Loans. Any such notice of conversion to Eurocurrency
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Specified Agent shall
promptly notify each affected Specified Term Loan Lender or Specified Revolving
Credit Lender, as the case may be, thereof. All or any part of outstanding Base
Rate Loans may be converted as provided herein, PROVIDED that (i) no Base Rate
Loan may be converted into a Eurocurrency Loan when any Event of Default has
occurred and is continuing and the Specified Agent has or the Required Lenders
have determined that such a conversion is not appropriate and (ii) any such
conversion may only be made if, after giving effect thereto, subsection 2.11
shall not have been contravened.
(b) Any Eurocurrency Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Specified Borrower giving notice to the Specified Agent, in accordance with the
applicable provisions of the term "INTEREST PERIOD" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
PROVIDED that no Eurocurrency Loan may be continued as such (i) when any Event
of Default has occurred and is continuing and the Specified Agent has or the
Required Lenders have determined that such a continuation is not appropriate or
(ii) if, after giving effect thereto, subsection 2.11 would be contravened and
PROVIDED, FURTHER, that if the Specified Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso, such Eurocurrency Loans shall
be automatically continued as Eurocurrency Loans on the last day of such then
expiring Interest Period with a new Interest Period of one (1) month.
(c) Subject to the terms and conditions hereof and to the extent
available to it, any Specified Borrower may elect from time to time to convert
its Eurocurrency Loans to Base Rate Loans, by giving the Specified Agent at
least two (2) Business Days' prior irrevocable notice of such election, PROVIDED
that, unless such Specified Borrower elects to pay to the Specified Agent for
the account of the Specified Lenders the amount of any breakage costs and other
Eurocurrency Loan related costs to be incurred by such Specified Borrower under
this Agreement with respect to the prepayment or conversion of such Eurocurrency
Loan prior to the end of an Interest Period, any such conversion of Eurocurrency
Loans may only be made on the last day of an Interest Period with respect
thereto.
(d) For greater certainty, the conversion of any Loan to another
basis of Loan, as provided in this subsection 2.10, shall not constitute a
repayment of amounts owing under the Specified Loans under this Agreement nor a
new advance of funds hereunder.
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2.11 MINIMUM AMOUNTS OF TRANCHES. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurocurrency Tranche shall be in a minimum Equivalent Amount of
$1,000,000 and so that there shall not be more than 12 Eurocurrency Tranches at
any one time outstanding.
2.12 SWING LINE COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Specified Swing Line Lender agrees to make Swing Line
Loans to the Specified Borrower from time to time during the Specified Revolving
Credit Commitment Period in an aggregate principal amount at any one time
outstanding not to exceed the Specified Swing Line Commitment of such Specified
Swing Line Lender, PROVIDED that at no time (i) may the sum of the Specified
Swing Line Loans, the Specified Revolving Credit Loans and Specified
Accommodation Outstandings exceed the Specified Revolving Credit Commitments,
(ii) may the aggregate of the Swing Line Loans, the Revolving Credit Loans and
the Accommodation Outstandings exceed the US Revolving Credit Commitments or
(iii) may the Equivalent Amount of the aggregate of the English Revolving Credit
Loans, the Accommodations issued by the English Issuing Lender for the account
of the English Borrower, the Swing Line Loans made to the English Borrower and
the Euro Revolving Credit Loans, in each case, then outstanding exceed
$20,000,000. During the Specified Revolving Credit Commitment Period, the
Specified Borrower may use the Specified Swing Line Commitment by borrowing,
prepaying the Specified Swing Line Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof. All Specified Swing Line
Loans shall be Base Rate Loans. The Specified Borrower shall give the Specified
Swing Line Lender irrevocable notice (which notice must be received by the
Specified Swing Line Lender prior to 12:00 noon local time of the Specified
Swing Line Lender) on the requested Borrowing Date specifying the amount of the
requested Specified Swing Line Loan which shall be in an aggregate minimum
Equivalent Amount of $100,000. The proceeds of the Specified Swing Line Loan
will be made available by the Specified Swing Line Lender to the Specified
Borrower at the office of the Specified Swing Line Lender by 2:00 p.m. local
time on the Borrowing Date by crediting the account of the Specified Borrower at
such office with such proceeds. The Specified Borrower may at any time and from
time to time, prepay the Specified Swing Line Loans, in whole or in part,
without premium or penalty, by notifying the Specified Swing Line Lender prior
to 12:00 noon local time on any Business Day of the date and amount of
prepayment. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein. Partial prepayments
shall be in a minimum principal Equivalent Amount of $100,000.
(b) Any Specified Swing Line Lender, at any time in its sole
and absolute discretion may, on behalf of the Specified Borrower (which hereby
irrevocably directs the Specified Swing Line Lender to act on its behalf), and
without regard to the minimum amounts in subsection 2.2, request each Specified
Revolving Credit Lender including the Specified Swing Line Lender to make a
Specified Revolving Credit Loan in an amount equal to such Specified Lender's
Revolving Credit Commitment Percentage of the amount of the Specified Swing Line
Loans outstanding on the date such notice is given (the "SPECIFIED REFUNDED
SWING LINE LOANS"). Unless any of the events described in paragraph (f) of
Section 9 shall have occurred with respect to the Specified Borrower (in which
event the procedures of paragraph (d) of this subsection 2.12 shall apply) each
Specified
<PAGE>
Revolving Credit Lender shall make the proceeds of its Specified Revolving
Credit Loan available to the Specified Agent for the account of the Specified
Swing Line Lender at the office of the Specified Agent specified in
subsection 12.2 prior to 1:00 p.m. local time of a Specified Agent in funds
immediately available on the Business Day next succeeding the date such
notice is given. The proceeds of such Specified Revolving Credit Loans shall
be immediately applied to repay the Specified Refunded Swing Line Loans.
Effective on the day such Specified Revolving Credit Loans are made, the
portion of such Loans so paid shall no longer be outstanding as Specified
Swing Line Loans, shall no longer be due under any Specified Swing Line Note
and shall be Specified Revolving Credit Loans made by the Specified Revolving
Credit Lenders in accordance with their respective Specified Revolving Credit
Commitment Percentages. Each Specified Borrower authorizes the Specified
Swing Line Lender to charge its accounts with the Specified Agent (up to the
amount available in each such account) in order to immediately pay the amount
of such Specified Refunded Swing Line Loans to the extent amounts received
from the Specified Revolving Credit Lenders are not sufficient to repay in
full such Specified Refunded Swing Line Loans.
(c) Notwithstanding anything herein to the contrary, no Specified
Swing Line Lender shall be obligated to make any Specified Swing Line Loans if
the conditions set forth in subsection 6.2 have not been satisfied.
(d) If prior to the making of a Specified Revolving Credit Loan
pursuant to paragraph (b) of this subsection 2.12 one of the events described in
paragraph (f) of Section 9 shall have occurred and be continuing with respect to
the Specified Borrower, each Specified Revolving Credit Lender will, on the date
such Specified Revolving Credit Loan was to have been made pursuant to the
notice in subsection 2.12(b), purchase an undivided participating interest in
the Specified Refunded Swing Line Loan in an amount equal to (i) its Specified
Revolving Credit Commitment Percentage MULTIPLIED BY (ii) the Specified Refunded
Swing Line Loans. Each Specified Revolving Credit Lender will immediately
transfer to the Specified Swing Line Lender, in immediately available funds, the
amount of its participation, and upon receipt thereof the Specified Swing Line
Lender will deliver to such Specified Revolving Credit Lender a Specified Swing
Line Loan Participation Certificate dated the date of receipt of such funds and
in such amount.
(e) Whenever, at any time after any Specified Revolving Credit
Lender has purchased a participating interest in a Specified Swing Line Loan,
the Specified Swing Line Lender receives any payment on account thereof, the
Specified Swing Line Lender will distribute to such Specified Revolving Credit
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Specified Revolving Credit Lender's participating interest was outstanding and
funded); PROVIDED, HOWEVER, that in the event that such payment received by the
Specified Swing Line Lender is required to be returned, such Specified Revolving
Credit Lender will return to the Specified Swing Line Lender any portion thereof
previously distributed by the Specified Swing Line Lender to it.
(f) Each Specified Revolving Credit Lender's obligation to
make the Loans referred to in subsection 2.12(b) and to purchase participating
interests pursuant to subsection 2.12(d) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense, or other right which such
Specified Revolving Credit Lender or the Specified
<PAGE>
Borrower may have against the Specified Swing Line Lender, the Specified
Borrower or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of a Default or an Event of Default; (iii) any adverse change
in the condition (financial or otherwise) of the Specified Borrower; (iv) any
breach of this Agreement or any other Specified Loan Document by the
Specified Borrower, any Subsidiary or any other Specified Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
SECTION 3. ACCOMMODATIONS
3.1 THE ACCOMMODATION COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Specified Issuing Lender, in reliance on the agreements
of the other Specified Revolving Credit Lenders set forth in subsection 3.4(a),
agrees to issue or accept Specified Accommodations for the account of the
related Specified Borrower on any Business Day during the Specified Revolving
Credit Commitment Period in such form as may be approved from time to time by
the Specified Issuing Lender; PROVIDED, that, no Specified Issuing Lender shall
issue or accept any Specified Accommodation if, after giving effect to such
issuance, (i) the Specified Accommodation Outstandings would exceed the
Specified Issuing Lender's Accommodation Commitment, (ii) the sum of the
Specified Revolving Credit Loans, Specified Swing Line Loans, and Specified
Accommodation Outstandings of the Specified Revolving Credit Lenders would
exceed the Specified Revolving Credit Commitments of the Specified Revolving
Credit Lenders, (iii) the aggregate of the Swing Line Loans, the Revolving
Credit Loans and the Accommodation Outstandings would exceed the US Revolving
Credit Commitments or (iv) the Equivalent Amount of the aggregate of the English
Revolving Credit Loans, the Accommodations issued by the English Issuing Lender
for the account of the English Borrower, the Swing Line Loans made to the
English Borrower and the Euro Revolving Credit Loans, in each case, then
outstanding would exceed $20,000,000. Each Specified Accommodation shall (i) be
(w) the Bank Guarantee Letters of Credit, (x) a Standby L/C, (y) a Trade L/C or
(z) a bankers' acceptance, to the extent included in the Specified Accommodation
Commitment and (ii) expire or mature no later than five (5) Business Days prior
to the Scheduled Revolving Credit Commitment Termination Date. No Accommodation
(other than the Bank Guarantee Letters of Credit) shall have an expiry or
maturity date more than one year after its date of issuance or creation;
PROVIDED, that, any Specified Letter of Credit (other than the Bank Guarantee
Letters of Credit) may provide for the renewal thereof for additional periods
not to exceed one (1) year (which shall in no event extend beyond the Scheduled
Revolving Credit Commitment Termination Date). Each Specified Accommodation
shall be denominated in the currency of the Specified Revolving Credit
Commitment.
(b) Each Specified Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith, the laws of the
jurisdiction of the Specified Issuing Lender's office.
(c) No Specified Issuing Lender shall at any time be obligated to
issue or accept any Specified Accommodation hereunder if such issuance would
conflict with, or cause the Specified Issuing Lender or any Specified
Participating Lender to exceed any limits imposed by, any applicable Requirement
of Law.
<PAGE>
3.2 PROCEDURE FOR ISSUANCE OF SPECIFIED ACCOMMODATIONS. Any
Specified Borrower may from time to time request that the Specified Issuing
Lender issue or accept a Specified Accommodation by delivering to the Specified
Issuing Lender and the Specified Agent at their respective address for notices
specified herein a draft of the Specified Accommodation to be accepted by the
Specified Issuing Lender, or a commercial letter of credit application in the
Issuing Lender's then customary form (a "TRADE L/C APPLICATION"), or a standby
letter of credit application in the Specified Issuing Lender's then customary
form (a "STANDBY L/C APPLICATION"), completed to the reasonable satisfaction of
the Specified Issuing Lender, and such other certificates, documents and other
papers and information as may be customary for Accommodations of the kind being
requested and as the Specified Issuing Lender may reasonably request. Upon
receipt of any Letter of Credit Application and appropriate documentation, the
Specified Issuing Lender will process such documents, certificates and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and, upon receipt by the Specified Issuing Lender
of confirmation from the Specified Agent that issuance of such Specified
Accommodation will not contravene subsection 3.1, the Specified Issuing Lender
shall promptly issue or accept the Specified Accommodation requested thereby
(but in no event shall the Specified Issuing Lender be required to issue or
accept any Specified Letter of Credit earlier than three (3) Business Days (or
such earlier date as the Specified Issuing Lender may approve) after its receipt
of the appropriate documentation therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Specified Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Specified Issuing Lender and the Specified
Borrower or delivering the accepted draft to the Specified Borrower (or as
directed by it). The Specified Issuing Lender shall furnish a copy of such
Specified Letter of Credit to the Specified Borrower and the Specified Agent
promptly following the issuance thereof. Each Specified Agent shall provide a
notice of the aggregate amount of Specified Accommodation Outstandings
periodically, but at least annually, to the Specified Lenders.
3.3 FEES, COMMISSIONS AND OTHER CHARGES. (a) Each Specified
Borrower shall pay to the Specified Agent, for the account of the Specified
Issuing Lender and the Specified Participating Lenders, a letter of credit
commission or acceptance fee, as applicable, with respect to each Specified
Accommodation, in an amount equal to the Applicable Margin applicable to
Specified Revolving Credit Loans bearing interest at the Eurocurrency Rate plus
1/4 of 1% per annum of the average daily face amount of such Specified
Accommodation, payable quarterly in arrears on the last day of each March, June,
September and December and on the Specified Revolving Credit Commitment
Termination Date. A portion of such commission or fee, as applicable, equal to
1/4 of 1% of the average daily face amount of such Specified Accommodation shall
be payable to the Specified Issuing Lender for its own account, and the
remaining portion of such commission shall be payable to the Specified Issuing
Lender and the Specified Participating Lenders to be shared ratably among them
in accordance with their respective Specified Revolving Credit Commitment
Percentages. Such commission and fee shall be nonrefundable.
<PAGE>
(b) In addition to the foregoing fees and commissions, each
Specified Borrower shall pay or reimburse the Specified Issuing Lender for such
normal and customary costs and expenses as are incurred or charged by such
Specified Issuing Lender in issuing, effecting payment under, amending or
otherwise administering any Specified Accommodation.
(c) The Specified Agent shall, promptly following its receipt
thereof, distribute to the Specified Issuing Lender and the Specified
Participating Lenders all fees and commissions received by the Specified Agent
for their respective accounts pursuant to this subsection.
3.4 ACCOMMODATION PARTICIPATIONS. (a) Effective on the date of
issuance or acceptance of each Specified Accommodation (or, in the case of the
Bank Guarantee Letters of Credit, the Closing Date), the Specified Issuing
Lender irrevocably agrees to grant and hereby grants to each Specified
Participating Lender, and each Specified Participating Lender irrevocably agrees
to accept and purchase and hereby accepts and purchases from the Specified
Issuing Lender, on the terms and conditions hereinafter stated, for such
Specified Participating Lender's own account and risk an undivided interest
equal to such Specified Participating Lender's Specified Revolving Credit
Commitment Percentage in the Specified Issuing Lender's obligations and rights
under each Specified Accommodation issued by such Specified Issuing Lender and
the amount of each draft paid by the Specified Issuing Lender thereunder. Each
Specified Participating Lender unconditionally and irrevocably agrees with the
Specified Issuing Lender that, if a draft is paid under any Specified
Accommodation (including a draft drawn by the Guarantor under the Bank Guarantee
Loan Note Letter of Credit) for which such Specified Issuing Lender is not
reimbursed in full by the Specified Borrower in accordance with the terms of
this Agreement, such Specified Participating Lender shall pay to the Specified
Agent, for the account of the Specified Issuing Lender, upon demand at the
Specified Agent's address specified in subsection 12.2, an amount equal to such
Specified Participating Lender's Specified Revolving Credit Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed. On the date that any Specified Assignee becomes a Specified
Revolving Credit Lender party to this Agreement in accordance with subsection
12.6, participating interests in any outstanding Specified Accommodation held by
the transferor Specified Revolving Credit Lender from which such Assignee
acquired its interest hereunder shall be proportionately reallotted between such
Specified Assignee and such transferor Specified Revolving Credit Lender. Each
Specified Participating Lender hereby agrees that its obligation to participate
in each Specified Accommodation, and to pay or to reimburse the Specified
Issuing Lender for its participating share of the drafts drawn or amounts
otherwise paid thereunder, is absolute, irrevocable and unconditional and shall
not be affected by any circumstances whatsoever (including, without limitation,
the occurrence or continuance of any Default or Event of Default), and that each
such payment shall be made without offset, abatement, withholding or other
reduction whatsoever.
(b) If any amount required to be paid by any Specified
Participating Lender to the Specified Issuing Lender pursuant to subsection
3.4(a) in respect of any unreimbursed portion of any draft paid by the Specified
Issuing Lender under any Specified Letter of Credit is paid to the Specified
Issuing Lender after the date such payment is due, such Specified Participating
Lender shall pay to the Specified Agent, for
<PAGE>
the account of the Specified Issuing Lender, on demand, an amount equal to
the product of (i) such amount, multiplied by (ii) the daily average Base
Rate (or if there is no Base Rate available, daily Eurocurrency Rate) for the
Specified Borrower during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Specified Issuing Lender, multiplied by (iii) a fraction the numerator of
which is the number of days that elapse during such period and the
denominator of which is 360 for Eurocurrency Loans, or 365 or 366 for Base
Rate Loans, as applicable. A certificate of the Specified Issuing Lender
submitted to any Specified Participating Lender with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after any Specified Issuing Lender has
paid a draft under any Specified Accommodation and has received from any
Specified Participating Lender its PRO RATA share of such payment in accordance
with subsection 3.4(a), such Specified Issuing Lender receives any
reimbursement on account of such unreimbursed portion, or any payment of
interest on account thereof, the Specified Issuing Lender will pay to the
Specified Agent, for the account of such Specified Participating Lender, its PRO
RATA share thereof; PROVIDED, HOWEVER, that in the event that any such payment
received by the Specified Issuing Lender shall be required to be returned by the
Specified Issuing Lender, such Specified Participating Lender shall return to
the Specified Agent for the account of the Specified Issuing Lender, the portion
thereof previously distributed to it.
3.5 REIMBURSEMENT OBLIGATION OF THE SPECIFIED BORROWER. Each
Specified Borrower agrees to reimburse its Specified Issuing Lender on each date
on which such Specified Issuing Lender notifies such Specified Borrower of the
date and amount of a draft presented under any Specified Accommodation and paid
by the Specified Issuing Lender for the amount of (a) such draft so paid and (b)
any taxes, fees, charges or other costs or expenses incurred by the Specified
Issuing Lender in connection with such payment. Each such payment shall be made
to the Specified Issuing Lender at its address for notices specified herein in
lawful money of the currency in which such Specified Accommodation is issued and
in immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Specified Borrower under this subsection from the date
such amounts become payable until payment in full, at the rate which would be
payable on Specified Revolving Credit Loans which are Base Rate Loans,
denominated in the same currency as the relevant Specified Accommodation (or, if
there is no Base Rate available, daily Eurocurrency Rate).
3.6 OBLIGATIONS ABSOLUTE. Each Specified Borrower's
obligations under this Section 3 shall be absolute and unconditional under any
and all circumstances and irrespective of any set-off, counterclaim or defense
to payment which such Specified Borrower or any other Person may have or have
had against its Specified Issuing Lender or any beneficiary of a Specified
Accommodation. Each Specified Borrower also agrees with its Specified Issuing
Lender that such Specified Issuing Lender shall not be responsible for, and such
Specified Borrower's obligations under subsection 3.5 shall not be affected by,
among other things, the enforceability, validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in fact prove to
be unenforceable, invalid, fraudulent or forged, or any dispute between or among
the Specified Borrower and any beneficiary of any Specified Accommodation or any
other
<PAGE>
party to which such Specified Accommodation may be transferred or any
claims whatsoever of the Specified Borrower against any beneficiary of such
Specified Accommodation or any such transferee, except for errors or omissions
caused by the Specified Issuing Lender's gross negligence or wilful misconduct.
The Specified Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Specified Accommodation,
except for errors or omissions caused by the Specified Issuing Lender's gross
negligence or wilful misconduct. The Specified Borrower agrees that any action
taken or omitted by the Specified Issuing Lender under or in connection with any
Specified Accommodation or the related drafts or documents, if done in the
absence of gross negligence or wilful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the State of New
York, including, without limitation, Article V thereof or the standards of care
specified in the laws of the jurisdiction of the Specified Issuing Lender's
issuing office, as applicable, shall be binding on the Specified Borrower and
shall not result in any liability of such Specified Issuing Lender to the
Specified Borrower.
3.7 ACCOMMODATION PAYMENTS. If any draft shall be presented for
payment under any Specified Accommodation, the Specified Issuing Lender shall
promptly notify the Specified Borrower and the Specified Agent of the date and
amount thereof. The responsibility of the Specified Issuing Lender to the
Specified Borrower in connection with any draft presented for payment under any
Specified Accommodation shall, in addition to any payment obligation expressly
provided for in such Specified Accommodation, be limited to determining that the
documents (including each draft) delivered under such Specified Accommodation in
connection with such presentment are in conformity with such Specified
Accommodation.
3.8 LETTER OF CREDIT APPLICATIONS. To the extent that any
provision of any Specified Letter of Credit Application, including any
reimbursement provisions contained therein, related to any Specified Letter of
Credit is inconsistent with the provisions of this Section 3, the provisions of
this Section 3 shall prevail.
SECTION 4. GENERAL PROVISIONS
4.1 INTEREST RATES AND PAYMENT DATES. (a) Each Eurocurrency Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Specified Base Rate plus the Applicable Margin.
(c) Upon the occurrence and during the continuance of any Event of
Default specified in subsection 9(a), the Specified Loans and any overdue
amounts hereunder shall bear interest at a rate per annum which is (x) in the
case of the Specified Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this subsection plus 2% per annum or (y)
in the case of overdue interest, commitment fee or
<PAGE>
other amount, the rate described in paragraph (b) (or, if no Base
Rate is available, paragraph (a) for Interest Periods of one day) of this
subsection 4.1 plus 2% per annum.
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
4.2 COMPUTATION OF INTEREST AND FEES. (a) Unless otherwise
indicated in the Administrative Schedule, interest on Loans, fees, interest on
overdue interest, and other amounts payable hereunder shall be calculated, on
the basis of a 365-or 366-day year, in each case, for the actual days elapsed.
The Specified Agent shall as soon as practicable notify the Specified Borrower
and the Specified Revolving Credit Lenders or the Specified Term Loan Lenders,
as the case may be, of each determination of a Eurocurrency Rate. Any change in
the interest rate on a Specified Loan resulting from a change in the Specified
Base Rate or the Specified Eurocurrency Rate shall become effective as of the
opening of business on the day on which such change becomes effective. The
Specified Agent shall as soon as practicable notify the Specified Borrower and
the Specified Revolving Credit Lenders or the Specified Term Loan Lenders, as
the case may be, of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by a Specified Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Specified Borrower and the Specified Lenders and the other parties hereto in
the absence of manifest error. The Specified Agent shall, at the request of the
Specified Borrower, deliver to the Specified Borrower a statement showing the
quotations used by the Specified Agent in determining any interest rate pursuant
to subsection 4.1(a) or (b).
(c) If any provision of any Loan Document would oblige any
Borrower to make any payment of interest or other amount payable to any Lender
in an amount or calculated at a rate which would be prohibited by law or would
result in a receipt by that Lender of interest at such prohibited rate (as such
terms are construed under the applicable Requirement of Law), then
notwithstanding such provision, such amount or rate shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as
the case may be, as would not be so prohibited by law or so result in a receipt
by that Lender of interest at a criminal rate, such adjustment to be effected,
to the extent necessary, as follows:
(i) firstly, by reducing the amount or rate of interest
required to be paid to the affected Lender under subsection 4.1; and
(ii) thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid to the affected Lender
which would constitute interest for purposes of any applicable
Requirement of Law.
4.3 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period:
(a) the Specified Agent shall have determined (which
determination, absent manifest error, shall be conclusive and binding
upon the Specified Borrower) that,
<PAGE>
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Specified
Eurocurrency Rate for such Interest Period, or
(b) the Specified Agent shall have received notice from
holders of a majority of the Specified Loans subject to such Interest
Period that the Specified Eurocurrency Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Specified Lenders (as conclusively certified
by such Specified Lenders) of making or maintaining their affected
Specified Loans during such Interest Period,
the Specified Agent shall give telecopy or telephonic notice thereof to the
Specified Borrower and the Specified Lenders as soon as practicable thereafter.
If such notice is given (x) any Specified Eurocurrency Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans,
(y) any Specified Loans that were to have been converted on the first day of
such Interest Period to Eurocurrency Loans shall be converted to or continued as
Base Rate Loans and (z) any outstanding Specified Eurocurrency Loans shall be
converted, on the last day of the Interest Periods therefor, to Base Rate Loans.
Until such notice has been withdrawn by the Specified Agent (which the Specified
Agent agrees to do when the circumstances that prompted the delivery of such
notice no longer exist), no further Eurocurrency Loans shall be made or
continued as such, nor shall the Specified Borrower have the right to convert
such Specified Loans to Eurocurrency Loans. Notwithstanding the foregoing, until
such notice has been withdrawn by the Specified Agent (which the Specified Agent
agrees to do when the circumstances that prompted the delivery of such notice no
longer exist), if a Base Rate is not available to the Specified Borrower, any
Specified Loans or Specified Obligations or other amounts due hereunder not
subject to an Interest Period determined prior to such notice shall bear
interest at a rate determined from time to time by the Specified Agent to be its
cost of maintaining its share of such Specified Loans, Specified Obligations or
other amounts plus the Applicable Margin and any overdue percentage (to the
extent chargeable at such time) pursuant to subsection 4.1(c).
4.4 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing,
conversion or continuation pursuant to subsection 2.10, of Specified Loans
(other than Specified Swing Line Loans) by a Specified Borrower from the
Specified Lenders and any reduction of the Specified Commitments of the
Specified Lenders hereunder shall be made PRO RATA according to the respective
principal amounts of such Specified Loans held by the Specified Lenders or the
respective Specified Commitments of the Specified Lenders, as the case may be.
(b) Whenever (i) any payment received by a Specified Agent under
this Agreement or any Specified Note or (ii) any other amounts received by such
Specified Agent for or on behalf of the Specified Borrower (including, without
limitation, proceeds of collateral or payments under any guarantee) is
insufficient to pay in full all amounts then due and payable to such Specified
Agent and the Specified Lenders under this Agreement and any Specified Note and
the other Loan Documents, such payment shall be distributed by the Specified
Agent and applied by the Specified Agent and the Specified Lenders in the
following order: FIRST, to the payment of fees and expenses due and payable to
the Specified Agent under and in connection with this Agreement and the other
<PAGE>
Specified Loan Documents; SECOND, to the payment of all expenses due and payable
under subsection 12.5, ratably among the Specified Agent and the Specified
Lenders in accordance with the aggregate amount of such payments owed to the
Specified Agent and each such Specified Lenders; THIRD, to the payment of fees
due and payable under subsections 2.3 and 3.3(a) (which, in the case of the
Specified Lenders, shall be distributed ratably among such Lenders in accordance
with the Specified Revolving Credit Commitment Percentage of each such Lender
and, in the case of the Specified Issuing Lender, the amount retained by such
Specified Issuing Lender for its own account pursuant to subsection 3.3(a)) and
to the payment of interest then due and payable under the Specified Loans,
ratably in accordance with the aggregate amount of interest and fees owed to
each such Specified Lender; FOURTH, to the payment of the principal amount of
the Specified Loans and the Specified Accommodation Obligations (including any
amounts required to be cash collateralized) then due and payable and, in the
case of proceeds of collateral or payments under any guarantee, to the payment
of any other Obligations to any Secured Party Lender not covered in First
through Third above ratably secured by such collateral or ratably guaranteed
under any such guarantee, ratably among the Secured Parties Lenders in
accordance with the aggregate principal amount and, in the case of proceeds of
collateral or payments under any guarantee, the obligations secured or
guaranteed thereby owed to each such Specified Lender.
(c) If any Specified Revolving Credit Lender (a "NON-FUNDING
LENDER") has (x) failed to make a Specified Revolving Credit Loan required to be
made by it hereunder, and the Specified Agent has determined that such Specified
Lender is not likely to make such Specified Loan or (y) given notice to the
Specified Borrower or the Specified Agent that it will not make, or that it has
disaffirmed or repudiated any obligation to make, any Specified Loans, any
payment made on account of the principal of the Specified Loans outstanding
shall be made as follows:
(i) in the case of any such payment made on any date when and
to the extent that, in the determination of the Specified Agent, the
Specified Borrower would be able, under the terms and conditions
hereof, to reborrow the amount of such payment under the Specified
Commitments and to satisfy any applicable conditions precedent set
forth in subsection 6.2 to such reborrowing, such payment shall be made
on account of the outstanding Specified Revolving Credit Loans held by
the Specified Lenders other than the Non-Funding Lender PRO RATA
according to the outstanding principal amounts of the Specified
Revolving Credit Loans of such Specified Lenders;
(ii) otherwise, such payment shall be made on account of the
outstanding Specified Revolving Credit Loans held by the Specified
Revolving Credit Lenders PRO RATA according to the respective
outstanding principal amounts of such Loans; and
(iii) any payment made on account of interest on the Specified
Revolving Credit Loans shall be made PRO RATA according to the
respective amounts of accrued and unpaid interest due and payable on
such Loans with respect to which such payment is being made.
The Specified Borrower agrees to give the Specified Agent such assistance in
making any determination pursuant to this paragraph as the Specified Agent may
reasonably request.
<PAGE>
Any such determination by the Specified Agent shall be conclusive and binding on
the Specified Lenders.
(d) All payments (including prepayments) to be made by a Specified
Borrower on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to its Specified Agent, for the
account of the Specified Lenders at the Specified Agent's office listed in
subsection 12.2 or in the Administrative Schedule, in the currency in which such
amounts are denominated and in immediately available funds. The Specified Agent
shall promptly distribute such payments in accordance with the provisions of
subsections 4.4(b) and (c) promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on the Eurocurrency Loans) would
become due and payable on a day other than a Business Day, such payment shall
become due and payable on the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension. If any payment on a Eurocurrency Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension), unless the result of such extension would be to extend such
payment into another calendar month in which event such payment shall be made on
the immediately preceding Business Day.
(e) A payment shall be deemed to have been made by the Specified
Agent on the date on which it is required to be made under this Agreement if the
Specified Agent has, on or before that date, taken all relevant steps to make
that payment. With respect to the payment of any amount denominated in euro, the
Euro Agent shall not be liable to the Euro Borrower or any of the Euro Lenders
in any way whatsoever for any delay, or the consequences of any delay, in the
crediting to any account of any amount required by this Agreement to be paid by
the Specified Agent if the Specified Agent shall have taken all relevant steps
to achieve, on the date required by this Agreement, the payment of such amount
in immediately available, freely transferable, cleared funds in the euro unit to
the account with the bank in the principal financial center in the Participating
Member State which the Euro Borrower or, as the case may be, any Euro Lender
shall have specified for such purpose. In this paragraph (e), "all relevant
steps" means all such steps as may be prescribed from time to time by the
regulations or operating procedures of such clearing or settlement system as the
Euro Agent may from time to time determine for the purpose of clearing or
settling payments of euro.
(f) Unless the Specified Agent shall have been notified in
writing by any Lender prior to a Borrowing Date that such Specified Lender will
not make the amount that would constitute its relevant Ratable Portion of the
Specified Loans on such date available to the Specified Agent, the Specified
Agent may assume that such Specified Lender has made such amount available to
the Specified Agent on such Borrowing Date, and the Specified Agent may, in
reliance upon such assumption, make available to the Specified Borrower a
corresponding amount. If such amount is made available to the Specified Agent on
a date after such Borrowing Date, such Specified Lender shall
pay to the Specified Agent on demand an amount equal to the product of (i) the
daily average Base Rate (or, if a Base Rate is not available to such Specified
Borrower, a Eurocurrency Rate with an Interest Period of one day) during such
period, times (ii) the amount of such Specified Lender's relevant Ratable
Portion of such Specified Loans, times (iii) a fraction
<PAGE>
the numerator of which is the number of days that elapse from and
including such Borrowing Date to the date on which such Specified Lender's
relevant Ratable Portion of such Specified Loans shall have become immediately
available to the Specified Agent and the denominator of which is 365/366 or 360,
as applicable. A certificate of the Specified Agent submitted to any Specified
Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Specified Lender's relevant
Ratable Portion of such Specified Loans is not in fact made available to the
Specified Agent by such Specified Lender within three (3) Business Days of such
Borrowing Date, the Specified Agent shall be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans
denominated in the relevant currency (or, if a Base Rate is not available to the
Specified Borrower, a Eurocurrency Rate with an Interest Period of one day), on
demand, from the Specified Borrower. The failure of any Specified Lender to make
any Specified Loan to be made by it shall not relieve any other Specified Lender
of its obligation, if any, hereunder to make its Specified Loan on such
Borrowing Date, but no Specified Lender shall be responsible for the failure of
any other Specified Lender to make the Specified Loan to be made by such other
Specified Lender on such Borrowing Date.
(g) Any amount payable by the Specified Agent to the Specified
Lenders under this Agreement in the currency of a Participating Member State
shall be paid in the euro unit.
(h) If, in relation to the currency of any Subsequent Participant,
the basis of accrual of interest or fees expressed in this Agreement with
respect to such currency shall be inconsistent with any convention or practice
in the London Interbank Market for the basis of accrual of interest or fees in
respect of the euro, such convention or practice shall replace such expressed
basis effective as of and from the date on which such Subsequent Participant
becomes a Participating Member State; PROVIDED, that if any Loan in the currency
of such Subsequent Participant is outstanding immediately prior to such date,
such replacement shall take effect, with respect to such Loan, at the end of the
then current Interest Period.
(i) Without prejudice and in addition to any method of conversion
or rounding prescribed by any EMU Legislation and (i) without prejudice to the
respective liabilities for indebtedness of the Specified Borrowers to the
Specified Lenders and the Specified Lenders to the Specified Borrowers under or
pursuant to this Agreement and (ii) without increasing the Specified Revolving
Credit Commitment of any Specified Lender:
(i) the Revolving Credit Commitments and each reference
in this Agreement to a minimum amount (or an integral multiple
thereof) in a national currency denomination of a Subsequent
Participant to be paid to or by the Specified Agent shall,
immediately upon such Subsequent Participant becoming a
Participating Member State, be replaced by a reference to such
reasonably comparable and convenient amount (or an integral
multiple thereof) in the euro unit as the Specified Agent may from
time to time specify; and
(ii) except as expressly provided in this subsection 4.4,
each provision of this Agreement shall be subject to such
reasonable changes of construction as the Specified Agent may from
time to time specify to be necessary or appropriate to
<PAGE>
reflect the adoption of the euro in any Participating Member
State and any relevant market conventions or practices
relating to the euro.
4.5 ILLEGALITY. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Specified Lender to make
or maintain Eurocurrency Loans as contemplated by this Agreement, (a) the
commitment of such Specified Lender hereunder to make Eurocurrency Loans,
continue Eurocurrency Loans as such, and convert Base Rate Loans to Eurocurrency
Loans, as applicable, shall forthwith be cancelled and (b) such Specified
Lender's Loans then outstanding as Eurocurrency Loans, if any, shall be
converted automatically to Specified Base Rate Loans on the respective last days
of the then current Interest Periods with respect to such Specified Loans or
within such earlier period as required by law; PROVIDED that before making any
such demand, each Specified Lender agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions and so long as
such efforts would not be disadvantageous to it, in its reasonable discretion,
in any legal, economic or regulatory manner) to designate a different lending
office if the making of such a designation would allow the Specified Lender or
its lending office to continue to perform its obligations to make Eurocurrency
Loans. If any such conversion of a Eurocurrency Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto, the
Specified Borrower shall pay to such Specified Lender such amounts, if any, as
may be required pursuant to subsection 4.8. If circumstances subsequently change
so that any affected Lender shall determine that it is no longer so affected,
such Specified Lender will promptly notify the Specified Borrower and the
Specified Agent, and upon receipt of such notice, the obligations of such
Specified Lender to make or continue Eurocurrency Loans or to convert Base Rate
Loans into Eurocurrency Loans, as applicable, shall be reinstated.
Notwithstanding the foregoing, until such notice has been withdrawn by the
Specified Lender (which the Specified Lender agrees to do when the circumstances
that prompted the delivery of such notice no longer exist), if a Base Rate is
not available to the Specified Borrower, any Specified Loans or Specified
Obligations or other amounts due hereunder not subject to an Interest Period
determined prior to such notice shall bear interest at a rate determined from
time to time by the Specified Lender to be its cost of maintaining its share of
such Specified Loans, specified Obligations or other amounts plus the Applicable
Margin and any applicable overdue percentage pursuant to subsection 4.1(c).
4.6 REQUIREMENTS OF LAW. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Specified Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority
made subsequent to the date hereof:
(i) shall subject any Specified Lender to any tax of
any kind whatsoever with respect to this Agreement, any Specified
Eurocurrency Loan, any Specified Note, any Specified Accommodation,
Letter of Credit Application, or change the basis of taxation of
payments to such Specified Lender in respect thereof (except for taxes
covered by subsection 4.7 and the establishment of a tax based on the
net income of such Specified Lender or changes in the rate of tax on
the net income of such Specified Lender);
<PAGE>
Exhibit 10.1_C
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit (including, without
limitation, letters of credit or bankers acceptances) by, or any other
acquisition of funds by, any office of such Lender; or
(iii) shall impose on such Specified Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Specified
Lender, by an amount which such Specified Lender reasonably deems to be
material, of making, converting into, continuing or maintaining Eurocurrency
Loans or to increase the cost to such Specified Lender, by an amount which such
Specified Lender reasonably deems to be material, of issuing or maintaining any
Specified Accommodation or participation therein or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Specified
Borrower shall promptly pay such Specified Lender, upon its written demand and
presentation of supporting calculations and any reasonably available supporting
documentation, any additional amounts necessary to compensate such Specified
Lender for such increased cost or reduced amount receivable, PROVIDED, in
respect of Accommodations and Eurocurrency Loans, that before making any such
demand, each Specified Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, in its reasonable discretion, in any
legal, economic or regulatory manner) to designate a different Accommodation
lending office or a different Eurocurrency lending office, as the case may be,
if the making of such designation would allow the Specified Lender, its
Eurocurrency Loan lending office, or its Accommodation lending office, as the
case may be, to continue to perform its obligations to make Accommodations or
Eurocurrency Loans, as applicable, or to continue to fund or maintain
Accommodations or Eurocurrency Loans, as applicable, and avoid the need for, or
materially reduce the amount of, such increased cost. If any Specified Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall promptly notify (in any event no later than ninety (90) days after such
Specified Lender becomes entitled to make such claim) the Specified Borrower in
writing, through the Specified Agent, of the event by reason of which it has
become so entitled. Such demand shall be accompanied by a statement summarizing
the basis for the additional amounts payable under this subsection including
reasonably detailed calculations of such additional amounts. Such statement
submitted by such Specified Lender, through the Specified Agent, to the
Specified Borrower shall be conclusive in the absence of manifest error. If the
Specified Borrower so notifies the Specified Agent within five (5) Business Days
after any Specified Lender notifies the Specified Borrower of any increased cost
pursuant to the foregoing provisions of this subsection 4.6, the Specified
Borrower may convert all Eurocurrency Loans of such Specified Lender then
outstanding into Base Rate Loans if a Base Rate option is available in
accordance with subsection 2.10 and, additionally, reimburse such Specified
Lender for any cost in accordance with subsection 4.8. This covenant shall
survive the termination of this Agreement and the payment of the Specified Loans
and all other amounts payable hereunder.
(b) If any Specified Lender shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Specified
Lender or any corporation
<PAGE>
controlling such Specified Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Specified Lender's or such
corporation's capital as a consequence of its obligations hereunder or under
any Specified Accommodation to a level below that which such Specified Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Specified Lender's or such corporation's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Specified Lender to be material, then from time to time, after
submission by such Specified Lender to the Specified Borrower (with a copy to
the Specified Agent) of a prompt written request therefor and presentation of
supporting calculations and any reasonably available supporting
documentation, the Specified Borrower shall pay to such Specified Lender such
additional amount or amounts as will compensate such Specified Lender for
such reduction. This c ovenant shall survive the termination of this
Agreement and the payment of the Specified Loans and all other amounts
payable hereunder.
4.7 TAXES. (a) Except as provided below in this subsection,
all payments made by each Specified Borrower under this Agreement and any
Specified Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any Specified
Governmental Authority, excluding net income taxes, franchise taxes imposed in
lieu of net income taxes, and branch profits taxes imposed on any Specified
Agent or any Specified Lender as a result of a present or former connection
between such Specified Agent or such Specified Lender and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from such Agent or such Specified Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED
TAXES") are required by law to be withheld from any amounts payable to the
Specified Agent or any Specified Lender hereunder or under any Specified Notes,
the amounts so payable to the Specified Agent or such Specified Lender shall be
increased to the extent necessary to yield to the Specified Agent or such
Specified Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and any Specified Notes, PROVIDED, HOWEVER, that the Specified
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any Specified
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Specified Lender's failure to comply with the requirements of paragraphs (b),
(c) or (d) of this subsection 4.7, (ii) that are United States withholding taxes
imposed on amounts payable to a US Lender either at the time the US Lender
becomes a party to this Agreement or as a result of an event occurring after the
US Lender becomes a US Lender other than a change in law or regulation or the
introduction of any law or regulation or a change in interpretation or
administration of any law, except to the extent that such US Lender's assignor
(if any) was entitled, at the time of assignment, to receive additional amounts
from the Borrower with respect to such Non-Excluded Taxes pursuant to Section
4.7(a) or (iii) that are United Kingdom withholding taxes imposed on amounts
payable to an English Lender either at the time the English Lender becomes a
party to this Agreement
<PAGE>
or as a result of an event occurring after the English Lender becomes a English
Lender other than a change in law or regulation or the introduction of any law,
except to the extent that such English Lender's assignor (if any) was entitled
at the time of assignment, to receive additional amounts from the Borrower with
respect to such Non-Excluded Taxes pursuant to Section 4.7(a). Whenever any
Non-Excluded Taxes are payable by the Specified Borrower, as promptly as
possible thereafter the Specified Borrower shall send to the Specified Agent for
its own account or for the account of such Specified Lender, as the case may be,
a certified copy of an original official receipt received by the Specified
Borrower showing payment thereof. If the Specified Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Specified Agent the required copies of receipts or other required
documentary evidence, the Specified Borrower shall indemnify the Specified Agent
and the Specified Lenders for any incremental taxes, interest or penalties that
may become payable by the Specified Agent or any Specified Lender as a result of
any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Specified Loans and all
other amounts payable hereunder.
(b) With respect to US Lenders, each US Lender that is not a
United States Person as defined in Section 7701(a)(30) of the Code shall:
(i) in the case of any such US Lender other than a US
Lender described in clause (ii) of this subsection:
(x) on or before the date of any payment by
the US Borrower under this Agreement or any Notes to
such US Lender, deliver to the US Borrower and the
Administrative Agent (A) two duly completed copies of
United States Internal Revenue Service ("IRS") Form
1001 or 4224, or successor applicable form, as the
case may be, certifying that it is entitled to
receive payments under this Agreement and any Notes
without any deduction or withholding of any United
States federal income taxes or at a reduced rate and
(B) a duly completed IRS Form W-8 or W-9, or
successor applicable form, as the case may be,
certifying that it is entitled to an exemption from
United States backup withholding tax;
(y) deliver to the US Borrower and the
Administrative Agent two further copies of any such
form or certification on or before the date that any
such form or certification expires or becomes
obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the US Borrower; and
(z) obtain such extensions of time for
filing and complete such forms or certifications as
may reasonably be requested by the US Borrower or the
Administrative Agent; or
<PAGE>
(ii) in the case of any such US Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code
and that does not comply with sub-paragraph (i) of this
paragraph (b),
(x) represent to the US Borrower (for the
benefit of the US Borrower and the Administrative
Agent) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code and deliver to the
US Borrower on or before the date of any payment by
the US Borrower, with a copy to the Administrative
Agent, (A) a certificate stating that such US Lender
(1) is not a "bank" under Section 881(c)(3)(A) of the
Code, is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has
not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to
any Governmental Authority, any application made to a
rating agency or qualification for any exemption from
tax, securities law or other legal requirements, (2)
is not a 10-percent shareholder within the meaning of
Section 881(c)(3)(B) of the Code and (3) is not a
controlled foreign corporation receiving interest
from a related person within the meaning of Section
881(c)(3)(C) of the Code (any such certificate a
"U.S. TAX COMPLIANCE CERTIFICATE") and (B) two duly
completed copies of IRS Form W-8, or successor
applicable form, certifying to such US Lender's legal
entitlement at the date of such certificate to an
exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Code with respect
to payments to be made under this Agreement and any
US Notes;
(y) deliver to the US Borrower and the
Administrative Agent two further copies of IRS Form
W-8 on or before the date it expires or becomes
obsolete and after the occurrence of any event
requiring a change in the most recently provided form
and, if necessary, obtain any extensions of time
reasonably requested by the US Borrower or the
Administrative Agent for filing and completing such
forms; and
(z) agree, to the extent legally entitled to
do so, upon reasonable request by the US Borrower, to
provide to the US Borrower (for the benefit of the US
Borrower and the Administrative Agent) such other
forms as may be reasonably required in order to
establish the legal entitlement of such US Lender to
an exemption from withholding with respect to
payments under this Agreement and any Notes.
Each Person that shall become a US Lender or a Specified Participant pursuant to
subsection 12.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms, certifications and statements required
pursuant to this subsection; provided that in the case of a Specified
Participant the obligations of such Specified Participant pursuant to this
paragraph (b) shall be determined as if such Specified Participant were a US
Lender except that such Specified Participant shall furnish all such required
forms, certifications and statements to the US Lender from which the related
participation shall have been purchased. Each US Lender shall promptly notify
the
<PAGE>
Borrower at any time it determines that it is no longer in a position to provide
any previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 4.7(b), a US Lender shall
not be required to deliver any form pursuant to this Section 4.7(b) that such US
Lender is not legally able to deliver.
(c) Each Specified Lender shall, upon request by the Specified
Borrower, deliver to the Specified Borrower or the applicable Governmental
Authority, as the case may be, any form or certificate required in order that
any payment by the Specified Borrower under this Agreement or any Specified
Notes may be made free and clear of, and without deduction or withholding for or
on account of any Non-Excluded Taxes (or to allow any such deduction or
withholding to be at a reduced rate) imposed on such payment under the laws of
any jurisdiction, PROVIDED that such Specified Lender is legally entitled to
complete, execute and deliver such form or certificate and such completion,
execution or submission would not materially prejudice the legal position of
such Specified Lender.
(d) Each English Lender represents to English Borrower that at
the date hereof it is either (i) a bank as defined in Section 840A of the Income
and Corporation Taxes Act of 1988 and is within the charge to United Kingdom
corporation tax in respect of all interest received by it under this Agreement
or (ii) entitled by virtue of an applicable double tax treaty to claim such
exemption or relief from United Kingdom income tax as will allow interest
payments hereunder by the English Borrower to be made to it free and clear of
all taxes imposed by United Kingdom and has filed such a claim including all of
the appropriate supporting documents and a gross payment direction will be or
should be, issued in due course to English Borrower by the Inland Revenue.
Notwithstanding anything in this agreement to the contrary, no English Lender
shall be entitled to payments under subsection 4.7(a) pending the issuance of a
gross payment direction under this clause (ii). Notwithstanding any other
provision of this Section 4.7(d), an English Lender shall not be required to
deliver any form pursuant to this Section 4.7(d) that such English Lender is not
legally able to deliver.
(e) If the Specified Agent or Specified Lender receives a
refund in respect of Non-Excluded Taxes paid by the Specified Borrower, which in
the good faith judgment of such Specified Lender is allocable to such payment,
it shall promptly pay such refund, together with any other amounts paid by the
Specified Borrower in connection with such refunded Non-Excluded Taxes, to the
Specified Borrower, net of all reasonable out-of-pocket expenses of such
Specified Lender incurred in obtaining such refund, PROVIDED, HOWEVER, that the
Specified Borrower agrees to promptly return such refund to the Specified Agent
or the Specified Lender as the case may be, if it receives notice from the
Specified Agent or Specified Lender that such Specified Agent or Specified
Lender is required to repay such refund.
4.8 INDEMNITY. Each Specified Borrower agrees to indemnify
each Specified Lender and to hold each Specified Lender harmless from any loss
or expense which such Specified Lender sustains or incurs as a consequence of
(a) default by the Specified Borrower in payment when due of the principal
amount of or interest on any Eurocurrency Loan, (b) default by the Specified
Borrower in making a borrowing of, conversion into or continuation of
Eurocurrency Loans after the Specified Borrower has given a notice
<PAGE>
requesting the same in accordance with the provisions of this Agreement, (c)
default by the Specified Borrower in making any prepayment after the Specified
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (d) the making of a prepayment of Eurocurrency Loans on a day which
is not the last day of an Interest Period with respect thereto, including,
without limitation, in each case, any such loss or expense (but excluding loss
of margin) arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained.
Calculation of all amounts payable to a Specified Lender under this subsection
4.8 shall be made as though such Specified Lender had actually funded its
relevant Eurocurrency Loan through the purchase of a deposit bearing interest at
the Eurocurrency Rate in an amount equal to the amount of such Eurocurrency Loan
and having a maturity comparable to the relevant Interest Period; PROVIDED,
HOWEVER, that each Specified Lender may fund each of its Eurocurrency Loans in
any manner it sees fit, and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this subsection 4.8. This covenant
shall survive the termination of this Agreement and the payment of the Specified
Loans and all other amounts payable hereunder for a period of nine (9) months
thereafter.
4.9 REPLACEMENT OF SPECIFIED LENDER. If at any time (a) the
Specified Borrower becomes obligated to pay additional amounts described in
subsections 4.5, 4.6 or 4.7 as a result of any condition described in such
subsections or any Specified Lender ceases to make Eurocurrency Loans
pursuant to subsection 4.5, (b) any Specified Lender becomes insolvent and
its assets become subject to a receiver, liquidator, trustee, custodian or
other Person having similar powers, (c) any Specified Lender becomes a
"Non-Funding Lender" or (d) any Specified Lender fails to comply with an
amendment, waiver or modification to this Agreement or the other Loan
Documents which has been approved by the Required Lenders (or any different
requisite amount of Lenders as provided herein), then the Specified Borrower
may, on three (3) Business Days' prior written notice to the Specified Agent
and such Specified Lender, replace such Specified Lender by causing such
Specified Lender to (and such Specified Lender shall) assign pursuant to
subsection 12.6(c) all of its rights and obligations under this Agreement to
a Specified Lender or other entity selected by the Specified Borrower and
acceptable to the Specified Agent for a purchase price equal to the
outstanding principal amount of such Lender's Specified Loans and all accrued
interest and fees and other amounts payable hereunder; PROVIDED that (i) no
Specified Borrower shall have the right to replace its Specified Agent (in
its capacity as such), (ii) no Specified Agent or Specified Lender shall have
any obligation to any Specified Borrower to find a replacement Specified
Lender or other such entity, (iii) in the event of a replacement of a
Specified Lender to which the Specified Borrower becomes obligated to pay
additional amounts pursuant to clause (a) of this subsection 4.9, in order
for the Specified Borrower to be entitled to replace such a Specified Lender,
such replacement must take place no later than six (6) months after the
Specified Lender shall have demanded payment of additional amounts under one
of the subsections described in clause (a) of this subsection 4.9, as the
case may be, and (iv) in no event shall the Specified Lender hereby replaced
be required to pay or surrender to such replacement Specified Lender or other
entity any of the fees received by such Specified Lender hereby replaced
pursuant to this Agreement. In the case of a replacement of a Specified
Lender to which the Specified Borrower becomes obligated to pay additional
amounts pursuant to clause (a) of this subsection 4.9, the Specified Borrower
shall pay such additional amounts to such Specified Lender prior to such
Specified Lender being replaced and the payment of such additional amounts
shall be a
<PAGE>
condition to the replacement of such Specified Lender. The Specified Borrower's
right to replace a Non-Funding Lender pursuant to this subsection 4.9 is, and
shall be, in addition to, and not in lieu of, all other rights and remedies
available to the Specified Borrower against such Non-Funding Lender under this
Agreement, at law, in equity, or by statute.
4.10 REDENOMINATION AND ALTERNATIVE CURRENCIES. Each
obligation under this Agreement of a party to this Agreement which has been
denominated in the National Currency Unit of a Subsequent Participant state
shall be redenominated into the euro unit in accordance with EMU Legislation
immediately upon such Subsequent Participant becoming a Participating Member
State (but otherwise in accordance with EMU Legislation).
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make their respective Loans and to issue and participate in
Accommodations, each Borrower, only as to itself and its Subsidiaries, hereby
represents and warrants to the Agents and each Lender that:
5.1 FINANCIAL CONDITION. (a) The audited consolidated
financial statements of the US Borrower (or its predecessor) and its
Subsidiaries for the period from April 2, 1996 through December 31, 1996 and the
fiscal years ended December 31, 1997 and December 31, 1998, copies of which have
been furnished to each Lender, have been prepared using accounting methods,
procedures and policies which are in accordance with GAAP and present fairly in
all material respects the financial positions of the US Borrower, its
predecessors and its Subsidiaries on a consolidated basis, in each case, as at
the dates thereof, and the results of operations and statements of cash flows
for the periods then ended. The unaudited consolidated balance sheet of the US
Borrower and its Subsidiaries as at March 31, 1999, and the related unaudited
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly in all material respects the consolidated
financial condition of the US Borrower and its Subsidiaries as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the three-month period then ended (subject to normal year-end audit adjustments
and the absence of footnotes). Neither the US Borrower nor any of its
Subsidiaries had, as at the date of the most recent balance sheet referred to
above, any Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which in any such case is material and is not reflected in the
foregoing statements or in the notes thereto and which has any reasonable
likelihood of resulting in a material cost or loss.
(b) The audited consolidated financial statements of the
English Borrower and its Subsidiaries for fiscal years ended March 31, 1996,
March 31, 1997 and March 31, 1998, copies of which have been furnished to
each Lender, have been prepared using accounting methods, proceduresand
policies which are in accordance with GAAP applied on a basis consistent with
that of prior years and present fairly in all material respects the financial
positions of the English Borrower and its Subsidiaries on a consolidated
basis, in each case, as at the dates thereof, and the results of operations
and statements of cash flows for the periods then ended. Neither the English
Borrower nor any of its Subsidiaries
<PAGE>
had, as at the date of the most recent balance sheet referred to above, any
Guarantee Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which in any such case is material and is not reflected in the foregoing
statements or in the notes thereto and which has any reasonable likelihood of
resulting in a material cost or loss.
(c) The PRO FORMA balance sheet of US Borrower and its
Subsidiaries (the "US BORROWER PRO FORMA BALANCE SHEET"), certified by a
Responsible Officer of US Borrower, copies of which have been heretofore
furnished to each Lender, is the audited balance sheet of US Borrower as at
December 31, 1998, adjusted to give effect to (i) the Transactions and (ii) the
financings contemplated by this Agreement. The US Borrower Pro Forma Balance
Sheet was prepared based on good faith assumptions and is based on the best
information available to US Borrower as of the date of delivery thereof, and
reflects on a PRO FORMA basis the financial position of US Borrower and its
combined Subsidiaries as at the Closing Date. Neither the US Borrower nor any of
its Subsidiaries had, as at the date of the US Borrower Pro Forma Balance Sheet,
any material Guarantee Obligation, contingent liability or, to the best
knowledge of the US Borrower, liability for taxes, or any long-term lease or
unusual forward or long-term commitment which is not reflected in the US
Borrower Pro Forma Balance Sheet and which has any reasonable likelihood of
resulting in a material cost or loss.
5.2 NO CHANGE. Since December 31, 1998, there has been no
Material Adverse Change.
5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. US Borrower and
each of its Subsidiaries (a) is duly organized, validly existing or validly
subsisting and, in the case of the US Borrower, its Domestic Subsidiaries and
any of its Foreign Subsidiaries organized in a jurisdiction where such concept
is applicable, in good standing, as the case may be, under the laws of the
jurisdiction of its organization or incorporation, (b) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation or other
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to so qualify
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Affect.
5.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Credit
Partyhas the power and authority, and the legal right, to make, deliver and
perform this Agreement, any of the Specified Notes and the other Specified Loan
Documents to which it is a party and, with respect to each Specified Borrower,
to borrow hereunder and has taken all necessary action to authorize the
borrowings on the terms and conditions of, or the granting of any security
interests under, this Agreement and any of the Specified Notes and the other
Specified Loan Documents and to authorize the execution, delivery and
performance of this Agreement, any of the Specified Notes and the other
Specified Loan Documents to which it is a party. No consent or authorization of,
filing with, notice to or
<PAGE>
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings under this Agreement or with the
execution, delivery, performance, validity or enforceability of, or the granting
of any security interests under, this Agreement, any of the Specified Notes or
the other Specified Loan Documents to which any Credit Party is a party, except
for (i) those which have been or will be made or taken and are or will be in
full force and effect, (ii) consents under immaterial Contractual Obligations or
other immaterial consents or (iii) those filings and notices referred to
subsection 5.20(d). This Agreement, any Specified Note and each of the other
Specified Loan Documents has been duly executed and delivered on behalf of the
Credit Party party thereto. This Agreement, any Specified Note and each of the
other Specified Loan Documents constitutes a legal, valid and binding obligation
of the Credit Party party thereto enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
5.5 NO LEGAL BAR. The execution, delivery and performance of
this Agreement, any of the Notes and the other Loan Documents, the borrowings
hereunder and thereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any material Contractual Obligation of any Credit
Party or of any of their Subsidiaries.
5.6 NO MATERIAL LITIGATION. Except as set forth in Schedule
5.6, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of any Specified
Borrower, threatened by or against any of the Credit Parties or any of their
Subsidiaries or against any of their respective properties or revenues (a) with
respect to this Agreement, the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) with respect to any Transaction Document or
any transactions contemplated thereby, which affects any material provision or
any material transaction contemplated thereby, or (c) which could reasonably be
expected to have a Material Adverse Effect.
5.7 NO DEFAULT. None of the Credit Parties or any of their
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
5.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Credit Parties
and their Subsidiaries (a) in respect of property situated in the United States,
has good and valid title or title in fee simple to, as applicable, or a valid
leasehold interest in, all its material real and immovable property, and good
title to, or a valid leasehold interest in, all its other material property and
(b) in respect of property situated outside the United States, is the legal and
beneficial owner of all its material property, and none of such property
referred to in clauses (a) and (b) hereof is subject to any Lien except as
permitted by subsection 8.3. As of the date hereof, the Fee Properties as listed
on Part I of Schedule 5.19 constitute all the real and immovable properties (y)
in respect of property situated in the United States, owned by good and valid
title or title in fee simple and (z) in respect of property situated outside the
United States, legally or beneficially owned, as applicable, by
<PAGE>
the US Borrower or its Subsidiaries and the Leased Properties as listed on Part
II of Schedule 5.19 constitute all of the real and immovable properties leased
by the US Borrower or its Subsidiaries. As of the date hereof, each of the
Leased Properties listed on Part II of Schedule 5.19 which may be made subject
to a recorded Lien without violating the terms of the applicable Underlying
Lease, and each lease agreement under which an interest in any material Leased
Property is held (as amended, an "UNDERLYING LEASE") is in full force and
effect.
5.9 INTELLECTUAL PROPERTY. Each of the Credit Parties and
their Subsidiaries owns, or is validly licensed to use, all trademarks,
tradenames, copyrights, technology, know-how and processes necessary for the
conduct of its business as currently conducted except for those the failure to
own or license which could not reasonably be expected to have a Material Adverse
Effect (the "INTELLECTUAL PROPERTY"). Except as set forth on Schedule 5.9, no
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property which could reasonably be expected to have a
Material Adverse Effect, nor do the Credit Parties know of any valid basis for
any such claim which could reasonably be expected to have a Material Adverse
Effect. To the best of the Credit Parties' knowledge, the use of such
Intellectual Property by the Credit Parties and their Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
5.10 TAXES. Except as set forth in Schedule 5.10, each of the
Credit Parties and their Subsidiaries has filed or caused to be filed all
federal and all other material tax returns which, to the knowledge of the Credit
Parties, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other material taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than (i) any such
taxes, assessments, fees, or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Credit Parties or their Subsidiaries, as the case may be, and (ii)
taxes, assessments, fees or other charges imposed by any Governmental Authority,
other than income taxes imposed by any Governmental Authority, with respect to
which the failure to make payments could not, by reason of the amount thereof or
of remedies available to such Governmental Authorities, reasonably be expected
to have a Material Adverse Effect); no tax Lien has been filed, and, to the
knowledge of the Credit Parties, no claim is being asserted, with respect to any
such tax, fee or other charge other than those being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Credit Parties or their
Subsidiaries, as the case may be.
5.11 US FEDERAL REGULATIONS. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulations T, U or X as
now and from time to time hereafter in effect or for any purpose which violates
the provisions of the Regulations of the Board. If requested by any US Lender or
the Administrative Agent, the US Borrower will furnish to the Specified Agent
and each Specified Lender a statement to the foregoing
<PAGE>
effect in conformity with the requirements of FR Form U-1 or G- 3 referred to in
said Regulation U.
5.12 ERISA. Except where the liability, individually or in the
aggregate, which could reasonably be expected to result has not had or could not
reasonably be expected to have a Material Adverse Effect: (i) neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan; (ii) each Plan (other than
a Multiemployer Plan) has complied in all material respects with the applicable
provisions of ERISA and the Code; (iii) no termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Single Employer Plan has
arisen and remains outstanding, during such five-year period; (iv) the present
value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by an amount which could reasonably be expected to have a Material Adverse
Effect; (v) none of the Credit Parties nor any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan, and, to the
best knowledge of the Credit Parties, none of the Credit Parties nor any
Commonly Controlled Entity would become subject to any liability under ERISA if
the Credit Parties or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made; (vi) no
such Multiemployer Plan is in Reorganization or Insolvent; and (vii) the present
value (determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Credit Parties and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits.
5.13 INVESTMENT COMPANY ACT. Neither the US Borrower nor any
of its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.14 SUBSIDIARIES, ETC. As of the date hereof, the only
Subsidiaries of the US Borrower, and the only partnerships, limited liability
companies or other joint ventures in which the US Borrower or any of its
Subsidiaries has an interest are those listed on Schedule 5.14. As of the date
hereof, the US Borrower owns the percentage of the Capital Stock or other
evidences of the ownership of each Subsidiary, partnership, limited liability
company or other joint venture listed on Schedule 5.14 as set forth on such
Schedule. As of the date hereof, no such Subsidiary, partnership, limited
liability company, or other joint venture has issued any securities convertible
into shares of its Capital Stock, and the outstanding stock and securities (or
other evidence of ownership) of such Subsidiaries, partnerships, limited
liability companies, or other joint ventures owned by the US Borrower and its
Subsidiaries are so owned free and clear of all Liens, warrants, options or
rights of others of any kind except as set forth in Schedule 5.14.
<PAGE>
5.15 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
5.15 hereto:
(a) The facilities and properties owned, leased or operated by
the US Borrower or any of its Subsidiaries (the "PROPERTIES") do not contain,
and have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under such conditions which (i) constitute or
constituted a violation of, or could reasonably be expected to give rise to
liability under, any Environmental Law in effect at the time of the making of
this representation, or (ii) could materially and adversely interfere with the
continued operation of the Properties, or (iii) materially impair the fair
saleable value thereof except in each case insofar as such violation, liability,
interference, or reduction in fair market value, or any aggregation thereof, is
not reasonably likely to result in a Material Adverse Effect.
(b) The business of the US Borrower and its Subsidiaries, the
Properties and all operations at the Properties are, and to the knowledge of the
US Borrower have been, in compliance in all material respects with all
applicable Environmental Laws except for noncompliance which is not reasonably
likely to result in a Material Adverse Effect.
(c) Neither the US Borrower nor any of its Subsidiaries has
received any written notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the business of
the US Borrower and its Subsidiaries, nor does any Specified Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in a Material Adverse Effect.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location which could reasonably be expected to give rise to liability
under, any Environmental Law in effect at the time of the making of this
representation, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give rise to
liability under, any applicable Environmental Law in effect at the time of the
making of this representation except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not reasonably
likely to result in a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of any Specified Borrower, threatened,
under any Environmental Law in effect at the time of the making of this
representation to which the US Borrower or any Subsidiary is or, to the best
knowledge of any Specified Borrower, will be named as a party with respect to
the Properties or the business of the US Borrower and its Subsidiaries, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law in effect at the time of the making of
this representation with respect to the Properties or the business of the US
Borrower and its Subsidiaries except insofar as such proceeding, action, decree,
order or other requirement, or any aggregation thereof, is not reasonably likely
to result in a Material Adverse Effect.
<PAGE>
(f) There has been no release or, to the best knowledge of any
Specified Borrower, threat of release of Materials of Environmental Concern at
or from the Properties, or arising from or related to the operations of the US
Borrower or any Subsidiary in connection with the Properties or otherwise in
connection with the business of the US Borrower and its Subsidiaries, in
violation of or in amounts or in a manner that could reasonably give rise to
liability under Environmental Laws in effect at the time of making this
representation except insofar as any such violation or liability referred to in
this paragraph, or any aggregation thereof, is not reasonably likely to result
in a Material Adverse Effect.
(g) To the best knowledge of any Specified Borrower, each of
the representations and warranties set forth in subsections 5.15(a) through (f)
is true and correct with respect to each parcel of real property owned or
operated by the US Borrower or any Subsidiary (other than the Properties) except
to the extent that the facts and circumstances giving rise to any such failure
to be so true and correct is not reasonably likely to result in a Material
Adverse Effect.
5.16 REGULATION H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968.
5.17 DELIVERY OF TRANSACTION DOCUMENTS. Each Specified Agent
has received for itself and for each Specified Lender a complete copy of each of
the Transaction Documents (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if any) and all
amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof.
5.18 REPRESENTATIONS AND WARRANTIES CONTAINED IN THE
TRANSACTION DOCUMENTS. Each of the Transaction Documents has been duly executed
and delivered by the Credit Parties party thereto and all other parties thereto
and is full force and effect. The representations and warranties of the US
Borrower and its Subsidiaries and, to the best knowledge of the Credit Parties
parties thereto, the other parties, in each of the Transaction Documents, are
true and correct in all material respects.
5.19 DISCLOSURE. As of the Closing Date or, if later, the date
it was furnished, no information, financial statement, report, certificate or
other document prepared or furnished by or on behalf of any Credit Party to any
Agent or any Lender in connection with this Agreement or any other Specified
Loan Document (but excluding all projections and pro forma financial statements
which shall have been prepared in good faith and based upon reasonable
assumptions, it being recognized that such projections are not viewed as facts
and actual results may be different) taken as a whole contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. As of the Closing Date,
there is no fact known to any Credit Party which has, or which could reasonably
be expected to have, a Material Adverse Effect.
5.20 GUARANTEE AND COLLATERAL AGREEMENT; MORTGAGES. (a) The
Guarantee and Collateral Agreement is effective to create in favor of the
Collateral Agent, for the
<PAGE>
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Pledged Securities described therein and proceeds thereof and
all actions have been taken to cause the Guarantee and Collateral Agreement to
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of the US Borrower and its Domestic Subsidiaries,
respectively, in such Pledged Securities described therein and in proceeds
thereof superior in right to any other Person.
(b) The Guarantee and Collateral Agreement is effective to
create in favor of the Collateral Agent, for the benefit of the Secured Parties,
a legal, valid and enforceable security interest in the respective collateral
described therein and proceeds thereof, and the Guarantee and Collateral
Agreement constitutes a fully perfected, first priority Lien on, and security
interest in, all right, title and interest of the US Borrower and its Domestic
Subsidiaries in such collateral and the proceeds thereof superior in right to
any other Person other than Liens permitted hereby.
(c) The properties listed on Schedule 5.19 constitute all
material real properties owned by the US Borrower or any of its Subsidiaries.
The Mortgages are each effective to create in favor of the Collateral Agent, for
the benefit of the Secured Parties, a legal, valid and enforceable Lien on the
properties described therein owned by the US Borrower and its Domestic
Subsidiaries and proceeds thereof, subject to obtaining necessary consents
(which consents shall be obtained on or prior to the Closing Date) and when the
Mortgages are filed in the offices specified on Schedule 5.19, the Mortgages
shall constitute a fully perfected, first priority Lien on, and security
interest in, all right, title and interest of the US Borrower and its Domestic
Subsidiaries in the Mortgaged Properties and the proceeds thereof, superior in
right to any other Person other than Liens permitted hereby.
(d) Each other Loan Document to which any Credit Party is a
party and which purports to grant a Lien on any property of such Credit Party to
secure the Specified Obligations is effective to create in favor of the
Specified Agent, for the benefit of the Specified Lenders, a legal, valid and
enforceable security interest in the respective collateral described therein and
proceeds thereof, and when appropriate filings and notices have been taken or
given, such Loan Document shall constitute fully perfected, first priority Liens
on, and security interests in, all right, title and interest of such Credit
Party in such collateral and the proceeds thereof superior in right to any other
Person other than Liens permitted hereby.
5.21 SOLVENCY. Each Specified Borrower is, individually and
together with its Subsidiaries, Solvent.
5.22 INSURANCE. The insurance maintained by or reserved
against on the books of the Borrowers and their respective Subsidiaries is for
such risks as are customarily insured against by companies engaged in the same
or similar business. None of the Credit Parties or any of their Subsidiaries is
in default under any provisions of any such policy of insurance or has received
notice of cancellation of any such insurance (other than in connection with the
replacement of any such policy). None of the Credit Parties or any of their
Subsidiaries has made any claims under any policy of insurance with respect to
which the insurance carrier has denied liability, which denial is reasonably
like to result in a Material Adverse Effect.
<PAGE>
5.23 SENIOR INDEBTEDNESS. The Domestic Obligations and the US
Borrower's guarantee of the Foreign Subsidiary Obligations constitute
"Designated Senior Indebtedness" of the US Borrower under and as to be defined
in the Subordinated Debt Documents. The obligations of each Domestic Subsidiary
under the Guarantee and Collateral Agreement constitute "Guarantor Senior
Indebtedness" of such Subsidiary under and as to be defined in the Subordinated
Debt Documents.
5.24 YEAR 2000 MATTERS. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the US Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the US Borrower or any of its Subsidiaries interface), and
the testing of all such systems and other equipment as so reprogrammed, will be
substantially completed by June 30, 1999. The costs to the US Borrower and its
Subsidiaries that have not been incurred as of the date hereof for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect.
SECTION 6. CONDITIONS PRECEDENT
6.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement
of each Lender to make its initial extension of credit hereunder and of each
Issuing Lender to issue or create any Accommodation, in each case, on the
Closing Date is subject to the satisfaction of the following conditions
precedent on or prior to May 30, 1999:
(a) LOAN DOCUMENTS. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a Responsible
Officer of each Borrower, (ii) for the account of each of the Specified
Lenders who has requested a Specified Note pursuant to subsection
2.7(e), a Revolving Credit Note, a Term Note or a Swing Line Note, as
the case may be, conforming to the requirements hereof and executed and
delivered by a Responsible Officer of the Specified Borrower; (iii) the
Guarantee and Collateral Agreement, executed and delivered by a
Responsible Officer of the US Borrower and each of its Domestic
Subsidiaries, (iv) Mortgages, executed and delivered by a Responsible
Officer of the US Borrower or its Domestic Subsidiaries, and (v) the
Sharing Agreement, executed and delivered by each of the Specified
Agents and the Collateral Agent. The English Agent shall have received
such collateral documents and guarantees as shall have been reasonably
requested by the English Agent to effect: (1) a charge of 65% of the
common stock of English Bidco to secure the Domestic Obligations, (2) a
guarantee by English Bidco of the English Obligations of English
Borrower and a charge of all the Capital Stock of English Borrower
owned by English Bidco to secure such guarantee and the other English
Obligations, (3) guarantee by the Material Subsidiaries of English
Borrower of the English Obligations of English Borrower only and a
charge of all the Capital Stock and material assets of the Material
Subsidiaries to secure such guarantee, (4)
<PAGE>
guarantee by English Borrower and the Material Subsidiaries of
English Borrower of the English Obligations owed by English Bidco
and a charge of all the Capital Stock and material assets of English
Borrower and such Material Subsidiaries to secure such guarantee,
and (5) charge over the assets of English Borrower to secure the
English Obligations owed by English Borrower; PROVIDED that, the
collateral documents and guarantees referred to in this sentence
shall be executed and delivered to the English Agent by no later
than June 30, 1999.
(b) CORPORATE PROCEEDINGS OF THE CREDIT PARTIES. The
Administrative Agent shall have received a copy of the resolutions, in
form and substance reasonably satisfactory to the Administrative Agent,
of the Board of Directors or duly authorized committee of each Credit
Party authorizing (i) the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party, (ii) the
borrowings and guarantees contemplated hereunder, and (iii) the
granting by it of Liens created pursuant to the Loan Documents, and
(iv) the other transactions contemplated hereby, certified by the
Secretary, Assistant Secretary, or comparable officer of such Person as
of the Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded
and shall be in form and substance reasonably satisfactory to the
Specified Agent.
(c) INCUMBENCY CERTIFICATES. The Administrative Agent shall
have received a certificate of the Secretary or an Assistant Secretary
(or comparable officer) of each Credit Party, dated the Closing Date,
as to the incumbency and signature of the officers of such Person
executing each Loan Document to which it is a party and any certificate
or other document to be delivered by it pursuant hereto and thereto,
together with evidence of the incumbency of such Secretary, Assistant
Secretary, or comparable officer.
(d) CORPORATE DOCUMENTS. The Administrative Agent shall have
received true and complete copies of the certificate of incorporation
and by-laws or memorandum and articles thereof (or equivalent
documents), as the case may be, of each Credit Party, certified as of
the Closing Date as complete and correct copies thereof by the
Secretary, Assistant Secretary, or comparable officer of such Person.
(e) EQUITY AND DEBT FINANCING. The US Borrower shall have
common equity of at least $175,000,000, of which at least $151,000,000
shall have been received by the US Borrower in cash from the proceeds
of equity issued by the US Borrower to the Buyer and the balance of
which shall be retained common equity, on terms reasonably satisfactory
to the Administrative Agent. The Borrower shall have received at least
$130,000,000 in gross cash proceeds from the extension of the Interim
Loans pursuant to the Interim Loan Agreement and on other terms and
conditions reasonably satisfactory to the Administrative Agent.
(f) CLOSING OF RECAPITALIZATION; TRANSACTION DOCUMENTS. The
Recapitalization shall have been consummated in accordance with the
Recapitalization Agreement and all requirements of applicable law, and
the Administrative Agent shall have received (i) a certified
copy of each of the Transaction Documents, which shall be in form and
substance reasonably
<PAGE>
satisfactory to the Agents and (ii) a certificate signed by a
Responsible Officer of the US Borrower to the effect that all
conditions precedent and other material transactions contemplated by
the Transaction Documents have been satisfied or consummated, as the
case may be, without amendment, waiver or modification of the
material terms thereof. The aggregate purchase price (including the
roll-over of management equity) for the common stock of the US
Borrower in connection with the Recapitalization shall be
approximately $380,000,000 (subject to post-closing adjustments
described in the Recapitalization Agreement).
(g) REPAYMENT OF INDEBTEDNESS. Contemporaneously with the
Loans made on the Closing Date, the US Borrower and its Subsidiaries
shall repay all of their existing outstanding Indebtedness for an
aggregate amount equal to approximately $230,000,000, other than any
such Indebtedness which is to remain outstanding after the Closing Date
and which is satisfactory to the Administrative Agent, and all Liens in
connection with such repaid Indebtedness shall have been (or
contemporaneously shall be) released.
(h) FEES. The Lenders, the Agents, and CSI shall have received
all fees and expenses due to them on the Closing Date and the total
aggregate amount of all fees and expenses incurred or to be incurred in
connection with this Agreement, the other Loan Documents, the Interim
Loan Agreement and the Recapitalization and the financings contemplated
thereby (other than the Senior Subordinated Notes) shall not exceed
$25,000,000.
.
(i) CONSENTS, LICENSES AND APPROVALS. (i) All governmental and
material third party approvals reasonably necessary or in the
reasonable judgment of the Administrative Agent advisable in connection
with the execution, delivery and performance of the Transactions, the
financings contemplated thereby, and the continuing operations of the
US Borrower and its Subsidiaries shall have been obtained and be in
full force and effect, and (ii) all applicable waiting periods shall
have expired without any action being taken or threatened by any
competent Governmental Authority which would restrain, prevent or
otherwise impose adverse conditions on the US Borrower, any of its
Subsidiaries, the Transactions, or the financings thereof.
(j) FINANCIAL INFORMATION. The Administrative Agent shall have
received copies of the financial statements described in subsection 5.1
and unaudited interim consolidated financial statements of the US
Borrower and its Subsidiaries for each fiscal month ended subsequent to
December 31, 1998 as to which such financial statements are available,
and all of such financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of the US Borrower and its
Subsidiaries, as reflected in the financial statements or projections
previously furnished to the Lenders.
<PAGE>
(k) SOLVENCY OPINION. The Administrative Agent shall have
received a solvency opinion from Murray, Devine & Co., reasonably
satisfactory in form and substance to the Administrative Agent,
certifying the Solvency of the US Borrower and its Subsidiaries on a
consolidated basis, after giving effect to the Transactions and any
other transaction contemplated hereby.
(l) INSURANCE. The Administrative Agent shall have received
evidence reasonably satisfactory to it that insurance relating to the
US Borrower and its Subsidiaries complying with the provisions of the
Loan Documents will be in place after the Transactions; PROVIDED that,
the English Borrower and its Subsidiaries shall be required to comply
with subsection 7.5(c)(ii) by no later than June 30, 1999.
(m) PERFECTION; LIEN SEARCHES. All filings and other actions
reasonably required by any Specified Agent to create and perfect a
first priority security interest in all collateral granted to any
Specified Agent pursuant to any Loan Documents shall have been duly
made or taken (or the Specified Agent shall be reasonably satisfied
that such action shall promptly be taken), and all such collateral
shall be free and clear of other Liens except as permitted hereby. The
Administrative Agent shall have received the results of a recent lien
search in each of the jurisdictions listed on Schedule 5.19 and each
other jurisdiction in the United States where assets of the US Borrower
and its Domestic Subsidiaries are located, and (i) such search shall
reveal no Liens on any of the assets of the US Borrower and its
Domestic Subsidiaries other than those permitted pursuant to subsection
8.3 or (ii) the Administrative Agent shall have received evidence
reasonably satisfactory to it that UCC-3 termination statements and
other Lien release documentation shall have been duly executed and
delivered on the Closing Date, and all other necessary actions shall
have been duly taken, to the extent necessary to effect the release of
all Liens other than those permitted pursuant to subsection 8.3 on the
assets of the US Borrower and its Domestic Subsidiaries. All actions
including pursuant to clause (r) below necessary to perfect or continue
the perfection of each Specified Agent in any of the collateral shall
have been taken or duly provided for.
(n) PERFECTION CERTIFICATE. The Administrative Agent shall
have received a Perfection Certificate in the form of Exhibit H duly
completed by the US Borrower and its Domestic Subsidiaries.
(o) LEGAL OPINIONS. The Administrative Agent shall have
received the following executed legal opinions, each dated the Closing
Date:
(i) the executed legal opinion of Kirkland & Ellis, New
York counsel to the Credit Parties, substantially in the form of
Exhibit E-1;
(ii) the executed legal opinion of Slaughter & May, English
counsel to the Credit Parties, substantially in the form of Exhibit
E-2; and
(iii) such legal opinions of local counsel to the Credit
Parties, in form and substance reasonably satisfactory to the
Administrative Agent as the Administrative Agent may request.
<PAGE>
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(p) CLOSING CERTIFICATE. The Administrative Agent shall have
received a Closing Certificate substantially in the form of Exhibit F
hereto and dated the Closing Date, executed by a Responsible Officer of
each Credit Party.
(q) PLEDGED STOCK. Each Specified Agent shall have received
the pledged stock to be pledged pursuant to, and the
acknowledgements and consents of the Issuers referred to in, the
applicable Loan Documents, together with undated stock powers
endorsed in blank for each stock certificate representing such
pledged stock, or, as applicable, such other documents or
notifications required by the applicable Loan Documents; PROVIDED
that in respect of the stock in English Borrower, these requirements
shall be satisfied by no later than June 30, 1999.
(r) SURVEYS. The Collateral Agent shall have received, and the
title insurance company issuing the policy referred to in subsection
6.1(t) (the "TITLE INSURANCE COMPANY") shall have received, maps or
plats of an as-built survey of the sites of the property covered by
each Mortgage certified to the Collateral Agent and the Title Insurance
Company in a manner satisfactory to them, dated (or, in the case of
previously prepared maps, plats or surveys, recertified) a date
satisfactory to the Collateral Agent and the Title Insurance Company,
by an independent professional licensed land surveyor satisfactory to
the Collateral Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1962,
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines
of streets abutting the sites and width thereof; (iii) all access and
other easements appurtenant to the sites or necessary or desirable to
use the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being
on a filed map, a legend relating the survey to said map.
(s) TITLE INSURANCE POLICY. The Collateral Agent shall have
received in respect of each parcel covered by each Mortgage a
mortgagee's title policy (or policies) or marked up unconditional
binder for such insurance dated the Closing Date. Each such policy
shall (i) be in an amount satisfactory to the Collateral Agent; (ii) be
issued at ordinary rates; (iii) insure that the Mortgage insured
thereby creates a valid first Lien on such parcel free and clear of all
defects and encumbrances, except such as may be approved by the
Collateral Agent; (iv) name the Collateral Agent for the ratable
benefit of the Secured Parties as the insured thereunder; (v) be in the
form of ALTA Loan Policy - 1970 (Amended 10/17/70);
<PAGE>
(vi) contain such endorsements and affirmative coverage as the
Collateral Agent may request and (vii) be issued by title companies
satisfactory to the Collateral Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Collateral Agent). The Collateral Agent shall have received evidence
satisfactory to it that all premiums in respect of each such policy,
and all charges for mortgage recording tax, if any, have been paid.
(t) FLOOD INSURANCE. If required by law and requested by the
Collateral Agent, the Collateral Agent shall have received (i) a policy
of flood insurance which (A) covers any parcel of improved real
property which is encumbered by any Mortgage, (B) is written in an
amount not less than the outstanding principal amount of the
indebtedness secured by such Mortgage which is reasonably allocable to
such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (C) has a term ending not
earlier than the maturity of the indebtedness secured by such Mortgage
and (ii) confirmation that the Company has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board of Governors
of the Federal Reserve System.
(u) COPIES OF DOCUMENTS. The Administrative Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
subsection 6.1(t) and a copy, certified by such parties as the
Administrative Agent may deem appropriate, of all other documents
affecting the property covered by each Mortgage.
(v) OTHER DOCUMENTATION. All other documentation, including,
without limitation, any tax sharing agreement, employment agreement,
management compensation arrangement or other financing arrangement of
each of the Borrowers, or any of their Subsidiaries shall be reasonably
satisfactory in form and substance to the Agents.
6.2 CONDITIONS TO EACH SPECIFIED LOAN. The agreement of each
Specified Lender to make any Specified Loan requested to be made by it on any
date (including the Closing Date) or of the Specified Revolving Credit Lenders
and the Specified Issuing Lender to issue, accept or participate in any
Specified Accommodation is subject to the satisfaction of the following
conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Credit Parties and their
Subsidiaries in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made on
and as of such date, except for any representation and warranty which
is expressly made as of an earlier date, which representation and
warranty shall have been true and correct in all material respects as
of such earlier date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Specified Loans requested to be made, or Specified Accommodation
requested to be issued or accepted, on such date.
<PAGE>
(c) LETTER OF CREDIT APPLICATION. With respect to the issuance
of any Specified Letter of Credit, the Specified Issuing Bank shall
have received a Specified Letter of Credit Application, completed to
its reasonable satisfaction and duly executed by a Responsible Officer;
PROVIDED that if such Specified Letter of Credit is being issued to
support the repayment of any Indebtedness of any Subsidiary of the
Specified Borrower, such Subsidiary shall also execute such Specified
Letter of Credit Application and shall agree to be jointly and
severally liable with the Specified Borrower for any and all
obligations arising under or in connection with such Specified Letter
of Credit or the Specified Letter of Credit Application related
thereto.
Each borrowing by a Specified Borrower hereunder and issuance of any Specified
Accommodation shall constitute a representation and warranty by the Specified
Borrower as of the date of such Specified Loan or issuance or acceptance, as the
case may be, that the conditions contained in this subsection 6.2 have been
satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
Each Borrower, as to itself and its Subsidiaries, hereby
agrees that, so long as any Commitment remains in effect, any Loan remains
outstanding and unpaid, any Accommodation is outstanding, or any other
Obligations are owing to any Secured Party, each Borrower, as to itself and its
Subsidiaries, shall and (except in the case of delivery of financial
information, reports and notices) shall cause each of its Subsidiaries to:
7.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent:
(a) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the US Borrower,
a copy of the consolidated (and unaudited consolidating for the US and
UK operations only) balance sheet of the US Borrower and its
consolidated Subsidiaries as at the end of such year and the
consolidated (and unaudited consolidating for the US and UK operations
only) statements of income and retained earnings and consolidated
statement of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without
a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than
sixty (60) days after the end of each of the first three (3) quarterly
periods of each fiscal year of the US Borrower, the unaudited
consolidating for the US and UK operations only and unaudtied
consolidated balance sheet of the US Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidating for the US and UK operations only and unaudited
consolidated statements of income and retained earnings and
consolidated statement of cash flows of the US Borrower and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case
in comparative form (i) the figures for the previous year and (ii) the
figures set forth in the relevant budgets required to be delivered in
accordance with subsection
<PAGE>
7.2(c), certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments
and the absence of footnotes);
all such financial statements shall fairly present in all material respects the
consolidated and consolidating for the US and UK operations only financial
position of the US Borrower and its Subsidiaries as of such date and shall be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
7.2 CERTIFICATES; OTHER INFORMATION. Furnish to the
Administrative Agent:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default relating to the
covenants contained in subsection 8.1, except as specified in such
certificate and (ii) a report of a reputable insurance broker with
respect to the insurance required by the Guarantee and Collateral
Agreement;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and 7.1(b), (x) a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, (i) each of the Borrowers and their respective
Subsidiaries has observed or performed all of its respective covenants
and other agreements, and satisfied every condition, contained in this
Agreement, in the Notes and the other Loan Documents to which it is a
party to be observed, performed or satisfied by it, in all material
respects, and that such Responsible Officer has obtained no knowledge
of any Default or Event of Default except as specified in such
certificate, (ii) stating that all such financial statements fairly
present in all material respects (subject, in the case of interim
statements, to normal year-end audit adjustments and the absence of
footnotes) and have been prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein (except as disclosed therein) and (iii) showing in
detail the calculations supporting such statement in respect of
subsections 8.1 and 8.8 and (y) to the extent not previously disclosed
to the Administrative Agent, a listing of any county or state within
the United States where any Credit Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the
date of the most recent list delivered pursuant to this clause (y) (or,
in the case of the first such list so delivered,since the Closing Date)
(c) as soon as available but not later than ninety (90) days
after the end of each fiscal year of the US Borrower, a copy of the
projections by the US Borrower of the operating budget and cash flow
budget of the US Borrower and its Subsidiaries for the succeeding
fiscal year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have been
prepared in good faith and based upon reasonable assumptions;
<PAGE>
(d) as soon as reasonably practicable after the same are
filed, copies of all financial statements and reports which the US
Borrower or any Subsidiary may make to, or file with, the Securities
and Exchange Commission or any successor or analogous Governmental
Authority; and
(e) promptly, such additional financial and other information
as any Lender may from time to time reasonably request (including,
without limitation, any supplemental reports with respect to the
insurance required by the Guarantee and Collateral Agreement).
7.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature (other than Indebtedness),
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the US Borrower or its
Subsidiaries, as the case may be and to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect; PROVIDED that, notwithstanding the foregoing, the US Borrower
and each of its Subsidiaries shall have the right to pay any such obligation and
in good faith contest, by proper legal actions or proceedings, the validity or
amount of such claims.
7.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. (a)
Except as provided in subsection 8.5, continue to engage in business of the same
general type as now conducted by it and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary in the normal conduct of its
business except if (i) in the reasonable business judgment of the US Borrower or
such Subsidiary, as the case may be, it is in its economic interest not to
preserve and maintain such rights or franchises, and (ii) such failure to
preserve and maintain such privileges, rights or franchises could not reasonably
be expected to have a Material Adverse Effect; and (b) comply with all
Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
7.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property
(including the Mortgaged Properties) necessary in its business in good working
order and condition (ordinary wear and tear and damage by casualty excepted);
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are customarily insured against in the same general area by
companies engaged in the same or a similar business or as otherwise reasonably
requested by the Specified Agent; and furnish to the Administrative Agent,
upon written request, full information as to the insurance carried except to the
extent that the failure to do any of the foregoing with respect to any such
property could not reasonably be expected to materially adversely affect the
value or usefulness of such property.
(b) With respect to Inventory and Equipment (as defined in the
Guarantee and Collateral Agreement) (i) maintain, with financially sound and
reputable companies, insurance policies insuring the Inventory and Equipment
against loss by fire, explosion,
<PAGE>
theft and such other casualties as are customary for businesses of the same or
similar type and (ii) insuring the US Borrower or any of its Domestic
Subsidiary, as the case may be, against liability for personal injury and
property damage relating to such Inventory and Equipment, such policies to be in
such form and amounts and having such coverage as are customary for businesses
of the same or similar type.
(c) All such insurance shall (i) provide that no cancellation
in coverage thereof shall be effective until at least thirty (30) days after
receipt by the Collateral Agent of written notice thereof, (ii) name the
Collateral Agent for the ratable benefit of the Secured Parties as insured
party, lender loss payee or, with respect to the Mortgaged Properties, mortgagee
under a standard mortgage clause, and (iii) if reasonably requested by the
Collateral Agent, include a breach of warranty clause.
7.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and prior
to the occurrence and continuance of a Default or an Event of Default not to
exceed two times a year for each Lender and at any time upon the occurrence and
during the continuance of a Default or Event of Default, permit representatives
of any Specified Lender in connection with such Lender's credit analysis of the
US Borrower to visit and inspect any of its properties and examine and make
abstracts from any of its books and records upon reasonable advance notice at
any reasonable time on any Business Day and to discuss the business, operations,
properties and financial and other condition of the US Borrower and its
Subsidiaries with officers and employees of the US Borrower and its Subsidiaries
and with its independent certified public accountants; PROVIDED that the
Specified Agent or such Specified Lender shall notify the US Borrower prior to
any contact with such accountants and give the US Borrower the opportunity to
participate in such discussions; PROVIDED, that prior to the occurrence of any
Default or Event of Default the Borrowers shall not be required to pay for any
visits by any Lender in excess of one visit per year.
7.7 NOTICES. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the US Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the US Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, could reasonably be expected to have a
Material Adverse Effect;
(c) the following events, if, in the aggregate, they could
reasonably be expected to have a Material Adverse Effect: (i) the
occurrence or expected occurrence of any Reportable Event with respect
to any Single Employer Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Single Employer Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the
PBGC or the US
<PAGE>
Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Single Employer Plan
or Multiemployer Plan;
(d) the occurrence of any Material Adverse Change; and
(e) the receipt by the US Borrower or any Subsidiary of any
complaint, order, citation, notice or other written communication from
any Person with respect to the existence or alleged existence of a
violation of any Environmental Laws or Materials of Environmental
Concern or any other environmental, health or safety matter including
the occurrence of any spill, discharge or release in a quantity that is
reportable under any Environmental Law on any Mortgaged Property or any
other property owned, leased or utilized by the US Borrower or any
Subsidiary of the US Borrower but only to the extent that such
complaint, order, citation, notice or written communication in the
aggregate could reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the US Borrower or the applicable Commonly Controlled
Entity proposes to take with respect thereto.
7.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and will use
reasonable best efforts to ensure compliance in all material respects
by all tenants and subtenants, if any, with, all applicable
Environmental Laws except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a
Material Adverse Effect;
(b) Conduct and complete (or cause to be conducted and
completed) all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws
and in a timely fashion comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings or to the extent
that the failure to take such actions could not in the aggregate be
reasonably expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Specified Agent
and the Specified Lenders, and their respective employees, agents,
officers, directors and controlling persons, from and against any and
all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the US Borrower,
any of its Subsidiaries or the Properties, or any orders, requirements
or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and
<PAGE>
litigation expenses, except to the extent that any of the foregoing
arise out of or relate to the gross negligence or wilful misconduct of
the Specified Agent or any of the Specified Lenders, or any
post-foreclosure actions not taken in accordance with the Assets
Conservation, Lender Liability and Deposit Insurance Protection Act of
1996 or any similar foreign law. The agreements in this paragraph shall
survive repayment of all Specified Loans and all other amounts payable
hereunder.
7.9 PLEDGE OF AFTER ACQUIRED PROPERTY. If at any time
following the Closing Date any Specified Borrower or any Subsidiary shall
acquire at any time property of any nature whatsoever with a monetary value on
the date of such acquisition in excess of the Equivalent Amount of $5,000,000 in
the aggregate, the Specified Borrower and any such Subsidiary shall grant to the
Specified Agent for the ratable benefit of the Specified Lenders a first
priority or first ranking Lien on and security interest in such property as
collateral security for the Specified Obligations pursuant to documentation
reasonably satisfactory to the Specified Agent and take such actions as the
Specified Agent shall reasonably require to ensure the priority and perfection
of such Lien, PROVIDED that (i) only 65% of the voting Capital Stock of any
direct Foreign Subsidiary of the US Borrower or its Domestic Subsidiaries need
be so pledged, (ii) no voting Capital Stock of any indirect Foreign Subsidiary
of the US Borrower or its Domestic Subsidiaries need be so pledged unless such
Foreign Subsidiary is also a Subsidiary of a Foreign Subsidiary Borrower and
such pledge is only to secure the Specified Obligations of such Foreign
Subsidiary Borrower, in which case subsection 7.10 shall be complied with, (iii)
with respect to real or immovable property, only fee owned real estate or
immovable property in excess of the Equivalent Amount of $5,000,000 need be
mortgaged, and (iv) property subject to a Lien permitted by subsection 8.3(h) or
falling within 8.14(a)(ii) need not be so pledged.
7.10 ADDITIONAL SUBSIDIARIES. If, at any time, any Specified
Borrower or any of its Subsidiaries shall form any new Material Subsidiary after
the date of this Agreement or any Subsidiary becomes a Material Subsidiary, such
Specified Borrower or such Material Subsidiary, as the case may be, shall,
subject to applicable Requirements of Law (i) cause any such Material Subsidiary
to guarantee the Specified Obligations to the extent permitted by law, and (ii)
cause each holder of any Capital Stock of such Material Subsidiary to pledge
100% of such Capital Stock to the Specified Agent which shall be accompanied by
such resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Specified Agent; PROVIDED, that (i) in the event such Material
Subsidiary is a direct Foreign Subsidiary of the US Borrower or its Domestic
Subsidiaries, (x) only 65% of the voting Capital Stock of such Foreign
Subsidiary need be pledged to the Collateral Agent and (y) such Foreign
Subsidiary need not provide any guarantee or a security interest in its assets,
and (ii) no voting Capital Stock of any indirect Foreign Subsidiary of the US
Borrower or its Domestic Subsidiaries need be so pledged unless such Foreign
Subsidiary is also a Subsidiary of a Foreign Subsidiary Borrower and such pledge
is only to secure the Specified Obligations of such Foreign Subsidiary Borrower,
in which case the foregoing shall be complied with, subject to applicable
Requirements of Law.
7.11 INTELLECTUAL PROPERTY. Whenever the US Borrower or any
other Credit Party, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Copyright,
Patent or Trademark with the United States Patent and Trademark Office or any
similar office or agency in any other country or any political subdivision
thereof, the US Borrower shall or shall cause such other Credit
<PAGE>
Party to report such filing to the Specified Agent within five (5) Business
Days after the last day of the fiscal quarter in which such filing occurs.
Upon request of the Specified Agent, the US Borrower and such Credit Party
shall execute and deliver any and all agreements, instruments, documents, and
papers as the Collateral Agent may reasonably request to evidence the
Administrative Agent's security interest in any Copyright, Patent or
Trademark or such Intellectual Property and the goodwill and general
intangibles of the US Borrower or such Credit Party relating thereto or
represented thereby.
7.12 USE OF PROCEEDS. Use the Specified Revolving Credit
Commitments for working capital and general corporate purposes of the Specified
Borrower and its Subsidiaries and Permitted Acquisitions, PROVIDED that, no more
than (pound)15,000,000 of the English Revolving Credit Commitments may be used
for purposes other than the Bank Guarantee Letters of Credit, reimbursement
obligations in respect thereof and obligations in respect of the related loan
notes. Use the Term Loans to finance the Transactions and to pay fees and
expenses in connection therewith.
7.13 INTEREST RATE PROTECTION AGREEMENTS. Within 90 days
following the Closing Date, ensure that at all times during the two year period
following the date that is 90 days following the Closing Date at least 40% of
the sum of the Interim Loans (or, after the issuance thereof, the Senior
Subordinated Notes) and the Term Loans bears interest at a fixed rate or is
subject to interest rate protection reasonably satisfactory to the
Administrative Agent.
SECTION 8. NEGATIVE COVENANTS
Each Borrower as to itself and its Subsidiaries hereby agrees
that, so long as the Specified Commitments remain in effect, any Specified Loan
remains outstanding and unpaid, any Specified Accommodation remains outstanding
or any other Obligations (other than indemnification obligations not due and
payable) are owing to any Secured Party, each Borrower as to itself and its
Subsidiaries shall not, and (except with respect to subsection 8.1) shall not
permit any of its Subsidiaries to, directly or indirectly:
8.1 FINANCIAL CONDITION COVENANTS.
(a) INTEREST COVERAGE RATIO. Permit the Interest Coverage
Ratio for any period of four consecutive calendar quarters ending
during any period set forth below to be less than the ratio set forth
opposite such period below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
June 30, 1999 through December 31, 1999 1.75 to 1.00
January 1, 2000 through December 31, 2000 2.00 to 1.00
January 1, 2001 through December 31, 2001 2.25 to 1.00
January 1, 2002 and thereafter 2.75 to 1.00
</TABLE>
(b) LEVERAGE RATIO. Permit the Leverage Ratio at the last day
of any fiscal quarter occurring during any period set forth below to be
greater than the ratio set forth opposite such period below:
<PAGE>
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
June 30, 1999 through December 31, 1999 5.75 to 1.00
January 1, 2000 through December 31, 2000 5.25 to 1.00
January 1, 2001 through December 31, 2001 4.75 to 1.00
January 1, 2002 and thereafter 4.50 to 1.00
</TABLE>
(c) SENIOR DEBT RATIO. Permit the Senior Debt Ratio at the
last day of any fiscal quarter occurring on or after September 30, 2000
to be greater than 3.00 to 1.00.
(d) MINIMUM CASH RETAINED EARNINGS. At the last day of any
fiscal quarter occurring during any period set forth below, permit (a)
the sum of (i) $175,000,000, (ii) 100% of the Net Cash Proceeds of any
equity securities issued by the US Borrower from the Closing Date
through such day of determination and (iii) 100% of Consolidated Net
Income from May 1, 1999 through such day of determination, to be less
than (b) the sum of (i) $156,000,000, (ii) 75% of the Net Cash Proceeds
of any equity securities issued by the US Borrower from the Closing
Date through such day of determination and (iii) 50% of Consolidated
Net Income for each fiscal quarter (or, in the case of the first fiscal
quarter concluding after the Closing Date, the period from May 1, 1999
to such date of conclusion) of the US Borrower for which Consolidated
Net Income is a positive number commencing from May 1, 1999 through
such day of determination.
8.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a)Indebtedness of the Credit Parties under the Loan Documents;
(b) Indebtedness among the Credit Parties and their
Subsidiaries arising as a result of intercompany loans (including the
conversion into intercompany indebtedness of any investments made in
the form of equity and permitted hereunder); PROVIDED that any such
loan made by a Credit Party is evidenced by an Intercompany Note
pledged by such Credit Party to secure its Obligations pursuant to
documentation reasonably satisfactory to the Administrative Agent.
(c) Indebtedness of Subsidiaries of the US Borrower
outstanding on the Closing Date and listed on Schedule 8.2 and
extensions, renewals or replacements thereof provided that no such
extension, renewal or replacement shall increase the principal amount
thereof;
(d) Indebtedness resulting from the endorsement of negotiable
instruments in the ordinary course of business;
(e) Indebtedness of Subsidiaries of the US Borrower in respect
of obligations under Financing Leases and purchase money Indebtedness
in an aggregate amount outstanding not to exceed Equivalent Amount of
$12,500,000 at any one time;
<PAGE>
(f) Indebtedness in respect of Interest Rate Agreements for
hedging purposes only and not for speculative purposes;
(g) Indebtedness of any Credit Party (other than the US
Borrower) to any other Credit Party from intercompany transfers of
assets made in the ordinary course of business or to the extent
permitted under subsections 8.6 and 8.9;
(h) Guarantee Obligations permitted by subsection 8.4;
(i) Indebtedness subject to Liens permitted under subsections
8.3(b), (c), (d), and (e);
(j) additional Indebtedness of Subsidiaries of the US Borrower
in an aggregate principal amount outstanding not to exceed the
Equivalent Amount of $15,000,000 at any one time, PROVIDED that if the
proceeds of any such Indebtedness are used to repay the Interim Loans
in accordance with the proviso clause of subsection 2.9(a) then such
Indebtedness shall be subordinated to payment of the Obligations of the
applicable Subsidiary on terms satisfactory to the Administrative
Agent;
(k) Indebtedness of English Bidco and English Borrower in
respect of Guaranteed Loan Notes not to exceed (pound)17,823,330.80;
(l) Indebtedness of a Credit Party which is a Domestic
Subsidiary of the US Borrower incurred to fund part of the cost of a
Permitted Acquisition, PROVIDED, (A) (i) such Indebtedness is owed to
the selling party and is evidenced by a promissory note or (ii) so long
as the Senior Debt Ratio is less than or equal to 2.75 to 1.0 both
before and after giving effect to such Permitted Acquisition, such
Indebtedness is in an aggregate principal amount during the term of
this Agreement not in excess of $50,000,000, (B) any such Indebtedness
is subordinated to the Obligations hereunder on terms reasonably
satisfactory to the Administrative Agent, and (C) immediately after
giving effect to the incurrence of such Indebtedness, no Event of
Default exists;
(m) Indebtedness in respect of the Interim Loans in an
aggregate principal amount not to exceed $130,000,000 (plus unpaid
accrued interest thereon which is capitalized in accordance with the
terms thereof); and Indebtedness in respect of the Exchange Notes as
long as (i) the Exchange Notes are issued in exchange for the Interim
Loans in accordance with Section 2.3 of the Interim Loan Agreement,
(ii) the Exchange Note Indenture is entered into in accordance with
subsection 8.10(e) and (iii) the aggregate principal amount of the
Interim Loans and the Exchange Notes does not exceed $130,000,000 (plus
unpaid accrued interest thereon which is capitalized in accordance with
the terms thereof);
(n) Indebtedness in respect of the Senior Subordinated Notes
as long as all of the Interim Loans and/or Exchange Notes are
simultaneously repaid or have previously been repaid from the proceeds
thereof;
<PAGE>
(o) Indebtedness of the US Borrower owing to outside directors,
employees or members of management in connection with the repurchase
of any Capital Stock permitted pursuant to subsection 8.7(a)(ii);
PROVIDED, that (i) such Indebtedness shall be subordinated to payment
of the Obligations on terms satisfactory to the Administrative Agent
and (ii) such Indebtedness shall provide that no payments of
principal, interest or other amounts may be paid in cash thereon
prior to October 21, 2007;
(p) Indebtedness owing to any insurance company in connection with
the financing of any insurance premiums permitted by such insurance
company in the ordinary course of business; and
(q) Indebtedness assumed in connection with a Permitted
Acquisition permitted by subsection 8.9(k); PROVIDED, that such
Indebtedness was in existence at the time of such Permitted Acquisition
and was not created in contemplation thereof.
8.3 LIMITATION ON LIENS. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens created by the Loan Documents in favor of the Specified
Agent or the Lenders;
(b) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, PROVIDED that adequate reserves
with respect to contested taxes are maintained on the books of the US
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(c) carriers', landlord's, warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business which are not overdue for a period of more than
sixty (60) days or which are being contested in good faith by
appropriate proceedings;
(d) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
insurance contracts, utilities, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(f) easements, rights-of-way, zoning restrictions, restrictions,
minor defects, encroachments or irregularities in title and other
similar encumbrances (i) previously or hereinafter incurred in the
ordinary course of business which, in the aggregate, are not material
in amount and which, in the case of such encumbrances on any of the
Properties covered by the Mortgages, do not in the aggregate materially
detract from the value of the Property subject thereto or, in the case
of such encumbrances on any property, materially interfere with the
ordinary conduct
<PAGE>
of the business of the US Borrower or its Subsidiaries or (ii) which
are set forth in the "marked up" commitments for title insurance
delivered to the Administrative Agent on the Closing Date or
thereafter;
(g) Liens in existence on the Closing Date listed on Schedule 8.3,
securing Indebtedness permitted by subsection 8.2(c) (including
extensions, renewals and replacements of such Indebtedness as permitted
under subsection 8.2(c)), PROVIDED that no such Lien is spread to cover
any additional property (other than after acquired title in or on such
property and proceeds of the existing collateral in accordance with the
instrument creating such Lien) after the Closing Date and that the
amount of Indebtedness secured thereby is not increased except pursuant
to the instrument creating such Lien (without any modification thereof)
other than as set forth in subsection 8.2(c);
(h) purchase money Liens and Liens in respect of Financing Leases
upon or in any property acquired or held by Subsidiaries of the US
Borrower to secure Indebtedness permitted under subsection 8.2(e)
incurred solely for the purpose of financing the acquisition of such
property, and Liens existing on such property at the time of its
acquisition or existing on property of any Person that becomes a
Subsidiary after the date hereof at the time such Person becomes a
Subsidiary (other than any such Lien created in contemplation of such
acquisition);
(i) Liens on assets of a Foreign Subsidiary which is not a Credit
Party securing working capital lines of such Foreign Subsidiary to the
extent (x) the Indebtedness secured thereby is permitted under
subsection 8.2(j) or (y) is the Indebtedness of the Spanish Subsidiary
referred to on Schedule 8.2;
(j) licenses, leases or subleases permitted hereunder granted to
others not interfering in any material respect in the business of the
US Borrower or any of its Subsidiaries;
(k) attachment or judgment Liens (other than judgment Liens paid
or fully covered by insurance which are not outstanding for more than
sixty (60) days) in an aggregate amount outstanding at any one time not
in excess of the Equivalent Amount of $5,000,000;
(l) Liens arising from precautionary Uniform Commercial Code
financing statement filings with respect to operating leases or
consignment arrangements entered into by Subsidiaries of the US
Borrower in the ordinary course of business;
(m) Liens in favor of a banking institution arising by operation
of law encumbering deposits (including the right of set-off) held by
such banking institutions incurred in the ordinary course of business
and which are within the general parameters customary in the banking
industry;
(n) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to Subsidiaries of the US Borrower) the
Equivalent Amount of $10,000,000 in aggregate amount at any time
outstanding; and
<PAGE>
(o) Liens existing on any property or asset prior to the
acquisition thereof by Subsidiaries of the US Borrower, PROVIDED THAT
(i) such Lien is not created in contemplation of such acquisition and
(ii) such Lien does not apply to any other property or other assets of
any Subsidiary of the US Borrower.
8.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations pursuant to the Loan Documents;
(b) guarantees of Indebtedness by Subsidiaries of the US Borrower
permitted pursuant to subsection 8.2(c) in existence on the Closing
Date and set forth on Schedule 8.4 and extensions, renewals and
replacements thereof, PROVIDED, however, that no such extension,
renewal or replacement shall (i) amend or modify the subordination
provisions, if any, contained in such guarantee in a manner adverse to
the Secured Parties, or (ii) increase the principal amount of such
Indebtedness guaranteed by the original guarantee;
(c) the Specified Accommodation Obligations;
(d) indemnities given in the ordinary course of business in favor
of the companies issuing title insurance policies insuring the title to
any property to induce such issuance;
(e) surety bonds issued in the ordinary course of business in
respect of the type of obligations described in subsection 8.3(e);
(f) indemnities made in the Loan Documents, the Transaction
Documents or in any of the agreements contemplated hereby and thereby
and in the financial advisory agreement described in subsection
8.11(b)(ii) and in the corporate charter and/or bylaws of the US
Borrower and its Subsidiaries;
(g) guarantees by English Borrower of the Guaranteed Loan Notes;
(h) indemnities and guarantees (other than guarantees of
Indebtedness (other than Indebtedness of Subsidiaries of the US
Borrower permitted hereunder)) made in the ordinary course of business,
PROVIDED that such indemnities and guarantees could not in the
aggregate reasonably be expected to have a Material Adverse Effect;
(i) guarantees of Indebtedness of any Subsidiary of the US
Borrower permitted under Section 8.2 to the extent that such Subsidiary
has granted a security interest in its material assets for the benefit
of the Lenders;
(j) Guarantee Obligations of Subsidiaries in respect of
Indebtedness under any Interest Rate Agreement permitted under
subsection 8.2(f);
(k) additional Guarantee Obligations in aggregate principal amount
not to exceed $5,000,000; and
<PAGE>
(l) Guarantee Obligations of Subsidiaries under the Subordinated
Debt Documents in respect of the Interim Loans, the Exchange Notes and
the Senior Subordinated Notes, as applicable.
8.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except (i) any Domestic Subsidiary of a Specified Borrower may be
merged or consolidated with or into such Specified Borrower (PROVIDED that the
Specified Borrower shall be the continuing or surviving corporation) or with or
into any one or more Wholly Owned Subsidiaries of any such Specified Borrower
(PROVIDED that no Domestic Subsidiary of the US Borrower may be merged or
consolidated with or into any Foreign Subsidiary of the US Borrower unless such
Domestic Subsidiary shall be the surviving corporation), (ii) any Subsidiary of
a Specified Borrower may liquidate or dissolve if, in connection therewith, all
of its assets are transferred to such Specified Borrower (or a Subsidiary
thereof which is a Credit Party), (iii) any Subsidiary which is not a Material
Subsidiary may liquidate or dissolve, (iv) any Foreign Subsidiary may be merged
or consolidated with or into another Foreign Subsidiary (PROVIDED that if any
such merger or consolidation involves a Credit Party, such Credit Party shall be
the continuing or surviving corporation), (v) in the case of a Subsidiary of the
US Borrower, to the extent necessary to effect any Permitted Acquisitions and
(vi) any transaction permitted by subsection 8.6(d).
8.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, except:
(a) obsolete, negligible, surplus or worn out property disposed of
in the ordinary course of business or property that is no longer used
or useful in the conduct of the US Borrower's business disposed of in
the ordinary course of business;
(b) the sale, transfer or exchange of inventory in the ordinary
course of business;
(c) transfers resulting from any casualty or condemnation of
property or assets;
(d) so long as immediately before and after giving effect thereto
no Default or Event of Default exists, any sale or other transfer of
any property or assets having an aggregate fair market value not
exceeding 10% of consolidated total assets of the US Borrower and its
Subsidiaries prior to giving effect to such disposition, PROVIDED that
the Net Cash Proceeds of each such transaction are applied to the
prepayment of the Loans to the extent required by subsection 2.9;
(e) intercompany sales or transfers of assets made (i) in the
ordinary course of business, (ii) between Credit Parties, (iii) from
Credit Parties to Subsidiaries
<PAGE>
which are not Credit Parties if such sales or transfers are for at
least fair market value or (iv) between Subsidiaries which are not
Credit Parties;
(f) licenses or sublicenses of intellectual property and general
intangibles and licenses, leases or subleases of other property in the
ordinary course of business and which do not materially interfere with
the business of the US Borrower and its Subsidiaries;
(g) any consignment arrangements or similar arrangements for the
sale of assets in the ordinary course of business;
(h) the sale or discount of overdue accounts receivable arising in
the ordinary course of business, but only in connection with the
compromise or collection thereof;
(i) dispositions permitted by subsection 8.5; and
(j) the sale of assets to the extent that such assets are
exchanged for credit against the purchase price of productive assets,
or the proceeds of such sale are reasonably promptly applied to the
purchase price of productive assets.
8.7 LIMITATION ON RESTRICTED PAYMENTS. Declare or pay any
dividend (other than dividends payable solely in common stock of the US
Borrower) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any class of Capital Stock of the US
Borrower or any of its Subsidiaries or any warrants or options to purchase any
such Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property, obligations of the US Borrower, any Subsidiary or otherwise (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "RESTRICTED
PAYMENTS"), except that:
(a) Subsidiaries of the US Borrower may make Restricted Payments
to other Subsidiaries of the US Borrower and to the US Borrower and the
US Borrower may make the respective Restricted Payments, so long as
(except in the cases of clauses (i), (iii) and (v)) no Event of Default
has occurred and is continuing or would be continuing after giving
effect to such Restricted Payment:
(i) the proceeds of which shall be applied by the US
Borrower directly to pay its out of pocket expenses, for
administrative, legal and accounting services provided by
third parties that are reasonable and customary and incurred
in the ordinary course of business for such professional
services, or to pay franchise fees and similar costs;
(ii) payments, the proceeds of which will be used to
repurchase the Capital Stock or other equity securities of the
US Borrower from outside directors, employees, officers or
members of the management of the US Borrower, or any
Subsidiary, at a price not in excess of fair market value, in
an
<PAGE>
aggregate amount not in excess of $2,500,000 in any fiscal
year and $10,000,000 in the aggregate during the term of this
Agreement plus the cash proceeds received by the US Borrower
as a result of any resales of any such Capital Stock or other
securities and plus the amount of Indebtedness referred to in
subsection 8.2(o);
(iii) payments, the proceeds of which will be used to
pay taxes of the US Borrower as part of a consolidated group;
(iv) payments, the proceeds of which will be used to
pay management fees and expenses to Hidden Creek as described
in subsection 8.11(b)(ii); and
(v) Restricted Payments may be made to the US
Borrower to be applied by the US Borrower to the payment of
regularly scheduled payments on the Interim Loans, the
Exchange Notes or the Senior Subordinated Notes due within
five Business Days to the extent such payments are then
permitted by the subordination provisions contained in the
Interim Loans or the Senior Subordinated Notes, as the case
may be.
(b) any Subsidiary of any of the Borrowers may make Restricted
Payments to the Specified Borrower or to their respective Subsidiaries;
and
(c) Restricted Payments necessary to complete the Transactions.
8.8 LIMITATION ON CAPITAL EXPENDITURES. (a) Make or commit to
make any Capital Expenditure except for expenditures in the ordinary course of
business not exceeding, in the aggregate for the US Borrower and its
Subsidiaries during any of the fiscal years of the US Borrower set forth below
the sum of (x) the amount set forth opposite such fiscal year below (the "BASE
CAPEX AMOUNT") and (y) the then unused Permitted Expenditure Amount, PROVIDED
THAT, (b) to the extent Capital Expenditures made in any particular year are
less than the amount set forth below with respect to such year, the amount of
such difference (other than the component thereof described in clause (y)) (the
"CAPEX ROLLOVER") may be carried forward and spent in the subsequent year:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
<S> <C>
1999 $35,000,000
2000 $27,500,000
2001 $27,500,000
2002 and each year thereafter $22,500,000
</TABLE>
(c) Notwithstanding the foregoing, in no event shall Capital
Expenditures be made by the US Borrower.
<PAGE>
8.9 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person
("INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) (i) Investments (other than Permitted Acquisitions) by the US
Borrower and its Subsidiaries in any of the Credit Parties, including
any new Subsidiary which becomes a Credit Party and (ii) Investments in
Foreign Subsidiaries of the US Borrower that are not Credit Parties not
to exceed the sum of (x) $5,000,000 in the aggregate plus (y)
intercompany indebtedness permitted by subsection 8.2(b);
(d) loans and advances by the US Borrower or its Subsidiaries to
their respective directors, officers and employees (a) which are in the
form of notes payable by such directors, officers and employees to the
US Borrower or its Subsidiaries and used to finance the purchase of
Capital Stock of the US Borrower or its Subsidiaries or (b) in an
aggregate principal amount not exceeding the Equivalent Amount of
$1,000,000 at any one time outstanding;
(e) loans, advances or Investments in existence on the Closing
Date and listed on Schedule 8.9, and extensions, renewals,
modifications or restatements or replacements thereof, PROVIDED that no
such extension, renewal, modification or restatement shall (i) increase
the amount of the original loan, advance or investment, or (ii)
adversely affect the interests of the Secured Parties with respect to
such original loan, advance or investment or the interests of the
Specified Lenders under this Agreement or any other Loan Document in
any material respect;
(f) Investments permitted by subsection 8.2(b), subsection 8.4,
subsection 8.7 and by subsection 8.8;
(g) promissory notes and other similar non-cash consideration
received in the ordinary course of business by the Subsidiaries of the
US Borrower in connection with the dispositions permitted by subsection
8.6;
(h) Investments in Interest Rate Agreements;
(i) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of,
and other disputes with, customers and suppliers arising in the
ordinary course of business;
(j) in addition to the foregoing, Investments by Subsidiaries of
the US Borrower in an aggregate amount not exceeding the Equivalent
Amount of $10,000,000 (at cost, without regard to any write down or
write up thereof) at any one time outstanding;
<PAGE>
(k) so long as after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, Investments after the
Closing Date by Subsidiaries of the US Borrower resulting from
Permitted Acquisitions in an aggregate amount which shall include
Indebtedness permitted by subsections 8.2(l) and (q) not to exceed the
sum of (A) the amount of $10,000,000 per annum, (B) up to $15,000,000
to finance the previously planned acquisition in Mexico, (C) the amount
of common stock of the US Borrower issued subsequent to the Closing
Date in connection with Permitted Acquisitions, (D) the amount of the
Indebtedness referred to in subsection 8.2(l)(A)(ii) and (E) the then
unused Permitted Expenditure Amount, PROVIDED, that (i) the
Administrative Agent shall have received as soon as practicable, (I)
such opinions (including with respect to environmental matters),
certificates and copies of agreements (including any Permitted
Acquisition Documents) as it shall reasonably request and (II) a
certificate of a Responsible Officer of the US Borrower after giving
effect to such Permitted Acquisition showing the aggregate purchase
price (including the assumption of any Indebtedness) for Permitted
Acquisitions made by the US Borrower and its Subsidiaries since the
Closing Date, (ii) such actions as may be required or reasonably
requested to ensure that the Specified Agent, for the ratable benefit
of the Specified Lenders, has a perfected first priority security
interest or first ranking hypothec (in each case, to the extent
permitted by any assumed Indebtedness) in any assets required to be
secured pursuant to subsections 7.9 and 7.11 or any other Loan
Document, subject to Liens permitted by subsection 8.3, shall have been
taken and (iii) (I) on a pro forma basis for the period of four
consecutive fiscal quarters most recently ended (assuming the
consummation of such Permitted Acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the
first day of such period of four consecutive fiscal quarters and taking
into account for such pro forma computation only, the reasonable pro
forma cost savings associated with such Permitted Acquisition which are
reasonably satisfactory to the Administrative Agent), the US Borrower
shall be in compliance with the covenants contained in subsection 8.1
and (II) the Administrative Agent shall have received calculations in
reasonable detail reasonably satisfactory to it showing compliance with
the requirements of this clause (iii) certified by a Responsible
Officer of the US Borrower; and
(l) Investments which were owned by the target entity of a
Permitted Acquisition and which were acquired by the US Borrower and
its Subsidiaries in connection with such Permitted Acquisition and were
not made or created in contemplation of such Permitted Acquisition.
8.10 LIMITATION ON PAYMENTS AND MODIFICATIONS OF SUBORDINATED
DEBT INSTRUMENTS. (a) Make any payment or prepayment on or redemption of any of
the Interim Loans, the Exchange Notes or the Senior Subordinated Notes and any
payments in redemption, defeasance or repurchase thereof, except (i) mandatory
payments of interest, fees and expenses required by the terms of the agreement
governing or instrument evidencing such indebtedness but only to the extent
permitted under the subordination provisions applicable thereto, (ii)(a) the
Interim Loans may be exchanged for the Exchange Notes in compliance with
subsection 8.2(m) and (b) the Interim Loans may be repaid as contemplated by the
proviso clause of subsection 2.9(a) and (iii) to the extent that the Leverage
Ratio does not exceed 3.5 to 1.0 after giving effect to the application
<PAGE>
described in this clause (iii) and no Default or Event of Default exists, up to
50% of the net proceeds of equity issuances of the US Borrower used to make
voluntary redemptions of outstanding Senior Subordinated Notes under the "equity
clawback" provisions with respect thereto.
(b) Amend, supplement or otherwise modify any of the provisions of
the Subordinated Debt Documents.
(i) which amends or modifies the subordination provisions
contained therein;
(ii) which shortens the fixed maturity, or increases the rate or
shortens the time of payment of interest on, or increases the amount or
shortens the time of payment of any principal or premium payable
whether at maturity, at a date fixed for prepayment or by acceleration
or otherwise of such Indebtedness, or increases the amount of, or
accelerates the time of payment of, any fees payable in connection
therewith;
(iii) which relates to the affirmative or negative covenants,
events of default or remedies under the documents or instruments
evidencing such Indebtedness and the effect of which is to subject the
US Borrower or any of its Subsidiaries, to any more onerous or more
restrictive provisions; or
(iv) which otherwise adversely affects the interests of the
Lenders as senior creditors or the interests of the Lenders under this
Agreement or any other Loan Document in any respect.
(c) Make any payment in cash on any equity or debt security that
may be made under the terms thereof by the issuance of any security of
the same nature.
(d) Designate any Indebtedness as "Designated Senior Indebtedness"
under the Subordinated Debt Documents.
(e) Enter into the Exchange Note Indenture or the Senior
Subordinated Note Indenture unless (i)(w) the subordination provisions
(and related definitions) thereof are reasonably acceptable to the
Administrative Agent and the Syndication Agent, (x) the covenants and
events of default therein, when taken as a whole, are not less
favorable to the US Borrower than those set forth in the Interim Loan
Agreement and are customary for senior subordinated debt securities
sold in a public offering or a Rule 144A offering, (y) interest is
payable no more frequently than semi-annually and (z) the principal
thereof is payable in a single installment on (i) the date which is
eight and one-half years from the Closing Date, in the case of the
Exchange Notes, and (ii) the tenth anniversary of the Closing Date, in
the case of the Senior Subordinated Notes, and, in each such case, is
not otherwise redeemable or payable or required to be purchased except
for required offers to purchase in connection with change of control
and asset sale provisions customary for senior subordinated debt
securities sold in a public offering or a Rule 144A offering or (ii)
the terms thereof are reasonably satisfactory to the Required Lenders.
<PAGE>
(f) Amend, supplement or otherwise modify any of the Transaction
Documents in any material respect without the consent of the
Administrative Agent.
8.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Except as set
forth on Schedule 8.11 hereto, (a) enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such transaction is (i)
otherwise permitted under this Agreement, (ii) (x) in the ordinary course of the
US Borrower's or such Subsidiary's business and (y) upon fair and reasonable
terms no less favorable to the US Borrower or such Subsidiary, as the case may
be, than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate or (iii) required by the Transaction Documents
(b) In addition, notwithstanding the foregoing, the US
Borrower and its Subsidiaries shall be entitled to make the following payments
and/or to enter into the following transactions:
(i) the payment of reasonable and customary fees and reimbursement
of expenses payable to directors of the US Borrower;
(ii) the payment to Hidden Creek and its Affiliates of fees plus
out-of-pocket expenses pursuant to financial advisory agreements
between Hidden Creek or such Affiliates and the US Borrower or its
Subsidiaries;
(iii) the employment arrangements with respect to the procurement
of services of directors, officers and employees in the ordinary course
of business and the payment of reasonable fees in connection therewith;
(iv) the adoption by the Board of Directors of the US Borrower of
a stock option plan, including any grants thereunder and the issuance
of any common stock upon the exercise of such options;
(v) directors and officers insurance policies and premiums and
indemnity agreements (and any payments pursuant thereto), between the
US Borrower and its Subsidiaries and each individual director and
officer of the US Borrower and its Subsidiaries; and
(vi) the sale of equity interests in the US Borrower to employees,
management and directors of the US Borrower or any of its Subsidiaries
(pursuant to subscription agreements to be entered into in connection
therewith).
8.12 LIMITATION ON SALES AND LEASEBACKS. Enter into any
arrangement with any Person providing for the leasing by the US Borrower or any
Subsidiary of real or personal, immovable or movable, property which has been or
is to be sold or transferred by the US Borrower or such Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the US
Borrower or such Subsidiary; PROVIDED that this subsection 8.12 shall not
prohibit any sale and leaseback resulting from the incurrence of any lease in
respect of any capital asset entered into within ninety (90) days of the
acquisition of such capital asset for the purpose of providing permanent
financing of such capital asset.
<PAGE>
8.13 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal
year of the US Borrower to end on a day other than December 31; PROVIDED that
the US Borrower may change such fiscal year upon the approval of each of the
Specified Agents.
8.14 RESTRICTIONS AFFECTING SUBSIDIARIES. Enter into with any
Person, or suffer to exist any consensual agreement which prohibits or limits
the ability of the US Borrower or any of its Subsidiaries to (a) create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than (i) this Agreement and the
other Loan Documents, (ii) any industrial revenue bonds, purchase money
mortgages or Financing Leases or any other agreement or transaction permitted by
this Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed thereby) and (iii) any agreements entered
into in connection with foreign working capital lines, the restrictions
contained in which are applicable only to assets of the relevant Foreign
Subsidiary which are not required to be pledged in favor of the Lenders (or any
of them) or (b) pay dividends or make other distributions or pay any
Indebtedness owed to the US Borrower or any of its Subsidiaries except as
permitted by this Agreement and the other Loan Documents.
8.15 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the US Borrower and its Subsidiaries are engaged on the date of this Agreement
or which are similar, related or supportive businesses or those consented to by
the Required Lenders.
8.16 AMENDMENTS TO CORPORATE DOCUMENTS; TRANSACTION DOCUMENTS;
LICENSES. (a) Amend its certificate of incorporation or by-laws or other
governing documents unless such amendment does not adversely affect the
interests of any Secured Party in any material respect, (b) amend, supplement or
otherwise modify the terms and conditions of the indemnities and licenses
furnished pursuant to any Transaction Document such that after giving effect
thereto such indemnities or licenses shall be materially less favorable to the
interests of the Credit Parties or the Secured Parties with respect thereto, (c)
otherwise amend, supplement or otherwise modify the terms and conditions of any
Transaction Document except to the extent that any such amendment, supplement or
modification could not reasonably be expected to have a Material Adverse Effect
or (d) increase the rate or amount of, or method of calculation of, the fees
described in subsection 8.11(b)(ii) from the rates and amounts in existence on
the date hereof.
8.17 PASSIVE STATUS OF THE US BORROWER. Permit the US Borrower
to engage in any activities or incur any Indebtedness or Guarantee Obligations
other than (A) maintaining its corporate existence, (B) participating in any tax
and accounting matters in connection with activities permitted hereunder and
under the other Loan Documents, (C) owning the stock of Subsidiaries, (D) its
activities incident to the performance of the Loan Documents, (E) transactions
pursuant to or in connection with the Transactions, (F) assuming and making
payments on the Interim Loans, the Exchange Notes and the Senior Subordinated
Notes, (G) the issuance and/or sale of its common stock or options or warrants
in respect of its Capital Stock, provided that the proceeds thereof are applied
as set forth in subsection 2.9, (H) incurring the Indebtedness referred to in
subsection 8.2(o) and (I) making any Restricted Payment permitted by subsection
8.7.
<PAGE>
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Specified
Loan and/or Specified Note or any Specified Accommodation Obligation
when due in accordance with the terms thereof or hereof; or any
Borrower shall fail to pay any interest on any Specified Loan and/or
Specified Note, or any other amount payable hereunder by it, within
five (5) days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Borrower or any of their Subsidiaries (other than, prior to
consummation of the Transactions, in their capacities as sellers in
connection with the Recapitalization) herein or in any other Loan
Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with any Loan Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) Any Borrower or any of their Subsidiaries shall default in the
performance or observance of (i) any agreement contained in the
provisos to subsections 6.1(a), 6.1(m) or 6.1(q), and Section 8 (other
than subsections 8.2, 8.3, 8.4, 8.7 and 8.9) or Section 11 of this
Agreement or Section 5 of the Guarantee and Collateral Agreement or
(ii) subsections 8.2, 8.3, 8.4, 8.7 or 8.9 and, in the case of any
default under this clause (ii), such default shall continue unremedied
for a period of ten (10) days; or
(d) Any Borrower or any of their Subsidiaries shall default in the
observance or performance of any other agreement contained in this
Agreement or in any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of thirty (30) days; or
(e) Any Credit Party or any of its Material Subsidiaries shall (i)
default (x) in any payment of principal of or interest on any
Indebtedness (other than any of the Loans) or (y) in the payment of any
Guarantee Obligation (other than the guarantees pursuant to the Loan
Documents), having an outstanding principal amount individually or in
the aggregate for both of clauses (x) and (y) in excess of the
Equivalent Amount of $5,000,000, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness
or Guarantee Obligation was created; or (ii) default in the observance
or performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness
<PAGE>
to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(f) (i) Any Credit Party or any of its Material Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, liquidation, administration, winding up, insolvency,
receivership, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, administration,
arrangement, adjustment, winding-up, liquidation, dissolution,
receivership, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee,
administrator, liquidator, custodian, administrative receiver,
conservator or other similar official for it or for all or any
substantial part of its assets, or any of the Credit Parties or any of
their Material Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any
Credit Party or any of its Material Subsidiaries any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of sixty (60) days; or (iii) there shall be commenced against
any Credit Party or any of its Material Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(iv) any Credit Party or any of its Material Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii),
or (iii) above; or (v) any Credit Party or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts (other than intercompany debts) as they
become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the US Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the US Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the US
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi)
<PAGE>
above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to result in a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Specified Borrower or any of their Material Subsidiaries involving,
individually or in the aggregate, a liability (not paid or fully
covered by insurance) of the Equivalent Amount of $5,000,000 or more,
and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within sixty (60) days from
the entry thereof; or
(i) Any Borrower or any of their Subsidiaries shall incur any
liability (not paid or fully covered by insurance) under any
Environmental Law in an amount which would result in a Material Adverse
Effect; or
(j) Any Loan Document shall, at any time, cease to be in full
force and effect (unless released by the Specified Agent, at the
direction of the Required Lenders or as otherwise permitted under this
Agreement) or shall be declared null and void, or the validity or
enforceability thereof of any terms or provisions therein shall be
contested by any Credit Party, or any of the Liens intended to be
created by the Loan Documents shall cease to be or shall not be a valid
and perfected Lien having the priority contemplated thereby; or
(k) (x) A Change of Control shall occur or (y) the US Borrower
shall fail to own directly or indirectly, beneficially and of record
100% of the Capital Stock of each Foreign Subsidiary Borrower if in
each case of (x) and (y) above, such event shall occur other than by
actions taken by the Administrative Agent or the Collateral Agent under
the Loan Documents; or
(l) The subordination provisions contained in the Subordinated
Debt Documents shall cease, for any reason, to be in full force and
effect or enforceable in accordance with their terms;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to a Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon), the maximum amount available to be
drawn under all outstanding Accommodations and all other amounts owing under
this Agreement and any Notes shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrowers declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrowers declare the Loans
hereunder (with accrued interest thereon), the maximum amount available to be
drawn under all outstanding Accommodations and all other amounts owing under
this Agreement and any Notes to be due and payable forthwith, whereupon the
same shall immediately become due and payable. All payments under this
Section 9 on account of undrawn Accommodations shall be made by the Specified
<PAGE>
Borrower directly to a cash collateral account established for such purpose for
application to the Specified Borrower's obligations with respect thereto as
drafts are presented under the Specified Accommodations. Any remaining amounts
paid by the Specified Borrower in respect of such undrawn Specified
Accommodations shall be returned to the Specified Borrower after the last expiry
date of the Accommodations and after the Obligations have been paid in full.
Except as expressly provided above in this Section, each Credit Party hereby
waives presentment, demand, protest and all other notices of any kind.
SECTION 10. THE AGENTS
10.1 APPOINTMENT. Each Specified Lender hereby irrevocably
designates and appoints its Specified Agent and person holding a power of
attorney of such Specified Lender under this Agreement and the other Specified
Loan Documents, and each such Specified Lender irrevocably authorizes such
Specified Agent for such Specified Lender, to take such action on its behalf
under the provisions of this Agreement and the other Specified Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Specified Agent by the terms of this Agreement and the other Specified
Loan Documents, together with such other powers as are reasonably incidental
thereto including, without limitation, the execution and delivery of the Sharing
Agreement on behalf of such Specified Lender and the appointment of Chase, as
Collateral Agent thereunder. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Specified Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Specified Loan Document or otherwise exist against the
Specified Agent.
10.2 DELEGATION OF DUTIES. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 EXCULPATORY PROVISIONS. The Agents shall not, nor shall
any of their officers, directors, controlling persons, employees, agents,
attorneys-in-fact or Affiliates be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except for its or such Person's own gross
negligence or wilful misconduct) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by any
Credit Party or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Specified Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any Notes or any other Loan Document or for any failure of any
Credit Party to perform its obligations hereunder or thereunder. No Agent
shall be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
<PAGE>
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Credit Parties.
10.4 RELIANCE BY THE SPECIFIED AGENTS. The Agents shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Credit Party), independent
accountants and other experts selected by the Agent. The Agents shall deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Specified Agent. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
or all the Lenders, as it deems appropriate or it shall first be indemnified to
its satisfaction by the Specified Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Each Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and any Notes and the other Loan
Documents in accordance with a request of the Required Lenders or all the
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Obligations.
10.5 NOTICE OF DEFAULT. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless it has received written notice from a Specified Lender or any
Credit Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
an Agent receives such a notice, the Specified Agent shall give notice thereof
to the Specified Lenders and other Agents. The Agents shall each take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders or all the Lenders; PROVIDED that unless and
until such Agents shall have received such directions, the Agents may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as they shall deem advisable in the
best interests of the Lenders.
10.6 NON-RELIANCE ON AGENT AND LENDERS. Each Lender expressly
acknowledges that no Agent has, nor has any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates made any representations or
warranties to it and that no act by any Agent hereinafter taken, including any
review of the affairs of any Credit Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Credit Parties and made its own decision to make its Specified Loans hereunder
and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agents or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and
<PAGE>
the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of any Credit Party.
Except for notices, reports and other documents expressly required to be
furnished to the Specified Lenders by the Specified Agent hereunder, the
Agents shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness
of any Credit Party which may come into the possession of the Agents or any
of their officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.7 INDEMNIFICATION. The Specified Lenders agree to indemnify the
Specified Agent in its capacity as such (to the extent not reimbursed by the
Specified Borrower and without limiting the obligation of the Specified Borrower
to do so), ratably according to their respective Specified Commitment
Percentages in effect on the date on which indemnification is sought under this
subsection, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Specified Loans) be imposed on, incurred
by or asserted against the Specified Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Specified Agent under or in
connection with any of the foregoing; PROVIDED that no Specified Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Specified Agent's gross negligence or wilful
misconduct. The Specified Agent shall have the right to deduct any amount owed
to it by any Specified Lender under this subsection from any payment made by it
to such Lender hereunder. The agreements in this subsection shall survive the
payment of the Specified Loans and all other amounts payable hereunder.
10.8 AGENTS IN THEIR INDIVIDUAL CAPACITY. The Agent, and their
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Credit Parties as though the Agents were not the
Agents hereunder and under the other Loan Documents. With respect to its
Specified Loans made or renewed by it and any Specified Note issued to it, the
Specified Agent shall have the same rights and powers under this Agreement and
the other Specified Loan Documents as any Specified Lender and may exercise the
same as though it were not a Specified Agent, and the terms "Specified Lender"
and "Specified Lenders" shall include each of the Specified Agents in its
individual capacity.
10.9 SUCCESSOR AGENTS. Any Specified Agent may resign as the
Specified Agent upon ten (10) days' notice to the Lenders and the US Borrower.
If the Specified Agent shall resign as Specified Agent under this Agreement and
the other Loan Documents, then the Required Lenders shall appoint from among the
Specified Lenders a successor agent for the Specified Lenders, which successor
agent shall be subject to the approval of the Specified Borrower, whereupon such
successor agent shall succeed to the rights, powers and duties of the Specified
Agent, and the term "Specified Agent" shall mean such successor agent effective
upon such appointment and approval, and the former Specified Agent's rights,
powers and duties as Specified Agent shall be terminated, without
<PAGE>
any other or further act or deed on the part of such former Specified Agent
or any of the parties to this Agreement or any holders of the Specified
Loans. After any retiring Specified Agent's resignation as Specified Agent,
the provisions of this subsection shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Specified Agent under
this Agreement and the other Loan Documents.
10.10 ADDITIONAL MINISTERIAL POWERS OF THE SPECIFIED AGENTS. Each
Specified Agent is hereby irrevocably authorized by each of the Specified
Lenders to execute any document creating any Lien and to release any Lien
covering any asset of the Specified Borrower or any of its Subsidiaries
(including, without limitation, any Properties, accounts receivable or
inventory) that is the subject of a disposition, sale or assignment which is
permitted under this Agreement or, subject to subsection 12.1, which has been
consented to by the Required Lenders.
10.11 SPECIFIED ISSUING LENDER AND COLLATERAL AGENT. Each
Specified Revolving Credit Lender hereby acknowledges that the provisions of
this Section 10 shall apply to the Specified Issuing Lender, in its capacity as
issuer of any Specified Accommodation, and to the Specified Swing Line Lender,
in its capacity as provider of any Specified Swing Line Loans, and in its
capacity under the other Loan Documents, each in the same manner as such
provisions are expressly stated to apply to a Specified Agent. Each Lender
hereby acknowledges that the provisions of this Section 10 shall apply to Chase,
as Collateral Agent under the other Loan Documents, in the same manner as such
provisions are expressly stated to apply to the Specified Agents.
10.12 ENGLISH AGENT AS TRUSTEE. (a) The English Agent in its
capacity as trustee or otherwise under the Loan Documents:
(i) is not liable for any failure, omission, or defect in
perfecting or registering the security constituted or created by
any Loan Document;
(ii) may accept without inquiry such title as any
Credit Party may have to any asset secured by any Loan
Document; and
(iii) is not under any obligation to hold any Loan
Document or any other document in connection with the Loan
Documents or the assets secured by any Loan Document
(including title deeds) in its own possession or take any
steps to protect or preserve the same. The English Agent may
permit any Credit Party to retain any Loan Document or other
document in its possession.
(b) Except as otherwise provided in the Loan Documents, all
moneys which under the trusts contained in the Loan Documents are
received by the English Agent in its capacity as trustee or otherwise
may be invested in the name of or under the control of the English
Agent in any investment authorized by English law for the investment by
trustee of trust money or in any other investments which may be
selected by the English Agent. Additionally, the same may be placed on
deposit in the name or under the control of the English Agent at such
bank or institution (including the English Agent) and upon such terms
as the English Agent may think fit.
<PAGE>
SECTION 11. GUARANTEE
11.1 GUARANTEE. To induce the Lenders to execute and deliver this
Agreement, to make Loans, and to issue and participate in Accommodations, and in
consideration thereof, the US Borrower hereby unconditionally and irrevocably
guarantees, as primary obligor and joint and several co-debtor and not merely as
surety to the Agents, the Secured Parties and their successors, indorsees,
transferees and assigns, the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Foreign Subsidiary Obligations, and the US Borrower further agrees to pay the
expenses which may be paid or incurred by the Agents or the Secured Parties
in collecting any or all of the Foreign Subsidiary Obligations and/or
enforcing any rights under this Section 11 or under the Foreign Subsidiary
Obligations in accordance with subsection 12.5. The guarantee contained in
this Section 11 shall remain in full force and effect until the Foreign
Subsidiary Obligations are paid in full and each of the Foreign Subsidiary
Revolving Credit Commitments is terminated, notwithstanding that from time to
time prior thereto any Foreign Subsidiary Revolving Credit Borrower may be
free from any Specified Obligations.
11.2 WAIVER OF SUBROGATION. Notwithstanding any payment or
payments made by the US Borrower in respect of the Foreign Subsidiary
Obligations or any setoff or application of funds of the US Borrower by any
Agent or any Lender, until payment in full of the Foreign Subsidiary Obligations
and the termination of each of Foreign Subsidiary Revolving Credit Commitments,
the US Borrower shall not be entitled to be subrogated to any of the rights of
the Agents or the Lenders against the Borrowers or any collateral security or
guarantee or right of offset held by any Agent or any Lender for the payment of
the Foreign Subsidiary Obligations, nor shall the US Borrower seek any
reimbursement from any Borrower in respect of payments made by the US Borrower
hereunder.
11.3 MODIFICATION OF FOREIGN SUBSIDIARY OBLIGATIONS. The US
Borrower hereby consents that, without the necessity of any reservation of
rights against the US Borrower and without notice to or further assent by the US
Borrower, any demand for payment of the Foreign Subsidiary Obligations made by
any Agent, any Issuing Lender, any Lender may be rescinded by the Agent, the
Issuing Lender, or the Lenders, and the Foreign Subsidiary Obligations
continued, and the Foreign Subsidiary Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Agent, any Issuing Lender,
or any Lender, and that this Agreement, any Notes, and the other Loan Documents,
including, without limitation, any collateral security document or other
guarantee or document in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Agents, the Issuing
Lenders, or the Lenders, may deem advisable from time to time, and, to the
extent permitted by applicable law, any collateral security or guarantee or
right of offset at any time held by any Agent, any Issuing Lender, or any
Lender, for the payment of the Foreign Subsidiary Obligations may be sold,
exchanged, waived, surrendered or released, all without the necessity of any
reservation of rights against the US Borrower and without notice to or further
assent by the US Borrower which will remain bound hereunder notwithstanding any
such renewal, extension, modification, acceleration, compromise,
<PAGE>
amendment, supplement, termination, sale, exchange, waiver, surrender or
release. The Agents, the Issuing Lenders, and the Lenders shall not have any
obligation to protect, secure, perfect or insure any collateral security
document or property subject thereto at any time held as security for the
Foreign Subsidiary Obligations. When making any demand hereunder against the
US Borrower, the Agents, the Issuing Lenders, or the Lenders, may, but shall
be under no obligation to, make a similar demand on any other party or any
other guarantor, and any failure by any Agent, any Issuing Lender, or any
Lender, to make any such demand or to collect any payments from any Borrower
or any such other guarantor shall not relieve the US Borrower of its
obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Agents, the Issuing Lenders, or the Lenders, against the US Borrower. For the
purposes of this subsection "demand" shall include the commencement and
continuance of any legal proceedings.
11.4 WAIVER BY THE US BORROWER. The US Borrower waives the
benefits of division and discussion and any and all notice of the creation,
renewal, extension or accrual of the Foreign Subsidiary Obligations and notice
of or proof of reliance by the Agents, the Issuing Lenders, or the Lenders upon
the guarantee contained in this Section 11 or acceptance of the guarantee
contained in this Section 11, and the Foreign Subsidiary Obligations, and any of
them, shall conclusively be deemed to have been created, contracted, continued
or incurred in reliance upon the guarantee contained in this Section 11, and all
dealings between the US Borrower and the Agents, the Issuing Lenders, or the
Lenders shall likewise be conclusively presumed to have been had or consummated
in reliance upon the guarantee contained in this Section 11. The US Borrower
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Specified Borrower or the US Borrower with respect
to any Specified Obligations. This guarantee shall be construed as a continuing
absolute and unconditional guarantee of payment without regard to the validity,
regularity or enforceability of this Agreement, any Note or any other Loan
Document, including, without limitation, any collateral security or guarantee
therefor or right of offset with respect thereto at any time or from time to
time held by any Agent, any Issuing Lender, or any Lender and without regard to
any defense, setoff or counterclaim which may at any time be available to or be
asserted by any Borrower against any Agent, any Issuing Lender, or any Lender,
or any other Person, or by any other circumstance whatsoever (with or without
notice to or knowledge of any Borrower or the US Borrower) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any
Borrower for any of its Foreign Subsidiary Obligations, or of the US Borrower
under the guarantee contained in this Section 11 in bankruptcy or in any other
instance, and the obligations and liabilities of the US Borrower hereunder shall
not be conditioned or contingent upon the pursuit by any Agent, any Issuing
Lender or any Lender or any other Person at any time of any right or remedy
against any Foreign Subsidiary Borrower or against any other Person which may be
or become liable in respect of any Foreign Subsidiary Obligations or against any
collateral security or guarantee therefor or right of offset with respect
thereto. The guarantee contained in this Section 11 shall remain in full force
and effect and be binding in accordance with and to the extent of its terms upon
the US Borrower and the successors and assigns thereof, and shall inure to the
benefit of the Lenders and their successors, indorsees, transferees and assigns,
until the Foreign Subsidiary Obligations shall have been satisfied in full and
the Foreign Subsidiary Revolving Credit Commitments shall be
<PAGE>
terminated, notwithstanding that from time to time during the term of this
Agreement any Foreign Subsidiary Borrower may be free from any Foreign
Subsidiary Obligations.
11.5 REINSTATEMENT. This guarantee shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any Foreign Subsidiary Obligations is rescinded or must otherwise be
restored or returned by any Agent, any Issuing Lender, or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the US
Borrower or any Foreign Subsidiary Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the US Borrower, any Foreign Subsidiary Borrower or any substantial
part of their respective property, or otherwise, all as though such payments had
not been made.
SECTION 12. MISCELLANEOUS
12.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or otherwise modified except in accordance with the provisions of
this subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Specified Agent, as the case may be, may, from time to
time, (a) enter into with any Credit Party written amendments, supplements or
modifications hereto and to any Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement or any Notes or the other
Loan Documents or changing in any manner the rights of the Secured Parties or
any Credit Party or any other Person hereunder or thereunder (including, without
limitation, for the purpose of adding additional Tranches of Term Loans after
the Closing Date) or (b) waive, on such terms and conditions as the Required
Lenders or the Specified Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or any Notes or the other
Loan Documents or any Default or Event of Default and its consequences;
PROVIDED, HOWEVER, that no such waiver and no such amendment, supplement or
modification shall directly (i) reduce the aggregate amount or extend the
scheduled date of maturity of any Loan or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or thereunder or extend
the scheduled date of any payment thereof or increase the aggregate amount or
extend the expiration date of any Lender's Specified Revolving Credit
Commitment, in each case without the consent of each Lender affected thereby,
(ii) amend, modify or waive any provision of this subsection 12.1 (except as
contemplated by clause (xi) below) or reduce the percentage specified in the
definition of Required Lenders or consent to the assignment or transfer by any
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents or release collateral having an aggregate value in excess of the
Equivalent Amount of $30,000,000 or release the US Borrower from any Guarantee
Obligation under the Loan Documents, in each case, except as set forth in
subsection 10.10, without the written consent of all the Lenders, (iii) amend,
modify or waive any provision of subsection 2.12 and Sections 3 or 10 (to the
extent applicable to Swing Line Notes or Swing Line Lenders) without the written
consent of the then Swing Line Lenders, (iv) except as specified in clause (i)
above, amend, modify or waive any provision of (w) subsection 2.5 (to the extent
such subsection 2.5 relates to the US Tranche A Term Loans) without the written
consent of US Tranche A Term Loan Lenders the US Tranche A Term Loan Percentages
of which aggregate at least a majority, (x) subsection 2.5 (to the extent
<PAGE>
such subsection 2.5 relates to the US Tranche B Term Loans) without the
written consent of US Tranche B Term Loan Lenders the US Tranche B Term Loan
Percentages of which aggregate at least a majority, (y) subsection 2.5 (to
the extent such subsection 2.5 relates to the US Sterling Term Loans) without
the written consent of US Sterling Term Loan Lenders the US Sterling Term
Loan Percentages of which aggregate at least a majority, (z) subsection 2.5
(to the extent such subsection 2.5 relates to the English Term Loans) without
the written consent of English Term Loan Lenders the English Term Loan
Percentages of which aggregate at least a majority, (v) amend, modify or
waive any provision of subsection 2.1, 2.2, 2.3 or 2.4 or Section 3 without
the written consent of the Specified Revolving Credit Lenders the Specified
Revolving Credit Commitment Percentages of which aggregate at least a
majority of the outstanding Specified Revolving Credit Commitments, (vi)
amend, modify or waive any provision of Section 10 without the written
consent of each Agent, (vii) amend, modify or waive the order of application
of prepayments specified in subsection 4.4(b) without the consent of (A) US
Revolving Credit Lenders the Total Credit Percentages (calculated for this
purpose without reference to outstanding US Term Loans, English Term Loans
and Foreign Subsidiary Revolving Credit Commitments) of which aggregate at
least a majority, (B) US Term Loan Lenders the Total Credit Percentages
(calculated for this purpose without reference to outstanding Revolving
Credit Commitments and English Term Loans) of which aggregate at least a
majority, (C) Specified Foreign Subsidiary Revolving Credit Lenders the Total
Credit Percentages (calculated for this purpose without reference to
outstanding Term Loans and other Specified Revolving Credit Commitments) of
which aggregate at least a majority, and (D) Specified English Term Loan
Lenders which hold a majority of the outstanding Specified English Term Loans
(the US Lenders and the Foreign Subsidiary Lenders referred to in clauses
(A), (B), (C), and (D), collectively, the "MAJORITY CLASS LENDERS"), (viii)
amend, modify or waive the provisions of any Specified Accommodation or any
Specified Accommodation Obligation without the written consent of the
Specified Issuing Lender, (ix) amend, modify or waive any provision of any
Loan Document that provides for the ratable sharing by the Secured Parties of
the proceeds of any realization on the security for the Obligations to
provide for a non-ratable sharing thereof, without the consent of the
Majority Class Lenders, (x) amend, modify or waive any provision herein that
(A) affects the Revolving Credit Lenders, or Term Loan Lenders (or any
tranche thereof) only, without the prior written consent of a majority in
interest of the Revolving Credit Lenders, Term Loan Lenders (or tranche
thereof), as the case may be, (B) adversely affects the Specified Lenders or
Specified Revolving Credit Lenders or Specified Term Lenders only, without
the prior written consent of a majority in interest of such Specified Lenders
or Specified Revolving Credit Lenders or Specified Term Lenders, as the case
may be, or (C) except as provided in the foregoing provisions of this
subsection 12.1, adversely affects the rights and interests of any of the
Specified Lenders differently from those of any other class of Specified
Lenders, without the prior written consent of a majority in interest of each
separate class of Specified Lenders affected thereby, (xi) if additional
Tranches of Term Loans are extended after the Closing Date with the consent
of the Required Lenders as required above, such Tranches may be included on a
PRO RATA basis (as is originally done with the US Tranche A Term Loans, the
US Tranche B Term Loans , the US Sterling Term Loans and the English Term
Loans) in the various prepayments or repayments required pursuant to
subsections 2.8 and 2.9, in any section providing scheduled installments for
any new Tranche of Term Loans and in the definition of Required Lenders and
may share in the Collateral on a ratable basis or (xii) amend or modify any
provision of this Agreement which would require a Lender to make a Loan with
an Interest Period in excess
<PAGE>
of six months without the prior written consent of such Lender. Any such
waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon each of the Borrowers, the
Agents, the Lenders, and all future holders of any of the Obligations. In the
case of any waiver, the Credit Parties, the Lenders, and each of the Agents
shall be restored to their former position and rights hereunder and under the
outstanding Loans and the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
12.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three (3) Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of any Borrower, the
Agents, the Issuing Lenders and the Swing Line Lenders, and as set forth on the
signature pages hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the Loans or any Notes:
The Borrowers: 3101 South Taylor Drive
P.O. Box 1024
Sheboygan, WI 53082-1024
Attention: Thomas C. Dinolfo
Telecopy: (920) 458-4861
With copies to:
Morris Ashby Limited
16 Freebournes Road
Witham
Essex, England CM8 3DX
Attention: David White
Telecopy: 011-44-1376-518-622
and
Hidden Creek Investments
4508 IDS Center
Minneapolis, MN 55402
Attention: Scott Rued and Carl E. Nelson
Telecopy: 612-332-2012
The Administrative The Chase Manhattan Bank
Agent, the US 270 Park Avenue, 47th Floor
Issuing Lender or New York, New York 10017
US Swing Line Attention: Andris Kalnins
Lender: Telecopy: (212) 270-5127
<PAGE>
with copies to: The Chase Manhattan Bank
Loan & Agency Services Group
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Janet Belden
Telecopy: (212) 552-5658
The English Chase Manhattan International Limited
Agent, the Euro Trinity Tower
Agent and the 9 Thomas More Street
English Issuing London, England E19YT
Lender: Attention: Stephen Clark or Stephen Hurfford
Telecopy: 011-44-171-777-2360
with copies to: The Chase Manhattan Bank
270 Park Avenue, 47th Floor
New York, New York 10017
Attention: Andris Kalnins
Telecopy: (212) 270-5127
The Collateral The Chase Manhattan Bank
Agent: 270 Park Avenue, 47th Floor
New York, New York 10017
Attention: Andris Kalnins
Telecopy: (212) 270-5127
PROVIDED that any notice, request or demand to or upon the Specified Agent or
the Specified Lenders pursuant to subsection 2.2, 2.4, 2.5, 2.6, 2.7, 2.10, or
4.4 shall not be effective until received.
12.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the making of the Specified
Loans hereunder.
12.5 PAYMENT OF EXPENSES AND TAXES. Each Specified Borrower agrees
(a) to pay or reimburse the Specified Agent for all reasonable out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and any Notes and the other Loan Documents and any other documents prepared in
connection herewith or therewith (requested by or for the benefit of such
Borrower) other than any Assignment and
<PAGE>
Acceptance, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Specified Agent, (b) to
pay or reimburse each Specified Lender and the Specified Agent for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, any Notes,
the other Loan Documents and any such other documents, including, without
limitation, the reasonable fees and disbursements of one counsel representing
the Specified Agent and the Specified Lenders in each jurisdiction and, at
any time after and during the continuance of an Event of Default, to the
extent a conflict arises, of one additional counsel to all the Specified
Lenders, and (c) to pay, indemnify, and hold each Specified Lender and the
Specified Agent (and their respective trustees, directors, officers,
employees and agents) harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other similar taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of,
or consummation or administration of any of the transactions contemplated by,
or any amendment, supplement or modification of, or any waiver or consent
under or in respect of, this Agreement, any Notes, the other Loan Documents
and any such other documents (requested by or for the benefit of such
Borrower), and (d) to pay, indemnify, and hold each Specified Lender and the
Specified Agent (and their respective trustees, directors, officers,
employees and agents) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, any Notes, the other Loan Documents, the
Acquisition Documents, the Transactions or the use of the proceeds of the
Specified Loans in connection with the Transactions and any such other
documents (all the foregoing in this clause (d), collectively, the
"INDEMNIFIED LIABILITIES"), PROVIDED that the Specified Borrower shall have
no obligation hereunder to the Specified Agent, or any Specified Lender (or
their respective trustees, directors, officers, employees and agents) with
respect to indemnified liabilities arising from the gross negligence or
wilful misconduct of the indemnified party or, in the case of indemnified
liabilities arising under this Agreement, any Notes and the other documents,
from material breach by the indemnified party of this Agreement, any Notes or
the other Loan Documents, as the case may be. The agreements in this
subsection shall survive repayment of the Specified Loans and all other
amounts payable hereunder.
12.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Lenders, Agents, and all future holders of the Loans and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of each Lender.
(b) Any Specified Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks, insurance companies, mutual funds, or other financial institutions or
other entities ("SPECIFIED PARTICIPANTS") participating interests in any
Specified Loan owing to such Lender, any Note held by such Lender, any Specified
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Specified
Lender of a participating interest to a Specified Participant, such Specified
Lender's obligations under this Agreement to the other parties to this Agreement
shall
<PAGE>
remain unchanged, such Specified Lender shall remain solely responsible for
the performance thereof, such Specified Lender shall remain the holder of any
such Specified Loan for all purposes under this Agreement and the other Loan
Documents, and the Specified Borrower and the Specified Agent shall continue
to deal solely and directly with such Specified Lender in connection with
such Specified Lender's rights and obligations under this Agreement and the
other Loan Documents. No Specified Lender shall permit any Specified
Participant to have the right to consent to any amendment or waiver in
respect of this Agreement or any of the other Loan Documents, except that
such Lender may grant such Specified Participant the right to consent to any
amendment or waiver in respect of this Agreement or the other Loan Documents
that would, directly or indirectly, (i) reduce the aggregate amount or extend
the final maturity of any Specified Loan, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof or (ii) consent to the assignment or transfer by the Specified
Borrower of any of its rights and obligations under this Agreement or any of
the other Loan Documents. Each Specified Borrower agrees that if amounts
outstanding under this Agreement and the Specified Loans are due or unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Specified Participant shall be deemed
to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Specified
Lender under this Agreement or any Note, PROVIDED that in purchasing such
participating interest, such Specified Participant shall be deemed to have
agreed to share with the Specified Lenders the proceeds thereof as provided
in subsection 12.7(a) as fully as if it were a Specified Lender hereunder.
The Specified Borrower also agrees that each Specified Participant shall be
entitled to the benefits of subsections 4.5, 4.6 and 4.7 with respect to its
participation in the Specified Commitments and the Specified Loans and
Specified Accommodations outstanding from time to time as if it was a
Specified Lender; PROVIDED that in the case of subsection 4.6 and 4.7, such
Specified Participant shall have complied with the requirements of said
subsection and PROVIDED, FURTHER, that no Specified Participant shall be
entitled to receive any greater amount pursuant to any such subsection than
the transferor Specified Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Specified Lender to such Specified Participant had no such transfer occurred.
(c) Any Specified Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time and from time to
time assign to any other Specified Lender of the same class, any local affiliate
thereof or a Related Fund of such Specified Lender or, with the consent of the
Specified Agent and the Specified Borrower (such consents not to be unreasonably
withheld), to an additional bank, mutual fund, or financial or lending
institution or any fund that is regularly engaged in making, purchasing, or
investing in loans or securities (a "SPECIFIED ASSIGNEE") all or any part of its
rights and obligations under this Agreement and any Specified Notes pursuant to
an Assignment and Acceptance, executed by such Specified Assignee, such
assigning Lender (and, in the case of a Specified Assignee that is not then a
Specified Lender of the same class, a local affiliate thereof or a Related Fund
of such Specified Lender, by the Specified Agent) and delivered to the Specified
Agent for its acceptance and recording in the Specified Register; PROVIDED that
(x) each such transfer shall be in respect of a portion of such assigning
Lender's rights and obligations under this Agreement and any Specified Notes
equal to or in excess of the Equivalent Amount of $2,500,000 or, if such
assigning Lender's outstanding Commitment on the date of such assignment is less
than the Equivalent Amount of $2,500,000, the
<PAGE>
aggregate of such assigning Lender's Commitments hereunder, or as otherwise
agreed by the Specified Borrower and the Specified Agent, (y) no Swing Line
Lender may transfer any portion of its Specified Swing Line Commitment
without the consent of the Specified Borrower (such consent not to be
unreasonably withheld) and (z) if any Lender assigns a part of its rights and
obligations under this Agreement in respect of any of its Specified Revolving
Credit Loans and/or Specified Revolving Credit Commitments to a Specified
Assignee, such Lender shall assign proportionate interests in its other
Revolving Credit Loans and Revolving Credit Commitments. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (y) the Specified
Assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a
Specified Lender hereunder with Specified Commitments as set forth therein,
and (z) the assigning Specified Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Specified Lender's
rights and obligations under this Agreement, such assigning Specified Lender
shall cease to be a party hereto).
(d) Each Specified Agent acting, for this purpose, as agent of the
Specified Borrower shall maintain at its address referred to in subsection 12.2
a copy of each Assignment and Acceptance delivered to it and a register (the
"SPECIFIED REGISTER") for the recordation of the names and addresses of the
Specified Lenders and the Specified Commitments of, and principal amount of the
Specified Loans owing to, each Specified Lender from time to time and any
Specified Notes evidencing such Specified Loans. The entries in the Specified
Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Agents and the Lenders may treat each Person whose name is
recorded in the Specified Register as the owner of the Specified Loans and any
Specified Notes evidencing such Specified Loans recorded therein for all
purposes of this Agreement. No assignment or transfer of any Specified Loan (or
portion thereof) or any Specified Note evidencing such Specified Loan shall be
effected unless and until it has been recorded in the Specified Register as
provided in this subsection 12.6(d). Any assignment or transfer of all or part
of a Specified Note shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Specified Note, accompanied by a
duly executed Assignment and Acceptance, and thereupon one or more new Specified
Notes in the same aggregate principal amount shall be issued to the designated
Assignee and the old Specified Notes shall be returned by the Specified Agent to
the Borrower marked "cancelled". The Specified Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Specified Lender and a Specified Assignee (and, in the case of a
Specified Assignee that is not, before such assignment, a Specified Lender, an
affiliate thereof or a Related Fund of such Specified Lender, by the Specified
Agent) together with payment, by a Specified Assignee, to the Specified Agent of
a registration and processing fee of the Equivalent Amount of $4,000 (except in
the case of a Specified Assignee that is a Specified Lender, an affiliate
thereof or a Related Fund of such Specified Lender) if the Specified Assignee is
not a Specified Lender prior to the execution of the Specified Assignment and
Acceptance and $1,000 otherwise, the Specified Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Specified
Register and give notice of such
<PAGE>
acceptance and recordation to the assigning Specified Lender, the Specified
Assignee and the Specified Borrower. On or prior to such effective date, if
requested, the Specified Borrower, at its own expense, shall execute and
deliver to the Specified Agent (in exchange for any Specified Revolving
Credit Note, Specified Swing Line Note or Specified Term Note of the
assigning Specified Lender) a new Specified Revolving Credit Note, Specified
Swing Line Note or Specified Term Note, as the case may be, to the order of
such Specified Assignee in an amount equal to the Specified Revolving Credit
Commitment, Specified Swing Line Commitment or portion of the Specified Term
Loan, as the case may be, assumed by it pursuant to such Specified Assignment
and Acceptance and, if the assigning Specified Lender has retained a
Specified Revolving Credit Commitment, Specified Swing Line Commitment or
portion of a Specified Term Loan hereunder, a new Specified Revolving Credit
Note, Specified Swing Line Note or Specified Term Note, as the case may be,
to the order of the assigning Specified Lender in an amount equal to the
Specified Revolving Credit Commitment or Specified Term Loan, as the case may
be, retained by it hereunder. Such new Specified Notes shall be in the form
of the Specified Note replaced thereby.
(f) The Specified Borrower authorizes each Specified Lender to
disclose to any Specified Participant or Specified Assignee (each, a "SPECIFIED
TRANSFEREE") and any prospective Specified Transferee any and all financial
information in such Specified Lender's possession concerning the Credit Parties
and their Affiliates which has been delivered to such Specified Lender by or on
behalf of the Credit Parties pursuant to this Agreement or which has been
delivered to such Specified Lender by or on behalf of the Credit Parties in
connection with such Specified Lender's credit evaluation of the Specified
Borrower and its Affiliates prior to becoming a party to this Agreement, under
the condition such Specified Transferee or prospective Specified Transferee
agrees to comply with the provisions of subsection 12.16.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Specified Loans and Specified Notes relate only to absolute assignments and that
such provisions do not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by US Lender of any Loan
or Note to any Federal Reserve Bank in accordance with applicable law.
12.7 ADJUSTMENTS; SET-OFF. (a) If any Specified Lender (a
"BENEFITTED SPECIFIED LENDER") shall at any time receive any payment of all or
part of the Specified Obligations owing to it or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in subsection 9(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Specified Lender, if any, in respect of the Specified
Obligations owing to such other Specified Lender, such benefitted Specified
Lender shall purchase for cash from the other Specified Lenders a participating
interest in such portion of the Specified Obligations owing to each such other
Specified Lender, or shall provide such other Specified Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Specified Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Specified
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Specified Lender, such
purchase shall be
<PAGE>
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Specified
Lenders provided by law, each Specified Lender shall have the right, without
prior notice to the Specified Borrower, any such notice being expressly waived
by the Specified Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Specified Borrower hereunder or under any
Specified Notes and not paid by the Specified Borrower after expiration of any
applicable grace periods (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Specified Lender or any branch or
agency thereof to or for the credit or the account of the Specified Borrower.
Each Specified Lender agrees promptly to notify the Specified Borrower and the
Specified Agent after any such set-off and application made by such Specified
Lender, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application.
12.8 COUNTERPARTS. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with each of the Borrowers and Agents.
12.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Credit Parties and the Secured Parties with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by any of the Agents or any Lender relative to the
subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
12.11 JUDGMENT CURRENCY.
(a) If, for the purpose of obtaining or enforcing judgment against
any Credit Party in any court in any jurisdiction, it becomes necessary to
convert into any other currency (such other currency being hereinafter in this
subsection 12.11 referred to as the "JUDGMENT CURRENCY") an amount due in a
particular currency (the "DENOMINATED CURRENCY") under any Loan Document, the
conversion shall be made at the rate of exchange prevailing on the Business Day
immediately preceding the date of actual payment of the amount due, in the case
of any proceeding in the courts of any jurisdiction that will give effect to
such conversion being made on such date, or the date on which the judgment is
given, in the case of any proceeding in the courts of any other jurisdiction
(the applicable
<PAGE>
date as of which such conversion is made pursuant to this subsection 12.11 being
hereinafter in this subsection 12.11 referred to as the "JUDGMENT CONVERSION
DATE").
(b) If, in the case of any proceeding in the court of any
jurisdiction referred to in subsection 12.11(a), there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the time of
actual receipt of the amount due in immediately available funds, the applicable
Credit Party shall pay such additional amount (if any, but in any event not a
lesser amount) as may be necessary to ensure that the amount actually received
in the Judgment Currency, when converted at the rate of exchange prevailing on
the date of payment, will produce the amount of Denominated Currency which could
have been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date.
(c) Any amount due from any Credit Party under this subsection
12.11 shall be due as a separate debt and shall not be affected by judgment
being obtained for any other amounts due under or in respect of any of the Loan
Documents.
(d) The term "RATE OF EXCHANGE" in this subsection 12.11 means the
spot rate of exchange at which the Specified Agent would, on the relevant date
at or about 12:00 noon, be prepared to sell Denominated Currency against the
Judgment Currency.
12.12 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
12.13 SUBMISSION TO JURISDICTION; WAIVERS. Each of the Borrowers
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Borrower at its address set forth in subsection 12.2
or at such other address of which any Agent shall have been notified
pursuant thereto;
<PAGE>
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction;
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages; and
(f) with respect to the Foreign Subsidiary Borrowers, appoints
the US Borrower, as its agent (in such capacity, the "PROCESS AGENT")
to receive on its behalf service of copies of the summons and complaint
and any other process that may be served in any such proceeding.
Service may be made on the Process Agent at its address specified above
or on the Specified Foreign Subsidiary Borrower at its address
specified hereunder, in each case in the manner provided for the giving
of notices in subsection 12.2 hereof.
12.14 ACKNOWLEDGEMENTS. Each of the Borrowers hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and any Notes and the other
Loan Documents;
(b) no Secured Party has any fiduciary relationship with or
duty to the Credit Parties arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship
between the Secured Parties, on one hand, and the Credit Parties, on
the other hand, in connection herewith or therewith is solely that of
creditor and debtor; and
(c) no joint venture exists among the Secured Parties or among
the Credit Parties and the Secured Parties.
12.15 WAIVERS OF JURY TRIAL. EACH BORROWER, THE LENDERS, AND EACH
AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.16 CONFIDENTIALITY. Each Specified Lender agrees to keep
confidential any information obtained by it pursuant hereto and the other Loan
Documents identified as confidential at the time of delivery in accordance with
such Lender's customary practices and agrees that it will only use such
information in connection with the transactions contemplated by this Agreement
and not disclose any of such information other than (a) to such Lender's
trustees, officers, directors, employees, representatives, attorneys, agents or
affiliates who are involved in the Transactions and are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Lender on a non-confidential
basis from any source or such information that is in the public domain at the
time of disclosure, (c) to the extent disclosure is required by law, regulation,
subpoena or judicial order or process (provided that notice of such requirement
or order shall be promptly furnished to the Specified Borrower unless such
notice is legally prohibited) or requested or required by bank regulators or
auditors or any administrative body, commission, or other Governmental Authority
to whose jurisdiction
<PAGE>
such Lender may be subject, (d) to assignees or participants or potential
assignees or participants or to professional advisors or direct or indirect
contractual counterparties in swap agreements provided in each case such
Person agrees to be bound by the provisions of this subsection 12.16, (e) to
the extent required in connection with any litigation between any Credit
Party and any Specified Lender with respect to the Specified Loans or this
Agreement and the other Loan Documents, (f) to rating agencies, their
employees, representatives, attorneys, agents or affiliates who are involved
in the Transactions and are advised of the confidential nature of such
information and agree to be bound by provisions of this subsection 12.16, (g)
to the National Association of Insurance Commissioners and (h) with the
Specified Borrower's prior written consent, PROVIDED THAT, in no event shall
any confidential information be disclosed to the Customers. The agreements in
this subsection shall survive repayment of the Specified Loans and all other
amounts payable hereunder.
[rest of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BORROWERS
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.,
as US Borrower
By: Signature Illegible
Name:
Title:
AUTOMOTIVE COMPONENTS INVESTMENTS
LIMITED, as English Bidco
By: /s/ David White
Name:
Title:
MORRIS ASHBY LIMITED,
as English Borrower and Euro Borrower
By: /s/ David White
Name:
Title:
AGENTS
THE CHASE MANHATTAN BANK,
as Administrative Agent and Collateral Agent
and as a Lender
By: Signature Illegible
Name:
Title:
<PAGE>
CHASE MANHATTAN INTERNATIONAL
LIMITED, as English Agent and Euro Agent
By: /s/ Stephen Hurford
Name:
Title: Vice President
By: /s/ Stephen Clarke
Name:
Title: Second Vice President
BANK OF AMERICA NT & SA,
as Syndication Agent and as a Lender
By: /s/ Lynn W. Stetson
-----------------
Name:
Title: Managing Director
<PAGE>
ADMINISTRATIVE SCHEDULE TO
CREDIT AGREEMENT
I. Available Currencies.
US BORROWER: Dollars and, with respect to the US Sterling Term Loans
only, Pounds Sterling.
ENGLISH BORROWER: Pounds Sterling
EURO BORROWER: Euro
II. Base Rates and Interest Payment Dates.
US BORROWER: DOLLARS - "BASE RATE": for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "PRIME
RATE" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at
its principal office in New York City; "BASE CD RATE" shall mean the
sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the C/D
Assessment Rate; "THREE-MONTH SECONDARY CD RATE" shall mean, for any
day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it; and "FEDERAL
FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or
both, for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition,
as appropriate, until the
<PAGE>
the circumstances giving rise to such inability no longer exist. Any
change in the Base Rate due to a change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate shall be effective on the
effective day of such change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate, respectively; "C/D ASSESSMENT RATE"
shall mean for any day as applied to the Base CD Rate, the net annual
assessment rate (rounded upward to the nearest 1/100th of 1%)
determined by the Administrative Agent to be payable on such day to
the Federal Deposit Insurance Corporation or any successor ("FDIC")
for FDIC's insuring time deposits made in Dollars at offices of the
Administrative Agent in the United States; and "C/D RESERVE
PERCENTAGE" shall mean, for any day as applied to the CD Base Rate,
that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars in respect of
new non-personal time deposits in Dollars in New York City having a
three month maturity and in an amount of $100,000 or more.
Interest shall be payable on the last day of each March, June,
September, and December and shall be calculated on the basis of 360
days when based on the Federal Funds Effective Rate or the CD Base
Rate.
US BORROWER: POUNDS STERLING - Same as English Borrower below.
ENGLISH BORROWER: Base Rate means the rate that the English Agent
announces from time to time as its Base Rate, as in effect from time to
time plus 0.25%.
EURO BORROWER: Base Rate means the rate that the Euro Agent determines
from time to time to be its cost of funds for obtaining the requested
amount of euro for the Specified Interest Period, as in effect from
time to time.
III. Eurocurrency Base Rates and Permitted Interest Periods.
US BORROWER: DOLLARS - "EUROCURRENCY BASE RATE": with respect to each
day during each Interest Period pertaining to a Eurocurrency Loan, the
rate per annum equal to the rate at which Chase is offered Dollar
deposits at or about 10:00 a.m., New York City time, two Business Days
prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurocurrency Loans are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the
amount of its Eurocurrency Loan to be outstanding during such Interest
Period.
Permitted Interest Periods shall be one, two, three, six or to the
extent available to all US Lenders, nine or twelve months and interest
shall be calculated on the basis of a 360-day year.
US BORROWER: POUNDS STERLING - Same as English Borrower below.
ENGLISH BORROWER: "EUROCURRENCY BASE RATE": with respect to each day
during each Interest Period pertaining to a Loan, a rate per annum
(rounded upward to the
2
<PAGE>
nearest 1/100th of 1%) equal to the sum of (a) LIBOR for such Interest
Period and (b) the rate per annum calculated by the English Agent in
accordance with Schedule 1.1(B); "LIBOR" means in relation to any
Interest Period, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) quoted at or about 11:00 a.m., London time,
on the Quotation Date for such period on that page of the Telerate
Screen which displays British Bankers Association Interest Settlement
Rates for deposits in Pounds Sterling of the equivalent amount for such
period (such page being currently 3750) or, if such page or such
service shall cease to be available, such other page or such other
service (as the case may be) for the purpose of displaying British
Bankers Association Interest Settlement Rates for Pounds Sterling as
the English Agent, after consultation with the Lenders and the
Borrower, shall select PROVIDED that if no such rate is displayed for
Pounds Sterling and the relevant period and the English Agent has not
selected an alternative service on which two or more such quotations
are displayed, "LIBOR" shall mean the arithmetic mean (rounded upwards,
if necessary, to the nearest 1/100th of 1%) of the rates (as notified
to the English Agent) at which each of the Reference Banks was offering
to prime banks in the London Interbank Market deposits in Pounds
Sterling of such amount and for such period at or about 11:00 a.m.,
London time, on the Quotation Date for such period; "REFERENCE BANKS"
means the principal London offices of The Chase Manhattan Bank and/or
such other bank or banks as may from time to time be agreed between the
English Agent and the English Borrower; and "QUOTATION DATE" means in
relation to any period for which an interest rate is to be determined
hereunder, the day on which quotations would ordinarily be given by
prime banks in the London Interbank Market for deposits in the currency
in relation to which such rate is to be determined for delivery on the
first day of that period, provided that, if, for any such period,
quotations would ordinarily be given on more than one date, the
Quotation Date for that period shall be the last of those dates.
EURO BORROWER: "EUROCURRENCY BASE RATE": with respect to each day
during each Interest Period pertaining to a Eurocurrency Loan, the rate
per annum equal to the sum of (a) the rate at which Chase is offered
euro deposits at or about 10:00 a.m., London time, two Business Days
prior to the beginning of such Interest Period in the interbank market
where the foreign currency and exchange operations in respect of its
Eurocurrency Loans are then being conducted for delivery on the first
day of such Interest Period for the number of days comprised therein
and in an amount comparable to the amount of its Eurocurrency Loan to
be outstanding during such Interest Period and (b) the rate per annum
calculated by the English Agent in accordance with Schedule 1.1(B).
Permitted Interest Periods shall be one, two, three, six or to the
extent agreed to by the English Lenders or the Euro Lenders, as the
case may be, or such other periods as may be available to all of the
Specified Lenders and interest shall be calculated on the basis of a
360-day year.
IV. Available Accommodations
US BORROWER: Letters of Credit in an amount not to exceed
$5,000,000.
3
<PAGE>
ENGLISH BORROWER: Letters of Credit in an amount not to
exceed L5,000,000 plus the Bank Guarantee
Letters of Credit.
V. Swing Line Lenders
US BORROWER: Chase in an amount not to exceed $5,000,000.
ENGLISH BORROWER: Chase in an amount not to exceed L3,000,000;
PROVIDED that the minimum amount provision in
subsection 2.12(a) shall not apply to such Swing
Line Loans.
VI. Cash Equivalents.
DOLLARS. (a) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and
repurchase agreements of any commercial bank which has, or whose
obligations are guaranteed by an affiliated commercial bank which has
capital and surplus in excess of $500,000,000 having maturities of one
year or less from the date of acquisition, (c) commercial paper of an
issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments, (d) money market
accounts or funds with or issued by Qualified Issuers, (e) repurchase
obligations with a term of not more than 90 days for underlying
securities of the types described in clause (a) above entered into with
any bank meeting the qualifications specified in clause (b) above, and
(f) demand deposit accounts maintained in the ordinary course of
business with any Lender or with any bank that is not a Lender not in
excess of $100,000 in the aggregate on deposit with any such bank;
"QUALIFIED ISSUER" means any commercial bank (a) which has, or whose
obligations are guaranteed by an affiliated commercial bank which has,
capital and surplus in excess of $500,000,000 and (b) the outstanding
short-term debt securities of which are rated at least A-1 by Standard
& Poor's Corporation or at least P-1 by Moody's Investors Service,
Inc., or carry an equivalent rating by a nationally recognized rating
agency if both of the two named rating agencies cease publishing
ratings of investments.
POUNDS STERLING. (a) any credit balances, realizable within three (3)
months, on any bank or other deposit, savings or current account held
in the United Kingdom (or any other jurisdiction from which cash is
readily remittable to the United Kingdom); (b) cash in hand; (c) gilt
edged securities; (d) Sterling commercial paper maturing not more than
twelve (12) months from the date of issue and rated A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investor Services Inc.; (e) any
deposit with or acceptance maturing not more than one (1) year after
issue accepted by an institution authorized under the Banking Act 1987
or a Bank; and (f) Sterling denominated debt securities having not more
than one (1) year until final maturity and listed on a recognized stock
exchange and rated at least AA by Standard & Poor's Corporation or Aa
by Moody's Investors Services Inc.
4
<PAGE>
VII. Specified Notice Times
US BORROWER: DOLLARS AND POUNDS STERLING - (a) Eurocurrency borrowings,
12:00 noon New York City time three Business Days prior to the
applicable event and (b) Base Rate borrowings, 12:00 noon New York City
time one Business Days prior to the applicable event.
ENGLISH BORROWER: 12:00 noon London time three Business Days prior to
the applicable event.
EURO BORROWER: 12:00 noon London time three Business Days prior to the
applicable event.
VIII. Specified Revolving Credit Commitment Periods.
US BORROWER: the period from and including the Closing Date to, but not
including, the Specified Revolving Credit Commitment Termination Date
or such earlier date on which the US Revolving Credit Commitments are
terminated (whether pursuant to Section 9 or otherwise).
ENGLISH BORROWER: the period from and including the Closing Date to,
but not including, the Scheduled Revolving Credit Commitment
Termination Date or such other earlier date on which the English
Revolving Credit Commitments are terminated (whether pursuant to
Section 9 or otherwise).
EURO BORROWER: the period from and including the Closing Date to, but
not including, the Scheduled Revolving Credit Commitment Termination
Date or such other earlier date on which the Euro Revolving Credit
Commitments are terminated (whether pursuant to Section 9 or
otherwise).
IX. Specified Revolving Credit Commitment Termination Date.
US BORROWER: the Scheduled Revolving Credit Commitment Termination
Date.
ENGLISH BORROWER: the Scheduled Revolving Credit Commitment Termination
Date.
EURO BORROWER: the Scheduled Revolving Credit Commitment Termination
Date.
5
<PAGE>
SCHEDULE 1.1 TO
CREDIT AGREEMENT
US COMMITMENTS
<TABLE>
<CAPTION>
US TRANCHE A US STERLING
US LENDERS TERM LOAN US TRANCHE B TERM LOAN US REVOLVING
- ---------- COMMITMENT TERM LOAN COMMITMENT CREDIT
---------- COMMITMENT ----------- COMMITMENT
---------- --------------
<S> <C> <C> <C> <C>
The Chase $ 35,000,000 $ 95,000,000 L5,420,000 $37,500,000
Manhattan Bank
Bank of America
NT & SA $ 35,000,000 $ 95,000,000 L5,420,000 $37,500,000
------------ ------------ ----------- -----------
TOTAL $70,000,000 $190,000,000 L10,840,000 $75,000,000
ENGLISH COMMITMENTS
ENGLISH ENGLISH
TERM LOAN REVOLVING CREDIT
ENGLISH LENDERS COMMITMENT COMMITMENT
- --------------- -------------- ------------
<S> <C> <C>
The Chase Manhattan Bank L5,420,000 $10,000,000
Bank of America NT & SA L5,420,000 $10,000,000
-------------- -----------
TOTAL L10,840,000 $20,000,000
EURO COMMITMENTS
EURO
REVOLVING CREDIT
EURO LENDERS COMMITMENT
- ------------ -----------------
<S> <C>
The Chase Manhattan Bank $10,000,000
Bank of America NT & SA $10,000,000
-----------------
TOTAL $20,000,000
</TABLE>
6
<PAGE>
SCHEDULE 1.1(B) TO
CREDIT AGREEMENT
1 The rate per annum referred to in clause (b) of the definition of
"Eurocurrency Base Rate" relative to each English Loan and Euro Loan
where (and to the extent that) English Lenders or Euro Lenders, as the
case may be, making such Loans are subject to Additional Cost, will be,
subject as hereinafter provided, for the Interest Period relating to
such Loan (or, if longer than three (3) months, for each consecutive
period for three (3) months within such Interest Period and for any
balance of such Interest Period) (which Interest Period if not longer
than three (3) months and each other such period is herein referred to
as a "Relevant Period") the percentage rate (or the arithmetic average
of the percentage rates where there is more than one Reference Bank
supplying the same) supplied by the Reference Banks (or such of them as
supply it to the English Agent or the Euro Agent, as the case may be)
arrived at by applying the following formula in relation to each
Reference Bank:
In relation to a Loan denominated in Pounds Sterling:
Additional Cost = BY + S(Y-Z) + F X 0.01 % per annum
-----------------------------
100 - (B+S)
In relation to a Loan denominated in any other currency:
Additional Cost = F X 0.01 % per annum
-------
300
Where:
B = The percentage of such Reference Bank's eligible
liabilities then required to be held on a
non-interest deposit account with the Bank of England
pursuant to the cash ratio requirements of the Bank
of England.
Y = The rate at which Pounds Sterling deposits in an
amount approximately equal to the principal amount of
such Loan are offered by such Reference Bank to
leading banks in the London Interbank Market at or
about 11:00 a.m. London time on the first day of the
Relevant Period for a period comparable to the
Relevant Period.
S = The percentage of such Reference Bank's eligible
liabilities then required to be placed as a special
deposit with the Bank of England.
Z = The percentage interest rate per annum allowed by
the Bank of England on special deposits.
F = The charge payable by such Reference Bank to the
Financial Services Authority under paragraph 2.02 or
2.03 (as appropriate) of the Fees Regulations but
where for this purpose, the figure in paragraph 2.02b
and 2.03b will be deemed to be zero expressed in
pounds per (pound)1 million of the fee base of such
Reference Bank.
7
<PAGE>
For purposes of this paragraph, "eligible liabilities" and "special
deposits" shall bear the meanings ascribed to them from time to time by
the Bank of England and "fee base" has the meaning given to it in the
Fees Regulations, and "Fees Regulations" means Banking Supervision
(Fees) Regulations 1999 and/or any other regulations governing the
payment of fees for banking supervision. "Additional Cost" means the
cost imputed to the English Lenders or the Euro Lenders, as the case
may be, of compliance with (a) the Mandatory Liquid Assets requirements
of the Bank of England and/or the banking supervision or other costs of
the Financial Services Authority as determined in accordance with this
Schedule 1.1(B) and (b) any other applicable Governmental Authority or
central bank requirement relating to any Loan made through a branch in
the jurisdiction of the currency of that Loan.
2 In the application of the above formula, B, Y, S, Z and F will be
included in the formula as figures and not as percentages, e.g., if B =
0.5% and Y = 15%, BY will be calculated as 0.5 x 15 and not as 0.5% x
15%.
3 The Additional Cost computed by the English Agent in accordance with
this Schedule shall be rounded upward, if necessary to four (4) decimal
places.
4 The calculation in respect of the Additional Cost for each English Loan
denominated in Pounds Sterling will be made by the English Agent on the
first day of each Relevant Period.
5 Calculations will be made on the basis of a year of 365 days and the
actual number of days elapsed.
6 If no Reference Bank furnishes the appropriate information for the
purposes of this Schedule, the Additional Cost shall be determined by
the English Agent on the basis of such other information and quotations
as the English Agent shall reasonably determine to be appropriate.
7 In the event of a change in circumstances (including the imposition of
alternative or additional official requirements, excluding capital
adequacy requirements) which renders the above formula inappropriate in
the reasonable opinion of the English Agent, the English Agent shall
promptly notify the English Borrower and the English Lenders thereof
and (after consultation with the Reference Banks and the English
Borrower) shall notify the English Borrower of the manner in which the
rate for the purposes of paragraph (b) of the definition of
"Eurocurrency Base Rate" shall thereafter be determined (which manner
shall be determined in a bona fide manner and provide a fair assessment
of the additional cost to the English Lenders of compliance with the
relevant requirements of the Bank of England or other central bank or
the Financial Services Authority or any other applicable Governmental
Authority) and the English Borrower and the English Lenders shall be
bound thereby.
8
<PAGE>
SCHEDULE 5.6
LITIGATION
None.
9
<PAGE>
SCHEDULE 5.9
INTELLECTUAL PROPERTY
None.
10
<PAGE>
SECTION 5.10
TAXES
11
<PAGE>
SECTION 5.14
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY OR NAME OF % OF CAPITAL
RELATED ENTITY DIRECT OWNER STOCK OWNED OR
--------------------- ---------------- BENEFICIALLY OWNED
------------------
<S> <C> <C>
French Holdings, Inc. J.L. French Automotive Castings, Inc. 100
J.L. French Corporation French Holdings, Inc. 100
Allotech International, Inc. French Holdings, Inc. 100
J.L. French FSC Corporation French Holdings, Inc. 100
Automotive Components J.L. French Automotive Castings, Inc. 100
Investments PLC
Morris Ashby Limited Automotive Components Investments PLC 100
Morris Ashby Castings Limited Morris Ashby Limited 100
Kaye (Presteigne) Limited Morris Ashby Limited 100
UJP Tools Limited Morris Ashby Limited 100
MAC Leasing Limited Morris Ashby Limited 100
Burdon & Miles Limited Morris Ashby Limited 100
Wilson & Royston Limited Morris Ashby Limited 100
Foundry Computational Services Morris Ashby Limited 51
Limited
Ansola Acquisition Corp. S.R.L.(1) J.L. French Automotive Castings, Inc. 100
Fundiciones Viuda de Ansola, S.A. Ansola Acquisition Corp. S.R.L. 100
Auxicomp Auxiliary Fundiciones Viuda de Ansola, S.A. 20
Componentes, S.L.
</TABLE>
- --------
(1) Corporate participations in a Spanish S.R.L. (Sociedad de Responsabilided
Limitada) do not have the nature of securities, nor may they be called shares,
nor are they represented by share certificates.
12
<PAGE>
SCHEDULE 5.15
ENVIRONMENTAL MATTERS
None.
13
<PAGE>
SCHEDULE 5.19
BUSINESS LOCATIONS
PART I -- OWNED REAL PROPERTY
- -----------------------------
J.L. French Corporation
3101 South Taylor Drive
P.O. Box 1024
Sheboygan, WI 53082-1024
J.L. French Corporation
4243 Gateway Drive
P.O. Box 1024
Sheboygan, WI 53082-1024
Kaye (Presteigne) Ltd.
Hereford Street
Presteigne, Powys LD8 2AL
Kaye (Presteigne) Ltd.
Back Lane
Presteigne, Powys LD8 2AL
Wilson & Royston Ltd.
Armytage Road Industrial Estate
Brighouse, West Yorkshire HD6 1QF
UJP Tools Ltd.
Arden Works
Camp Lane
Kings Norton, Birmingham B38 8SL
Fundiciones Viuda de Ansola, S.A.
Poligono Galarza s/n.
48277 Etxebarria
Vizcaya, Spain
14
<PAGE>
PART II -- LEASED REAL PROPERTY
- -------------------------------
M. J.L. French Corporation
Portion of 4243 Gateway Drive, Sheboygan, WI, pursuant to lease agreement
between J.L. French Corporation and Allotech International, Inc. dated March 30,
1995.
Portion of 3101 South Taylor Drive, Sheboygan, WI, pursuant to lease agreement
between J.L. French Corporation and Allotech International, Inc. dated August 1,
1988.
Lease of Apartment in Hiroshima, Japan by J.L. French Corporation in connection
with product development project with Ford and Mazda engineers.
Suite 400, 500 Town Center Drive, Dearborn, MI, pursuant to sublease agreement
between J.L. French Corporation and American Bumper & Mfg. Co. dated March 25,
1998.
N. Morris Ashby Limited and Subsidiaries
18 Freebournes Road, Witham, Essex.
Northeast side of Delamare Road, Cheshunt, Broxbourne.
3 Freebournes Road, Freebournes Industrial Estate, Witham, Braintree, Essex.
16 Freebournes Road, Witham, Essex.
15
<PAGE>
SCHEDULE 8.2
EXISTING INDEBTEDNESS
Wilson & Royston Loan Notes due 2000, principal amount (pound)210,000.
DEM800,000 overdraft facility for Kaye (Presteigne) Limited.
(pound)13,800 owed to Morris Ashby Limited by Foundry Computational Services
Limited.
(pound)20,000 Barclaycard facility of Kaye (Presteigne) Limited.
Capitalized Leases of Morris Ashby Limited and subsidiaries (described in
greater detail in Attachment A hereto).
Fundiciones Viuda de Ansola, S.A. Peseta Denominated Debt (described in greater
detail in Attachment B hereto).
Fundiciones Viuda de Ansola, S.A. Capitalized Leases (described in greater
detail in Attachment C hereto).
16
<PAGE>
Attachment A
Morris Ashby Group
Capital Lease Schedule
12/31/98
<TABLE>
<CAPTION>
1998
1/1/98 -------------------- 12/31/98
ORIGINATION ORIGINAL BEGINNING ENDING
DATE TERM LEASE AMT BALANCE ADDITIONS PAYMENTS BALANCE INTEREST
LEASING CO./DESCRIPTION ---------- ------- --------- ---------- --------- ---------- --------- ---------
MORRIS ASHBY - CAPITAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lloyds bowmaker 600,000 252,034 94,486 178,778 21,230
White Arrow 28,751 19,206 19,812 0 608
Fleetlease 18,397 15,293 4,344 11,567 618
Ryland 23,864 20,773 5,145 17,338 1,710
Highway 25,098 22,723 8,147 15,598 1,022
Fleetlease 20,875 16,372 5,913 11,459 1,000
Highway (HEVIY) - P Buckley 52,251 0 52,251 14,301 40,821 2,871
Barclays Mercantile 399,521 178,582 93,103 92,147 6,668
Barclays Mercantile 1,136,395 968,253 196,085 823,921 51,753
Subtotal 1,191,629
KAYES - CAPITAL
Audi Quattro - R Evans Aug-98 3 yrs 33,655 0 33,655 6,343 29,528 2,216
Volvo 850 - G Whitney Apr-96 3 yrs 23,974 15,232 5,192 10,410 370
Volvo 960 - P Davidson Aug-96 3 yrs 24,772 13,188 5,469 8,338 619
Chrysler Cherokee - G Hayball Jan-98 3 yrs 21,608 21,608 6,103 18,307 2,802
Jaguar Finance 2 yrs 39,842 14,545 14,545 0 0
BMW 5231 - G Smith Feb-96 3 yrs 24,169 13,209 4,553 8,940 284
Barclays Mercantile Apr-97 7 yrs 1,023,935 937,361 165,725 813,092 41,456
Subtotal 888,615
B&M CAPITAL
Mercedes E240 - P Moxley Oct-98 3 yrs 37,581 37,581 5,425 33,284 1,128
BMW 3231 Jul-98 3 yrs 26,182 26,182 5,951 21,649 1,418
Rover 620 Jun-95 3 yrs 19,992 5,713 0 5,728 0 15
Range Rover Jeep Jun-95 3 yrs 50,450 19,462 0 19,519 0 57
1st Buhler M/C Mar-93 5 yrs 609,880 181,371 0 75,045 120,383 14,057
Subtotal 175,316
W&R - CAPITAL
Audi A6 - P Royston Sep-98 3 yrs 29,532 0 29,532 3,739 26,394 601
Land Rover - Ian Wilson Mar-98 3 yrs 53,891 0 53,891 14,120 42,850 3,080
Subtotal 69,244
Accounting adjustment L8,068
Group Total L2,316,736 L155,581
Conversion Rate 1.6595
Converted to US $ $3,844,623
</TABLE>
18
<PAGE>
Attachment B
Fundiciones Viuda de Ansola
Debt Schedule - 1999
(Amounts in Pesetas)
<TABLE>
<CAPTION>
12/31/98 2/28/99
REFERENCE PRINCIPAL NEW LOANS PRINCIPAL
NUMBER INSTITUTION ORIGINATION MATURITY OUTSTANDING (PAYMENTS) OUTSTANDING
--------- ------------------------ -------------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
7 Luzaro Bancogui 3/1994 3/2004 50,000,000 50,000,000
13 Luzaro BBK 7/1994 7/2004 20,000,000 20,000,000
16 Hispamer I 10/1995 11/2000 7,864,892 7,864,892
22 BBK II 4/1996 5/2001 19,072,369 1,907,237 17,165,132
18 Vitoria I 4/1996 4/2001 8,707,903 933,680 7,774,223
8 Bancogui IV 6/1998 6/2005 185,714,286 185,714,286
10 Bancogui II 7/1997 7/2004 7,200,000 7,200,000
11 Bancogui I 12/1996 12/2003 96,000,000 96,000,000
9 Bancogui III 7/1997 7/2004 16,800,000 16,800,000
14 Bankinter I 7/1997 7/2004 25,088,874 25,088,874
17 Hinspamer II 6/1997 7/2004 27,800,000 27,800,000
20 Vitoria III 5/1997 6/2004 19,400,000 19,400,000
19 Vitoria II 4/1997 4/2004 12,900,000 12,900,000
12 BBK III 3/1997 3/2004 17,339,608 17,339,608
31 BBK IV 6/1998 6/2005 65,000,000 65,000,000
21 Vitoria IV 7/1998 7/2005 100,000,000 100,000,000
15 Bankinter II 11/1998 11/2005 75,000,000 75,000,000
Hispamer III 2/1999 2/2006 75,000,000 75,000,000
Factored Receivables net of payts 0
Payments 0
753,887,932 72,159,083 826,047,015
</TABLE>
19
<PAGE>
Attachment C
ANSOLA LEASES 31 DECEMBER 1998
(Amounts in Pesetas)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
REFERENCE REMAINING
NUMBER LEASES BANK MATURITY 12/31/98
--------- ------------------ ----------- -------------------------- -------------
<S> <C> <C> <C> <C> <C>
28 BANKINTER BANKINTER MARCH 2002 49,470,189
1 UNILEASING HISPAMER JANUARY 2000 4,411,197
6 UNILEASING HISPAMER OCTOBER 2000 6,704,090
UNILEASING HISPAMER JANUARY 1999 245,497
UNILEASING HISPAMER JANUARY 1999 208,849
29 UNILEASING HISPAMER JULY 1999 1,600,634
30 UNILEASING HISPAMER JULY 1999 1,247,262
27 HISPAMER HISPAMER JULY 2000 5,444,339
24 HISPAMER HISPAMER NOVEMBER 2004 84,537,000
25 HISPAMER HISPAMER NOVEMBER 2004 15,030,261
5 LEASING VASCONIA NOVEMBER 2000 3,842,996
4 LEASING VASCONIA DECEMBER 2000 3,579,585
3 LEASING VASCONIA DECEMBER 2000 3,853,244
2 ADEFISA BBK MARCH 2000 9,924,782
26 ADEFISA BBK AUGUST 2002 14,513,584
23 BANCOGUI BANCOGUI SEPTEMBER 2001 5,638,550
TOTAL 210,252,059
</TABLE>
20
<PAGE>
SCHEDULE 8.3
EXISTING LIENS
None.
21
<PAGE>
SCHEDULE 8.4
EXISTING GUARANTEE OBLIGATIONS
None.
22
<PAGE>
SCHEDULE 8.9
EXISTING INVESTMENTS
See Schedule 5.14 hereof, which lists ownership of subsidiaries and related
entities.
In addition, Fundiciones Viuda de Ansola, S.A. holds limited amounts of cash and
in highly liquid investments.
The following is a list of intercompany debt involving J.L. French Automotive
Castings, Inc. and its various subsidiaries:
2.548 billion Spanish Peseta demand note by Ansola Acquisition
Corporation in favor of J.L. French Automotive Castings, Inc.
US$16.9 million note by J.L. French Automotive Castings, Inc. in favor
of French Holdings, Inc.
US$75 million revolving facility by French Holdings, Inc. in favor of
J.L. French Corporation.
US$75 million revolving facility by French Holdings, Inc. in favor of
Allotech International, Inc.
US$75 million revolving facility by French Holdings, Inc. in favor of
J.L. French Automotive Castings, Inc.
23
<PAGE>
SCHEDULE 8.11
TRANSACTIONS WITH AFFILIATES
Sublease Agreement between J.L. French Corporation and American Bumper & Mfg.
Co. dated March 25, 1998, for office space at 500 Town Center Drive, Suite 400,
Dearborn, Michigan.
Portion of 4243 Gateway Drive, Sheboygan, WI, pursuant to lease agreement
between J.L. French Corporation and Allotech International, Inc. dated March 30,
1995.
Portion of 3101 South Taylor Drive, Sheboygan, WI, pursuant to lease agreement
between J.L. French Corporation and Allotech International, Inc. dated August 1,
1988.
See the description of intercompany debt listed on Schedule 8.9 hereof.
24
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................1
1.1 DEFINED TERMS.........................................................1
1.2 OTHER DEFINITIONAL PROVISIONS........................................30
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS..................................30
2.1 REVOLVING CREDIT COMMITMENTS.........................................30
2.2 PROCEDURE FOR REVOLVING CREDIT BORROWING.............................31
2.3 COMMITMENT FEE; ADMINISTRATIVE AGENT FEES............................31
2.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS.............32
2.5 TERM LOANS...........................................................33
2.6 PROCEDURE FOR TERM LOAN BORROWINGS...................................36
2.7 REPAYMENT OF LOANS...................................................36
2.8 OPTIONAL PREPAYMENTS.................................................38
2.9 MANDATORY PREPAYMENTS................................................38
2.10 CONVERSION AND CONTINUATION OPTIONS.................................41
2.11 MINIMUM AMOUNTS OF TRANCHES.........................................42
2.12 SWING LINE COMMITMENTS..............................................42
SECTION 3. ACCOMMODATIONS....................................................44
3.1 THE ACCOMMODATION COMMITMENTS........................................44
3.2 PROCEDURE FOR ISSUANCE OF SPECIFIED ACCOMMODATIONS...................45
3.3 FEES, COMMISSIONS AND OTHER CHARGES..................................46
3.4 ACCOMMODATION PARTICIPATIONS.........................................46
3.5 REIMBURSEMENT OBLIGATION OF THE SPECIFIED BORROWER...................47
3.6 OBLIGATIONS ABSOLUTE.................................................48
3.7 ACCOMMODATION PAYMENTS...............................................48
3.8 LETTER OF CREDIT APPLICATIONS........................................48
SECTION 4. GENERAL PROVISIONS................................................48
4.1 INTEREST RATES AND PAYMENT DATES.....................................48
4.2 COMPUTATION OF INTEREST AND FEES.....................................49
4.3 INABILITY TO DETERMINE INTEREST RATE.................................50
4.4 PRO RATA TREATMENT AND PAYMENTS......................................50
4.5 ILLEGALITY...........................................................54
4.6 REQUIREMENTS OF LAW..................................................54
4.7 TAXES .............................................................56
4.8 INDEMNITY............................................................59
4.9 REPLACEMENT OF SPECIFIED LENDER......................................60
4.10 REDENOMINATION AND ALTERNATIVE CURRENCIES...........................60
SECTION 5. REPRESENTATIONS AND WARRANTIES....................................60
5.1 FINANCIAL CONDITION..................................................61
i--
<PAGE>
PAGE
5.2 NO CHANGE............................................................62
5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.............................62
5.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS..............62
5.5 NO LEGAL BAR.........................................................62
5.6 NO MATERIAL LITIGATION...............................................62
5.7 NO DEFAULT...........................................................63
5.8 OWNERSHIP OF PROPERTY; LIENS.........................................63
5.9 INTELLECTUAL PROPERTY................................................63
5.10 TAXES .............................................................63
5.11 US FEDERAL REGULATIONS..............................................64
5.12 ERISA .............................................................64
5.13 INVESTMENT COMPANY ACT..............................................65
5.14 SUBSIDIARIES, ETC...................................................65
5.15 ENVIRONMENTAL MATTERS...............................................65
5.16 REGULATION H...................................................... 66
5.17 DELIVERY OF TRANSACTION DOCUMENTS.................................. 66
5.18 REPRESENTATIONS AND WARRANTIES CONTAINED IN THE TRANSACTION
DOCUMENTS..........................................................66
5.19 DISCLOSURE..........................................................67
5.20 GUARANTEE AND COLLATERAL AGREEMENT; MORTGAGES.......................67
5.21 SOLVENCY............................................................68
5.22 INSURANCE...........................................................68
5.23 SENIOR INDEBTEDNESS.................................................68
5.24 YEAR 2000 MATTERS...................................................68
SECTION 6. CONDITIONS PRECEDENT..............................................68
6.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT...........................68
6.2 CONDITIONS TO EACH SPECIFIED LOAN....................................73
SECTION 7. AFFIRMATIVE COVENANTS.............................................74
7.1 FINANCIAL STATEMENTS.................................................74
7.2 CERTIFICATES; OTHER INFORMATION......................................75
7.3 PAYMENT OF OBLIGATIONS...............................................76
7.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.....................76
7.5 MAINTENANCE OF PROPERTY; INSURANCE...................................76
7.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS...............77
7.7 NOTICES .............................................................77
7.8 ENVIRONMENTAL LAWS...................................................78
7.9 PLEDGE OF AFTER ACQUIRED PROPERTY....................................79
7.10 ADDITIONAL SUBSIDIARIES.............................................79
7.11 INTELLECTUAL PROPERTY...............................................79
ii--
<PAGE>
7.12 USE OF PROCEEDS.....................................................80
7.13 INTEREST RATE PROTECTION AGREEMENTS.................................80
SECTION 8. NEGATIVE COVENANTS................................................80
8.1 FINANCIAL CONDITION COVENANTS........................................80
8.2 LIMITATION ON INDEBTEDNESS...........................................81
8.3 LIMITATION ON LIENS..................................................83
8.4 LIMITATION ON GUARANTEE OBLIGATIONS..................................84
8.5 LIMITATION ON FUNDAMENTAL CHANGES....................................85
8.6 LIMITATION ON SALE OF ASSETS.........................................86
8.7 LIMITATION ON RESTRICTED PAYMENTS....................................87
8.8 LIMITATION ON CAPITAL EXPENDITURES...................................88
8.9 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES........................88
8.10 LIMITATION ON PAYMENTS AND MODIFICATIONS OF SUBORDINATED DEBT
INSTRUMENTS.........................................................90
8.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES..........................91
8.12 LIMITATION ON SALES AND LEASEBACKS..................................92
8.13 LIMITATION ON CHANGES IN FISCAL YEAR................................92
8.14 RESTRICTIONS AFFECTING SUBSIDIARIES.................................92
8.15 LIMITATION ON LINES OF BUSINESS.....................................92
8.16 AMENDMENTS TO CORPORATE DOCUMENTS; TRANSACTION DOCUMENTS;
LICENSES...........................................................93
8.17 PASSIVE STATUS OF THE US BORROWER...................................93
SECTION 9. EVENTS OF DEFAULT.................................................93
SECTION 10. THE AGENTS.......................................................96
10.1 APPOINTMENT.........................................................96
10.2 DELEGATION OF DUTIES................................................97
10.3 EXCULPATORY PROVISIONS..............................................97
10.4 RELIANCE BY THE SPECIFIED AGENTS....................................97
10.5 NOTICE OF DEFAULT...................................................97
10.6 NON-RELIANCE ON AGENT AND LENDERS...................................98
10.7 INDEMNIFICATION.....................................................98
10.8 AGENTS IN THEIR INDIVIDUAL CAPACITY.................................98
10.9 SUCCESSOR AGENTS....................................................99
10.10 ADDITIONAL MINISTERIAL POWERS OF THE SPECIFIED AGENTS..............99
10.11 SPECIFIED ISSUING LENDER AND COLLATERAL AGENT......................99
10.12 ENGLISH AGENT AS TRUSTEE...........................................99
SECTION 11. GUARANTEE.......................................................100
11.1 GUARANTEE..........................................................100
iii--
<PAGE>
11.2 WAIVER OF SUBROGATION..............................................100
11.3 MODIFICATION OF FOREIGN SUBSIDIARY OBLIGATIONS.....................100
11.4 WAIVER BY THE US BORROWER..........................................101
11.5 REINSTATEMENT......................................................102
SECTION 12. MISCELLANEOUS...................................................102
12.1 AMENDMENTS AND WAIVERS.............................................102
12.2 NOTICES............................................................104
12.3 NO WAIVER; CUMULATIVE REMEDIES.....................................105
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........................105
12.5 PAYMENT OF EXPENSES AND TAXES......................................106
12.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.............106
12.7 ADJUSTMENTS; SET-OFF...............................................109
12.8 COUNTERPARTS.......................................................110
12.9 SEVERABILITY.......................................................110
12.10 INTEGRATION.......................................................110
12.11 JUDGMENT CURRENCY.................................................110
12.12 GOVERNING LAW.....................................................111
12.13 SUBMISSION TO JURISDICTION; WAIVERS...............................111
12.14 ACKNOWLEDGEMENTS..................................................112
12.15 WAIVERS OF JURY TRIAL.............................................112
12.16 CONFIDENTIALITY...................................................112
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Term Note
A-3 Form of Swing Line Note
B Participation Certificate
C Swing Line Loan Participation Certificate
D Assignment and Acceptance
E-1 Form of Opinion of Kirkland & Ellis,
Counsel to the US Borrower
E-2 Form of English Opinion
F Closing Certificate
G-1 Form of Guarantee and Collateral Agreement
G-2 Form of Mortgage
H Form of Perfection Certificate
I Form of Sharing Agreement
J Form of Intercompany Note
K Form of Prepayment Option Notice
SCHEDULES
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<PAGE>
Administrative Schedule
1.1 Commitments
1.1(B) Eurocurrency Rate Formula
5.6 Litigation
5.9 Intellectual Property
5.10 Taxes
5.14 Subsidiaries, Joint Ventures, etc.
5.15 Environmental Matters
5.19 Filing Locations and Properties
8.2 Existing Indebtedness
8.3 Existing Liens
8.4 Existing Guarantee Obligations
8.9 Existing Investments
8.11 Existing Transactions with Affiliates
v--
<PAGE>
Exhibit 10.2
INVESTOR STOCKHOLDERS AGREEMENT
THIS INVESTOR STOCKHOLDERS AGREEMENT, dated as of April 21,
1999 (this "AGREEMENT") is made by and among J.L. French Automotive Castings,
Inc., a Delaware corporation (the "COMPANY"), Onex American Holdings LLC, a
Delaware limited liability company ("ONEX"), J2R Partners III, a Minnesota
general partnership ("J2R") and the stockholders listed on the signature pages
hereto and such other stockholders of the Company as may, from time to time,
become parties to this Agreement in accordance with the terms and provisions
hereof.
WHEREAS, the authorized capital stock of the Company consists
of 20,000 shares of Class A Common Stock, par value $.01 per share (the "CLASS A
COMMON"), 30,000 shares of Class B Common Stock, par value $0.01 per share (the
"CLASS B COMMON"), 2,000 shares of Class C Common Stock, par value $0.01 per
share (the "CLASS C COMMON"), 15,000 shares of Class D-1 Common Stock, par value
$0.01 per share (the "CLASS D-1 COMMON"), 7,500 shares of Class D-2 Non-Voting
Common Stock, par value $0.01 per share (the "CLASS D-2 COMMON"), and 1,000
shares of Class E Common Stock, par value $0.01 per share (the "CLASS E
COMMON").
WHEREAS, the Company, Onex, J2R, and certain other
Stockholders are parties to a Recapitalization Agreement, dated as of the date
hereof, the ("RECAPITALIZATION AGREEMENT"), pursuant to which Onex, J2R, and
such Stockholders have acquired their Common Stock (as defined).
WHEREAS, the Company, Onex, J2R, and certain other investors
are parties to a Registration Agreement (the "REGISTRATION AGREEMENT"), dated as
of the date hereof.
WHEREAS, in order to provide for the stability of the Company,
the parties wish to enter into this Agreement.
WHEREAS, certain terms used in this Agreement are defined in
Article I of this Agreement.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
<PAGE>
ARTICLE 1ARTICLE 1
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. when used in this Agreement the
following terms shall have the respective meanings shown:
"AFFILIATE" shall mean, with respect to any Person, any of (a)
a director or executive officer of such Person, (b) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (c) any other Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person, including, without limitation, investment partnerships or
funds that are sponsored, managed or controlled, directly or indirectly, by such
Person or its Affiliates. For the purpose of this definition and the definition
of Independent Third Party, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or agency or otherwise.
"BRIDGE LOAN AGREEMENT" shall mean the Bridge Loan Agreement
dated as of April 21, 1999 among the Company, the Guarantors referred to
therein, Nationsbridge, L.L.C., as an arranger, co-agent, initial lender and
administrative agent, Chase Securities, Inc., as an arranger, the Chase
Manhattan Bank, as a co-agent and initial lender, and the other lenders referred
to therein as such agreement may be amended, restated or otherwise modified from
time to time.
"BUSINESS DAY" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York City.
"CLASS D COMMON" means collectively the Class D-1 Common and
the Class D-2 Common.
"CLOSING" shall mean the closing of the transactions
contemplated by the Recapitalization Agreement.
"CLOSING DATE" means the date on which the transactions
contemplated by the Recapitalization Agreement shall be consummated.
"CO-INVESTMENT AGREEMENT" means that certain Co-Investment
Agreement, dated as of March 30, 1990, between Onex TMB Investments Inc., an
Ontario corporation, and J2R Corporation, a Delaware corporation, as amended
from time to time.
"COMMON STOCK" means (i) any Class A Common, Class B Common,
Class C Common, Class D-1 Common, Class D-2 Common and Class E Common purchased,
issued to or otherwise acquired by any Stockholder, (ii) the Warrants and any
Class A Common issuable pursuant
- 2 -
<PAGE>
to the Warrant held by any Stockholder, and (iii) any equity securities issued
or issuable, directly or indirectly, with respect to the securities referred to
in clause (i) or (ii) above by way of stock dividend or stock split, exchange or
conversion, or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares
constituting Common Stock, such shares will continue to be Common Stock in the
hands of any holder of such Common Stock (other than purchasers pursuant to a
Public Sale).
"COMPANY" includes any successor to the Company resulting from
any merger, consolidation or other reorganization of or including the Company.
"ESCROW AGENT" means U.S. Bank Trust National Association or
any subsequent escrow agent who holds the Warrants in an escrow account.
"INDEPENDENT THIRD PARTY" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's common stock on a fully-diluted basis (a "5% Owner") , who is not
controlling, controlled by or under common control with any such 5% Owner and
who is not the spouse or descendent (by birth or adoption) of any such 5% Owner
or a trust for the benefit of such 5% Owner and/or such other Persons.
"INSTITUTIONAL INVESTOR" means a "qualified institutional
buyer" as defined in Rule 144A promulgated under the Securities Act (codified at
17 C.F.R. Section 230.144A (1990)).
"NML" means The Northwestern Mutual Life Insurance Company, a
Wisconsin corporation.
"OTHER STOCKHOLDER" means any holder of Common Stock which is
bound by and subject to this Agreement other than (i) Onex and its Affiliates
and (ii) the transferees of Onex or its Affiliates.
"PERSON" means an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"PUBLIC COMPANY" means a company which has effected a Public
Offering.
"PUBLIC OFFERING" means a public offering and sale of Common
Stock pursuant to an effective registration statement under the Securities Act.
"PUBLIC SALE" means any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
(or any similar provision then in force) adopted under the Securities Act.
"QUALIFIED PUBLIC OFFERING" means the sale in an underwritten
public offering
- 3 -
<PAGE>
registered under the Securities Act of shares of the Common Stock consisting of
at least 20% of the Common Stock determined on a fully diluted basis.
"SALE OF THE COMPANY" means the sale of the Company to an
Independent Third Party or a group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company possessing
the voting power to elect a majority of the Company's board of directors
(whether by merger, consolidation, recapitalization, reorganization or sale of a
majority of the Company's outstanding Common Stock and Common Stock equivalents)
or (ii) all or substantially all of the Company's consolidated assets.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"STOCKHOLDER" means any holder of Common Stock or Warrant
(other than the Escrow Agent) which is bound by and subject to this Agreement.
"SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control a majority of the managers or general
partners of such limited liability company, partnership, association or other
business entity.
"WARRANTS" shall mean the warrant issued pursuant to the
Warrant Agreement by and between J.L. French Automotive Castings, Inc. and U.S.
Bank Trust National Association dated on the date hereof.
"WINDWARD" means Windward Capital Associates, L.P.
"WINDWARD GROUP" means Windward/Metropolitan L.L.C. and
Windward/Park WACI, L.L.C. and their respective Affiliates.
ARTICLE 2
Board of Directors of the Company
- 4 -
<PAGE>
2.1 BOARD OF DIRECTORS. (a) From and after the Closing Date
and until the provisions of this Article 2 cease to be effective, each of the
Stockholders will vote all of its voting stock of the Company, and will take,
and will cause any Persons controlled by it to take, all other necessary or
desirable actions within its control (in its capacity as a stockholder of the
Company), and the Company will take all necessary or desirable action within its
control, in order to cause:
(i) the authorized number of directors on the Company's
board of directors (the "Board") to be established at seven (7) directors;
(ii) the election to the Board of:
(A) three (3) representatives designated by J2R (by
written notice to the Company, which shall furnish copies of such
notice to each other party hereto), two of whom shall initially be S.A.
(Tony) Johnson and Carl E. Nelson (the "J2R DIRECTORS");
(B) two (2) representatives designated by Onex (by
written notice to the Company, which shall furnish copies of such
notice to each other party hereto), who shall initially be Eric Rosen
and Charles Waldon (the "ONEX DIRECTORS");
(C) subject to paragraph (v) below, one (1)
representative designated by Windward (by written notice to the
Company, which shall furnish copies of such notice to each other party
hereto), who shall initially be Robert Barton (the "WINDWARD
DIRECTOR"); and
(D) subject to paragraph (vi) below, one (1)
representative designated by NML (by written notice to the Company,
which shall furnish copies of such notice to each other party hereto),
who shall initially be A. Kipp Koester (the "NML DIRECTOR").
(iii) at the written request of a Stockholder with the right
to designate a Board representative, the removal from the Board (with
or without cause) of any representative designated by such Stockholder,
but only upon such written request and under no other circumstances;
(iv) in the event that any representative designated hereunder
by a Stockholder for any reason ceases to serve as a member of the
Board during his or her term of office, the resulting vacancy on the
Board to be filled by a representative designated by such Stockholder
as provided hereunder;
(v) the rights of Windward to designate a Windward Director
under this Section 2.1(a) shall terminate at such time as the Windward
Group holds in aggregate less than 5% of the total outstanding Common
Stock of the Company; and
(vi) the rights of NML to designate a NML Director under this
Section 2.1(a) shall terminate at such time as the NML holds in
aggregate less than 5% of the total outstanding Common Stock of the
Company.
- 5 -
<PAGE>
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending the meetings of
the Board and any committee thereof.
(c) The provisions of this Article 2 will terminate
automatically and be of no further force and effect upon a Qualified Public
Offering.
ARTICLE 3
Covenants of the Company and Other Matters
3.1 TRANSACTIONS WITH AFFILIATES. Neither the Company nor any
of its Subsidiaries shall enter into any material transaction with a Stockholder
or any of its Affiliates, including, without limitation, the purchase, sale or
exchange of property or the rendering of any service, but excluding any dividend
or other distribution to Stockholders in their capacity as such unless either:
(a) the terms of the transaction are no less favorable to the
Company or its Subsidiaries, as the case may be, than are obtainable by it in a
comparable arm's length transaction with a Person not such Stockholder or any of
its Affiliates, or
(b) the Stockholders holding at least a majority of the shares
of Common Stock held by all Stockholders (excluding for purposes of determining
a majority, such Stockholder and its Affiliates) give their written consent
thereto.
The Company shall give notice to the Stockholders at least 20
business days in advance of any such transaction. The Company may, however,
without complying with this Section 3.1, pay an annual management and advisory
fee to Hidden Creek Industries, a New York general partnership ("HCI") (or any
successor thereto), pursuant to the Management Agreement, dated as of the date
hereof, by and between the Company and HCI. Moreover, the Stockholders
acknowledge that the Company or the Company will pay HCI a $3,000,000 closing
fee upon the consummation of the transactions contemplated herein.
3.2 MERGERS, CONSOLIDATIONS, ETC. The Company shall not merge
or consolidate with another corporation, enter into a share exchange, or sell
all or substantially all of its assets to another Person, if pursuant thereto
any Stockholder shall receive securities as full or partial consid eration for
its Common Stock, unless all holders of a class of Common Stock (a) shall have
the right to receive the same securities as each holder of such class of Common
Stock, in each case in propor tion to their respective holdings of Common Stock
(assuming the conversion, exchange or exercise of all securities convertible
into or exchangeable, or exercisable for Common Stock) and on terms consistent
with the rights and preferences set forth in the Company's Certificate of
Incorporation as is reasonably determined by the holders of at least a majority
of the shares of Class A Common and the Class D Common voting as a separate
class, the holders of a majority of the Class B Common voting as a separate
class, and the holders of at least a majority of the shares of Class C Common
voting as a separate class, and if such classes cannot agree, by an investment
banking firm of national
- 6 -
<PAGE>
recognition mutually agreeable to such parties, whose determination shall be
conclusive, and (b) who are parties to this Agreement enter into a stockholders
agreement containing substantially similar rights and preferences as set forth
in this Agreement.
3.3 BY-LAWS. The by-laws of the Company shall at all times
provide, to the extent permitted by law, that:
(a) notice of every meeting of the Board shall be given, in
the same manner as is provided in Section 8.3, to each director not less than
one day prior to the meeting;
(b) a special meeting of the Board may be called, to be held
at the registered office of the Company, by holders of at least 20% of the
Company's Common Stock, upon at least 10 days' notice, given in the same manner
as is provided in Section 8.3;
(c) any director may require the Company, to include in the
business to be discussed at the meeting any one or more proposals submitted by
such director;
(d) directors may participate in directors' meetings by
telephone;
(e) directors may take action by their unanimous written
consent;
(f) notice of any meeting may be waived by any director;
and
(g) any action to be taken by the Board will require at least
a majority of the directors of the Company.
3.4 FINANCIAL INFORMATION. So long as any Stockholder owns any
Common Stock, the Company shall furnish to such Stockholder the following;
provided that with respect to Stockholders who are a member of the Windward
Group, the Company shall furnish to Windward the following:
(a) as soon as available, and in any event within 90 days
after-the end of each fiscal year of the Company, duplicate copies of the
audited financial statements of the Company and its Subsidiaries reported on by
a firm of independent certified public accountants of national recognition,
including a consolidated balance sheet of the Company and its Subsidiaries as at
the end of such fiscal year, and consolidated statements of income and of cash
flow of the Company and its Subsidiaries for such fiscal year and the related
footnotes thereto, and stating in comparative form the figures as of the end of
and for the previous fiscal year, accompanied by a report thereon contain ing an
opinion by such independent certified public accountants that the financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied, except as may be noted otherwise; provided that
with respect to fiscal year 1999, such statements shall only cover a period
beginning on the date hereof;
(b) as promptly as practicable, and in any event within
45 days after the end of
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each fiscal quarter of the Company, duplicate copies of its quarterly, unaudited
financial statements prepared by the Company, including a consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal quarter,
and consolidated statements of income and of cash flow of the Company and its
Subsidiaries for such fiscal quarter and year to date period, and stating in
comparative form the figures as of the end of and for the corresponding fiscal
quarter and year to date period in the previous fiscal year, in all cases such
financial statements shall have been prepared in accordance with generally
accepted accounting principles consistently applied, except as otherwise noted;
(c) copies of all press releases issued by the Company;
(d) except as otherwise required by law or judicial order or
decree or by any governmental agency or authority, each Stockholder entitled to
receive information regarding the Company and its Subsidiaries under this
Section 3.4 shall use its best efforts to maintain the confidentiality of all
nonpublic information obtained by it hereunder which the Company has reasonably
designated as proprietary or confidential in nature; provided that each such
Stockholder may, to the extent required by law, regulatory authority or rating
agency, disclose such information in connection with the sale or transfer of
Common Stock if such Stockholder's transferee agrees in writing to be bound by
the provisions hereof; and
(e) such additional financial information as may be reasonably
requested by any Stockholder who then has a right to designate a member of the
Board pursuant to Section 2.1 hereof.
3.5 ACTION BY STOCKHOLDERS. The Stockholders shall from time
to time vote their Common Stock and take such actions reasonably within their
control as may be required in order to cause the Company:
(a) to comply with the provisions of this Agreement; and
(b) to take all other actions required or permitted to be
taken by the Company in order to permit the Company to purchase Common Stock
pursuant to the terms of this Agreement (which may include the revaluation of
assets), provided such action is not contrary to any applicable law and such
action would not cause a default by the Company or any of its Subsidiaries under
any agreements of the Company or any of its Subsidiaries.
3.6 ACTION BY THE COMPANY TO PURCHASE STOCK. The Company shall
take all actions necessary to permit the purchase of Common Stock pursuant to
this Agreement (which may include the revaluation of assets), provided such
action is not contrary to any applicable law and such action would not cause a
default by the Company or any Subsidiary under any agreements with the Company
or any Subsidiary.
3.7 CONSENTS TO STOCK TRANSFERS PURSUANT TO THIS AGREEMENT.
The Stockholders hereby consent, to the extent required by the Company's
Certificate of Incorporation, to any transfer of Common Stock made as permitted
by this Agreement and shall execute any further formal
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consents which counsel for the Company may determine to be reasonably necessary
for that purpose.
3.8 STOCK ACQUIRED PURSUANT TO WARRANTS AND OPTIONS. The
Stockholders hereby agree that all Common Stock acquired by any of them whether
pursuant to the exercise of all warrants, rights or options granted, or
otherwise issued by the Company to the Stockholders, either prior to or
following the date of this Agreement, shall be subject to the terms of this
Agreement in all respects.
3.9 AMENDMENTS TO CERTIFICATE OF INCORPORATION. No Stockholder
shall, nor shall it permit any of its Affiliates to, vote any Common Stock owned
by it or over which it has the power to vote in favor of any amendment to or
restatement of the Company's Certificate of Incorporation, if such amendment or
restatement would alter the rights and preferences of any class of Common Stock
held by the Stockholders so as to affect them adversely, but shall not so affect
the other classes of Common Stock, without the express consent of the holders of
at least 80% of the shares of the adversely affected class of Common Stock held
by such Stockholders.
ARTICLE 4
Restrictions on Transfer of Common Stock
4.1 TRANSFER OF STOCKHOLDER STOCK. No Other Stockholder shall
sell, transfer, assign, pledge, exchange or otherwise dispose of (a "TRANSFER")
any interest in Common Stock except pursuant to the provisions of this Article
4, Article 5, Article 7, or pursuant to a Public Sale; provided that as between
Onex and J2R, the provisions of the Co-Investment Agreement will govern any
"transfer" (as defined for this purpose in the Co-Investment Agreement) and the
provisions of Article 4 and Article 5 of this Agreement will not apply. Each
Other Stockholder agrees not to consummate any Transfer pursuant to the
provisions of Section 4.2 until at least the minimum number of days required by
Section 4.2 after the delivery of such Other Stockholder's Offer Notice (as
hereinafter defined), unless the parties to the Transfer have been finally
determined pursuant to this Article 4 prior to the expiration of such period.
4.2 FIRST OFFER RIGHT.
(a) In addition to Transfers pursuant to Article 5, Article 7,
or a Public Sale, any Other Stockholder may Transfer an interest in Common Stock
by complying with this Section 4.2. At least 45 days prior to making any
Transfer by any Other Stockholder of any Common Stock pursuant to a bona fide
offer from an Independent Third Party (other than Pursuant to Article 5 and
Article 7 or a Public Sale), the transferring Other Stockholder (the
"TRANSFERRING STOCKHOLDER") will deliver a written notice (the "OFFER NOTICE")
to the Stockholders and to the Company. The Offer Notice will disclose the
proposed number of shares of Common Stock (the "SUBJECT SHARES") to be
transferred, identity of the proposed purchasers, and, in reasonable detail, the
proposed terms and conditions of the Transfer. First, Onex may elect to purchase
all (but not less than all) of the Common Stock specified in the Offer Notice at
the price in cash and on the terms specified therein
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by delivering written notice of such election to the Transferring Stockholder as
soon as practical but in any event within 20 days after the delivery of the
Offer Notice. If Onex has not elected to purchase all of the Subject Shares
within such 20-day period, the Company may elect to purchase all (but not less
than all) of the Subject Shares at the price in cash and on the terms specified
therein by delivering written notice of such election to the Transferring
Stockholder as soon as practicable, but in any event within 30 days after
delivery of the Offer Notice. If neither Onex nor the Company has elected to
purchase all of the Subject Shares within such 30-day period, the Stockholders
other than Onex and the Transferring Stockholder (collectively, the "FIRST OFFER
STOCKHOLDERS") may elect to purchase all (but not less than all) of the Subject
Shares at the price in cash and on the terms specified therein, on a pro rata
basis determined by the number of shares of Common Stock then held by the First
Offer Stockholders electing to make such purchase, by delivering written notice
of such election to the Transferring Stockholder as soon as practicable, but in
any event within 45 days after delivery of the Offer Notice; provided that if
less than all of the First Offer Stockholders elect to make such purchase, the
remaining Subject Shares shall be reoffered to those Stockholders who have
elected to make such purchase until an election to purchase all of the Subject
Shares has been made. If Onex, the Company or the First Offer Stockholders have
elected to purchase all (but not less than all) of the Subject Shares from the
Transferring Stockholder, the transfer of such shares will be consummated as
soon as practical after the delivery of the election notice, but in any event
within 75 days after delivery of the Offer Notice (the "CONSUMMATION PERIOD").
If any of the Subject Shares to be purchased by any holder of any Class D-2
Common are voting securities, at the request of any holder of Class D-2 Common
the Company will exchange for such securities other securities which are
non-voting, convertible into such securities on the same terms as those on which
the Class D-2 Common is convertible into Class D-1 Common and otherwise
identical to such securities in all respects. If neither Onex , the Company nor
the First Offer Stockholders have elected to purchase all of the Subject Shares
being offered or if Onex, the Company or the First Offer Stockholders elect to
purchase all of the Subject Shares but do not consummate the purchase within the
Consummation Period, the Transferring Stockholder may, within 45 days after the
expiration of the Consummation Period, transfer the Subject Shares to one or
more third parties at a price in cash and on other terms no more favorable to
the transferees than offered to Onex, the Company and the First Offer
Stockholders in the Offer Notice; provided that prior to such Transfer, such
transferees shall have agreed in writing to be bound by the provisions of this
Agreement. Any Subject Shares not transferred within such 45-day period will be
subject to the provisions of this Section 4.2(a) upon subsequent transfer and
the Transferring Stockholder will not be entitled to deliver another Offer
Notice for 90 days after the Transferring Stockholder has again become subject
to this Section 4.2(a).
(b) The Stockholders may transfer any of its rights to
purchase the Subject Shares under Section 4.2(a) to any of its Affiliates;
provided that prior to such transfer, such Affiliate shall have agreed in
writing to be bound by the provisions of this Agreement.
4.3 PERMITTED TRANSFERS.
(a) The restrictions contained in this Article 4 and in
Article 5 shall not apply with respect to (i) any Transfer of Common Stock by
any Stockholder to or among its Affiliates or (ii) any Transfer of Common Stock
by any Stockholder to any other Stockholder or (iii) any Transfer of a
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Warrant or of Common Stock issued thereto to a lender under the Bridge Loan
Agreement or any Affiliate thereof; provided that the restrictions contained in
this Article 4 and in Article 5 shall continue to be applicable to the Common
Stock after any such Transfer and provided further that the transferees of such
Common Stock shall have agreed in writing to be bound by the provisions of this
Agreement affecting the Common Stock so Transferred.
(b) In the case of any Transfer pursuant to Section 4.3(a)(i)
above, a transferee may at any time, and shall forthwith in the event that such
transferee ceases to be an Affiliate of the transferor (other than a transferee
pursuant to Section 4.3(a)(ii) above), transfer back to such transferor all of
the Common Stock held by it.
ARTICLE 5
Tag-Along and Drag-Along Rights
5.1 TAG-ALONG RIGHT.
(a) Except as provided in Section 5.3, if at any time Onex or
its Affiliate proposes to Transfer (other than a pledge) any or all of its
Common Stock to any person other than an Affiliate (a "DISPOSITION"), Onex or
its Affiliates, as the case may be (the "DISPOSING STOCKHOLDER"), shall, at
least 30 days prior to the consummation of the Disposition, give notice (a
"DISPOSITION NOTICE") to the Other Stockholders (the "NONDISPOSING
STOCKHOLDERS") describing the terms and conditions of the Disposition in
reasonable detail, including the proposed price per share, the method of
payment, the anticipated closing date and the identity of the proposed
purchaser, and stating that each of the Nondisposing Stockholders may elect to
participate in such Disposition, at a price per share and on other terms
consistent with the rights and preferences of the Common Stock set forth in the
Company's Certificate of Incorporation (but in any case determined without
consideration of voting rights or lack thereof) as is reasonably determined by
the holders of at least a majority of the shares of Class A Common and Class D
Common voting as a separate class, the holders of at least a majority of the
shares of Class B Common voting as a separate class, and the holders of at least
a majority of the shares of Class C Common voting as a separate class, and if
such classes cannot agree, by an investment banking firm of national recognition
mutually agreeable to such parties, whose determination shall be conclusive.
(b) The election pursuant to subsection (a) shall be exercised
by notice to the Disposing Stockholder given within the time period specified in
the Disposition Notice, which time period shall not be less than 10 Business
Days after such Disposition Notice is given. If any Nondisposing Stockholder
gives notice of its election to sell, it shall be obligated to sell the Common
Stock specified in its notice upon the terms and subject to the conditions
specified in subsection (a) to the proposed purchaser, conditional upon the
closing of the Disposition.
(c) If the purchaser pursuant to the Disposition has a
specified limited number of shares of Common Stock which it is willing to
purchase in the aggregate, each of the Nondisposing Stockholders shall have the
right to sell to the purchaser up to that number of shares
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of Common Stock owned by such Nondisposing Stockholder which is in the same
proportion to its total ownership of Common Stock as the number of shares of the
Common Stock being sold by the Disposing Stockholder is to the Disposing
Stockholder's total ownership of Common Stock (in each case, assuming the
conversion, exchange or exercise of all securities convertible into or
exchangeable or exercisable for Common Stock).
(d) If any Nondisposing Stockholder does not elect to sell the
full number of shares of Common Stock which it is entitled to sell pursuant to
this Section 5.1, or if the aggregate number of shares of the Company's Common
Stock which the Nondisposing Stockholders and any other stockholders of the
Company are entitled to sell is less than the number of shares of the Company's
Common Stock which the purchaser is willing to purchase, the remaining
Nondisposing Stockholders shall be entitled to sell additional shares of Common
Stock pro rata (as described in subparagraph (c) above) to the number of shares
of Common Stock owned by each of them to make up the aggregate number of shares
of Common Stock the purchaser is willing to purchase.
(e) Prior to transferring its Common Stock pursuant to this
Section 5.1, the Disposing Stockholder shall cause the prospective transferee to
be bound by this Agreement.
5.2 DRAG-ALONG RIGHT.
(a) If the Board approves a Sale of the Company (the "APPROVED
SALE"), the Stockholders will consent to and raise no objections to the Approved
Sale of the Company and (i) if the Approved Sale of the Company is structured as
a sale of stock, the Stockholders will agree to sell all of their Common Stock
and rights to acquire Common Stock on the terms and conditions approved by the
Board, (ii) if the Approved Sale of the Company is structured as a merger,
consolidation or other reorganization, the Stockholders will vote in favor
thereof (to the extent they are entitled to vote) and will not exercise any
dissenters' rights of appraisal they may have under Delaware law, and (iii) if
the Approved Sale of the Company is structured as a sale of all or substantially
all of the Company's consolidated assets, the Stockholders will vote in favor
thereof (to the extent they are entitled to vote). The Stockholders will use
their best efforts to cooperate in the Approved Sale of the Company and will
take all necessary and desirable actions in connection with the consummation of
the Approved Sale of the Company as are reasonably requested by the Board,
including, but not limited to, the provision of representations and warranties
or indemnifications; provided that the Stockholders shall not be required to
incur any out-of-pocket expenses in connection with such Approved Sale of the
Company which are not reimbursed by the Company; and provided further that no
Stockholder shall be required to provide substantively different representations
and warranties or indemnification than any other Stockholder and that each
Stockholder's obligations thereunder shall be several and limited to the
proceeds received by such Stockholder in connection with such Approved Sale.
(b) The obligations of the Stockholders with respect to the
Approved Sale of the Company are also subject to the satisfaction of the
following conditions: (i) upon the consummation of the Approved Sale of the
Company, all of the holders of each class of Common Stock will receive the same
form and amount of consideration for their Common Stock as all other holders of
the same
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class of Common Stock, or if any Stockholders are given an option as to the form
and amount of consideration to be received, all holders of the same class of
Common Stock will be given the same option; and (ii) the price per share of
Common Stock will be payable in cash or publicly traded securities and will be
on terms consistent with the rights and preferences set forth in the Company's
Certificate of Incorporation as is reasonably determined by the holders of at
least a majority of the shares of Class A Common and the Class D common voting
as a separate class, the holders of at least a majority of the Class B Common
voting as a separate class, and the holders of at least a majority of the shares
of Class C Common voting as a separate class, and if such classes cannot agree,
by an investment banking firm of national recognition mutually agreeable to such
parties, whose determination shall be conclusive.
(c) If the Company enters into any negotiation or transaction
for which Rule 506 (or any similar rule then in effect) promulgated by the
Securities and Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders will, at the request of the Board, and to the
extent required to comply with Rule 501, appoint a purchaser representative (as
such term is defined in Rule 501) reasonably acceptable to the Board. If any
Stockholder appoints the purchaser representative designated by the Board, the
Company will pay the fees of such purchaser representative, but if any
Stockholder declines to appoint the purchaser representative designated by the
Board, such holder will appoint another purchaser representative (reasonably
acceptable to the Board), and such holder will be responsible for the fees of
the purchaser representative so appointed.
(e) The provisions of this Section 5.2 shall terminate
automatically and be of no further force and effect upon the consummation of a
Public Offering.
5.3 EXCEPTIONS TO THE TAG-ALONG RIGHT.
(a) At any time when the Company is a Public Company, Onex and
Affiliates shall be entitled during any 90-day period to sell collectively up to
5% of the Common Stock held by Onex and its Affiliates collectively at the
beginning of such period through the facilities of any securities exchange on
which the Common Stock is then listed or quoted in the NASDAQ System or the
over-the-counter market, subject to compliance with applicable law and with the
by-laws and regulations of such exchange or the NASD, if applicable. Any such
sale shall not be subject to the provisions of Section 5.1.
(b) Section 5.1 and Section 4.2 shall not apply to any
sale as part of a Public Offering.
(c) Section 5.1 shall not apply to any Transfer of Common
Stock pursuant to a drag-along right exercised in connection with an Approved
Sale.
5.4 PURCHASER SUBJECT TO THIS AGREEMENT. No Stockholder nor
its Affiliates shall sell any of their Common Stock to any purchaser unless the
purchaser assumes in writing, pro rata with such Stockholder and its Affiliates,
in accordance with the purchaser's and such Stockholder's
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and its Affiliates' (taken together) respective share holdings, all of such
Stockholder's and its Affiliates' obligations under, and agrees to be bound by
(to the extent of such Stockholder's and its Affiliates' obligations), this
Agreement. This Section shall not, however, apply in the case of transfers by
each Stockholder and its Affiliates (a) through the facilities of any securities
exchange on which the shares of Common Stock are then listed or quoted in the
NASDAQ System or the over-the-counter market, or (b) by way of a Public
Offering.
ARTICLE 6
Limited Pre-Emptive Rights
6.1 PRE-EMPTIVE RIGHTS.
(a) Except for issuances of Offered Securities (as defined)
(i) as full or partial consideration in connection with the acquisition of
another business or company, (ii) to the Company's or its Subsidiaries'
employees and directors, (iii) pursuant to a Public Offering, (iv) in connection
with financing arrangements with independent third party lenders, until the
Company effects an initial Public Offering, the Company shall not issue any
shares of stock that have a right to participate generally in dividends or the
distribution of assets upon liquidation, dissolution or the winding up of the
Company ("PARTICIPATING SECURITIES"), any shares of Common Stock or any
securities possessing voting power with respect to the election of directors of
the Company ("VOTING SECURITIES"), or any securities containing or consisting of
options or rights to acquire any shares of Participating Securities, Common
Stock or Voting Securities or any securities exchangeable into Participating
Securities, Voting Securities or Common Stock (other than a dividend on any
outstanding Common Stock or Participating Securities) (collectively, "OFFERED
SECURITIES") to any Person unless the Company shall have first offered such
Offered Securities pro rata to all Stockholders, on the same price, terms and
conditions, pursuant to a written offer (the "OFFER"). The Offer shall specify
the number of Offered Securities proposed to be issued by the Company, the price
per Offered Security and shall limit the time within which the Offer, if not
accepted, will be deemed to be declined (which time shall be not less than 20
days notice or more than 40 days after the date of the Offer). Each Stockholder
shall then have the right, exercisable by notice to the Company within the time
period specified in the Offer, to purchase its "Pro Rata Share" of the Offered
Securities at the price per Offered Security referred to in the Offer. As used
in this Section 6.1, the term "PRO RATA SHARE" of each Stockholder shall mean
the product of (i) the total number of Offered Securities referred to in the
Offer and (ii) a fraction, the numerator of which is the number of shares of
Common Stock held by such Stockholder on the date the Offer is made and the
denominator of which is the aggregate number of the Company's shares of Common
Stock owned by such Stockholder and such other stockholders who are entitled to
purchase a pro rata portion of the Offered Securities (in each case, assuming
the conversion, exchange or exercise of all securities convertible into or
exchangeable or exercisable for Common Stock). In the event the Offered
Securities consist of shares of Class A Common, Class B Common, Class C Common,
, Class D-1 Common, Class D-2 Common or Class E Common, then (i) any shares
offered to the holders of Class A Common pursuant to this Section 6.1 shall be
shares of Class A Common, (ii) any shares
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offered to the holders of Class B Common pursuant to this Section 6.1 shall be
shares of Class B Common, (iii) any shares offered to the holders of Class C
Common pursuant to this Section 6.1 shall be shares of Class C Common, (iv) any
shares offered to holders of Class D-1 Common pursuant to this Section 6.1 shall
be shares of Class D-1 Common, (v) any shares offered to holders of Class D-2
Common pursuant to this Section 6.1 shall be shares of Class D-2 Common, and
(vi) any shares offered to holders of Class E Common pursuant to this Section
6.1 shall be shares of Class E Common. In the event the Offered Securities
consist of any other securities which are voting securities, then the securities
offered to the holders of Class D-2 Common pursuant to this Section 6.1 shall be
non-voting, convertible into such Offered Securities on the same terms as those
on which the Class D-2 Common is convertible into Class D-1 Common and otherwise
identical to such Offered Securities in all respects.
(b) If any Offered Securities shall not be capable of being
offered to or being divided among the Stockholders in proportion to their
holdings of Common Stock at the date of the Offer without division into
fractions, the same shall be offered to or divided among the Stockholders as
nearly as may be in proportion to the number of shares of Common Stock held by
them respectively at the date of the Offer without division into fractions, as
may be determined in good faith by the Board.
(c) The closing of a purchase and sale pursuant to this
Section 6.1 shall be held at the registered office of the Company on the date
specified in the Offer, which date shall be not less than 15 or more than 30
days after the time at which the Offer, if not accepted, will be deemed to be
declined.
(d) If any Stockholder does not elect to purchase the full
number of Offered Securities which it is entitled to purchase pursuant to this
Section 6.1, the balance shall be reoffered pro rata to the remaining
Stockholders that did elect to purchase their full entitlement at the same price
per Offered Security as specified in the Offer and otherwise on such terms as
the Board may in good faith determine until either (i) all of such Offered
Securities shall have been elected to be purchased or (ii) all of the
Stockholders have elected to not purchase such remaining Offered Securities. In
the event any Offered Securities remain the Company may issue such Offered
Securities in compliance with Section 6.1(c) above to such Person or Persons as
the Board may in good faith determine, but, in any event, at the same price per
Offered Security as specified in the Offer.
6.2 NO ADDITIONAL PRE-EMPTIVE RIGHTS. No Stockholder shall
have any preemptive right to acquire Common Stock from the Company except
pursuant to Section 6.1 and, without limiting the generality of the foregoing,
shall have no preemptive rights on a Public Offering of Common Stock by the
Company.
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ARTICLE 7
Transfers of Common Stock and
Appointment of Proxy
7.1 TRANSFERS IN ACCORDANCE WITH THIS AGREEMENT. No
Stockholder shall transfer or suffer to be transferred any or all of its Common
Stock, except as permitted or required by this Agreement. The Company may refuse
to register any transfer of Common Stock on its transfer books if such transfer
is not in accordance with this Agreement and state and federal securities laws.
7.2 LEGENDING OF SHARES CERTIFICATES. All certificates
representing Common Stock held by any Person subject to this Agreement (and by
any permitted or required transferees who are bound by or subject to this
Agreement) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CERTAIN
RESTRICTIONS ON THE VOTING OF SUCH SECURITIES CONTAINED IN THE
INVESTOR STOCKHOLDERS AGREEMENT, DATED AS OF APRIL 21, 1999,
AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH INVESTOR
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
7.3 DEFAULT OF DELIVERY.
(a) In the event that any Stockholder, the Company, or any
Stockholder's transferees or assignees (each, a "REQUIRING PARTY") have the
right to acquire Common Stock from any other Stockholder or the right to require
any such other Stockholder to sell its Common Stock to any other Person,
pursuant to the terms of this Agreement (such selling Stockholder hereinafter
referred to as the "Transferor" and such Requiring Party or any other Person to
whom the Transferor is required to transfer Common Stock, as applicable,
hereinafter referred to as the "TRANSFEREE") and the Transferor is not present
at the closing, or is present but for any reason fails to produce and deliver to
the Transferee the certificates or other instruments representing any of the
Common Stock being transferred, then the cash purchase price, as and when
payable, may be deposited into a special account in the name of the Company at a
branch of the Company's bankers and any other consideration permitted or
required to be delivered in satisfaction of the purchase price shall be
deposited with the Company. Such deposits shall constitute valid and effective
payment to the Transferor of the purchase price for the Common Stock being
transferred notwithstanding the fact that the Transferor may have voluntarily
attempted to encumber or dispose of any of the Common Stock contrary to the
terms hereof, or that one or more certificates or other evidences of ownership
of such Common Stock may have been delivered to any other Person. From and after
the date of such deposits (even though the share certificates in the name of the
Transferor have not been
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delivered to the Transferee), the purchase and transfer of the Common Stock
shall be deemed to have been fully completed and all right, title, benefit and
interest of the Transferor in and to all such Common Stock, both at law and in
equity, shall be conclusively deemed to have been transferred and assigned to
and become vested in the Transferee and the Transferee will have the right to
request that the Company enter the transfer into the stock register and the
Company shall be entitled to so enter the transfer.
(b) Where the Transferee has made a deposit in accordance with
subsection (a), the Transferor shall be entitled to receive the cash purchase
price of the Common Stock deposited with the Company's bankers, and to receive
any other consideration deposited with the Company, upon delivery to the Company
of (i) the certificates or other instruments representing the Common Stock duly
endorsed for transfer and (ii) any other document required to be delivered by
the Transferor at closing, including, without limitation, the release or
discharge of any encumbrance relating to the Common Stock and stock transfer
stamps, if necessary.
7.4 DISTRIBUTIONS UPON SALE OF THE COMPANY. In the event of a
sale or exchange by the Stockholders of all or substantially all of the Common
Stock held by the Stockholders, the Stockholders shall receive the same portion
of the aggregate consideration from such sale or exchange that such Stockholders
would have received if such aggregate consideration had been distributed by the
Company in complete liquidation.
ARTICLE 8
Representations and Warranties
of the Company.
The Company hereby represents and warrants to the Stockholders
that as of the Closing:
8.1 ORGANIZATION, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to carry
on its businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement, except where the
failure to have such power and authority would not have a material adverse
effect upon the business or financial condition of the Company.
8.2 CAPITAL STOCK AND RELATED MATTERS.
(i) Immediately following the Closing, (a) the authorized
capital stock of the Company will consist of 20,000 shares of Class A Common,
30,000 shares of Class B Common, 2,000 shares of Class C Common, 15,000 shares
of Class D-1 Common, 7,500 shares of Class D-2 Common, and 1,000 shares of Class
E Common and (b) the Company will have issued, and there will be outstanding,
6,998.4380 shares of Class A Common, 21,367.6964 shares of Class B
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<PAGE>
Common, 7.1700 shares of Class C Common, 6,885.1466 shares of Class D-1 Common,
7,122.5655 shares of Class D-2 Common, and 4.7009 shares of Class E Common.
(ii) Immediately following the Closing, except for the
Warrants, the Company will not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock, nor will it
have outstanding any rights, subscriptions, warrants, agreements, commitments or
options to subscribe for or to purchase any capital stock or any stock or
securities convertible into or exchangeable for any capital stock, except as
contemplated in the Certificate of Incorporation. Immediately following the
Closing, all of the outstanding shares of the Company's capital stock will have
been duly authorized, and upon payment therefore will be validly issued and will
be fully paid and nonassessable.
8.3 AUTHORIZATION; NO BREACH. The execution, delivery and
performance of this Agreement, and all other agreements and transactions
contemplated hereby and thereby have been duly authorized by the Company. This
Agreement constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms, subject to the availability of equitable remedies
and to the laws of bankruptcy and other similar laws affecting creditors' rights
generally. The execution and delivery by the Company of this Agreement and all
other agreements and instruments contemplated hereby and thereby to be executed
by the Company do not and will not (i) conflict with or result in a breach of
the terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Company's capital stock or assets pursuant to, (iv) give any third
party the right to accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court or administrative or
governmental body (other than in connection with certain state and federal
securities laws) or any other third party pursuant to, the Certificate of
Incorporation or the Bylaws, or any law, statute, rule, regulation, instrument,
order, judgment or decree to which the Company is subject or any agreement or
instrument to which the Company is a party, or by which its assets are bound,
except where the existence of any such conflict, breach, default, right to
accelerate or violation, or the creation of any such lien, security interest,
charge or encumbrance, or the failure to obtain, take or make any such
authorization, consent, approval, exemption, other action, notice or filing,
could not reasonably be expected to, individually or in the aggregate, have a
material adverse effect on the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries taken as a
whole.
ARTICLE 9
Miscellaneous
9.1 VOTING AGREEMENT.
(a) The Other Stockholders (other than Stockholders who are
members of the Windward Group) shall at all times vote their Common Stock (to
the extent they are entitled to vote the same) as directed by Onex, or in the
same manner as the Common Stock held by Onex is voted, on the designation of
director representatives, on the election of directors and, with the exception
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<PAGE>
of NML, on all other matters which are submitted to a vote (or consent in lieu
of voting) of the Company's stockholders and on which such Common Stock is
entitled to vote, and for this purpose, shall execute and deliver to Onex (or
its designees) proxies to make such designations and to vote such Common Stock
in the same manner as directed by Onex or as the Common Stock held by Onex is
voted. To the extent permitted by law and for all purposes of this Agreement,
each Other Stockholder (other than Stockholders who are members of the Windward
Group), by its execution of this Agreement, irrevocably constitutes and appoints
the Person who is at any time the president of Onex, its proxy to vote all of
its Common Stock at any meeting of stockholders of the Company, or to give
consent in lieu of voting on the designation of directors, representatives, or
the election of directors and, with the exception of NML, on any matter which is
submitted for a vote or consent to the stockholders and on which such Common
Stock is entitled to vote (except to the extent such vote or consent would
violate any applicable law and except with respect to stockholder voting on the
merger or consolidation of the Company with another corporation or the sale of
all or substantially all of the Company's assets), provided that such Common
Stock is voted or consent is given with respect to it in the same manner as the
Common Stock held by Onex. The proxies and powers granted by such Other
Stockholder pursuant to this Article 9 are coupled with an interest.
Notwithstanding anything contained in this paragraph, such Stockholder's Common
Stock shall not, except with the express consent of such Stockholder, be voted
in favor of any resolution the effect of which will be to change such
Stockholder's Common Stock or Onex's Common Stock, or convert or exchange such
Stockholder's Common Stock or Onex's Common Stock into or for different
securities, unless in every such case such Stockholder's Common Stock and Onex's
Common Stock are thereby changed identically or converted into or exchanged for
the same type of securities pro rata (except in no event shall the Class D-2
Common or any other nonvoting securities issued as contemplated by this
Agreement to holders of Class D-2 Common be amended to become voting securities
and in no event shall the terms on which Class D-2 Common or any such securities
are convertible into voting securities be amended, except with the consent of
the holders of a majority of the outstanding shares of Class D-2 Common
originally issued pursuant to the Recapitalization Agreement).
(b) Each Other Stockholder represents that he has not granted
and is not a party to any proxy, voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement, and no
such holder of Common Stock shall grant any proxy or become party to any voting
trust or other agreement which is inconsistent with or conflicts with the
provisions of this Agreement.
(c) The voting agreement set forth in this Section 9.1 shall
terminate upon the occurrence of a Qualified Public Offering.
9.2 ACKNOWLEDGMENT. The parties hereto acknowledge that,
pursuant to the Company's Certificate of Incorporation, and except as expressly
set forth in this Agreement, the Class A Common, Class B Common, Class C Common,
Class D-1 Common and Class E Common will vote together as a single class, the
Class D-2 Common shall not vote, and none of the classes of Common Stock will be
entitled to a separate class vote, except as required by law.
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<PAGE>
9.3 NOTICES. All notices, consents and other communications
required or permitted to be given under or by reason of this Agreement shall be
in writing, shall be delivered personally or by telex or telecopy as described
below or by reputable overnight courier, and shall be deemed given on the date
on which such delivery is made. If delivered by telex or telecopy, such notices
or communications shall be confirmed by a registered or certified letter (return
receipt requested), postage prepaid. Any such delivery shall be addressed to the
intended recipient at the following addresses (or at such other address for a
party as shall be specified by such party by like notice to the other parties):
(a) if to J2R or the Company:
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Scott D. Rued
Telecopy: (612) 332-2012
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, P.C.
John A. Schoenfeld, Esq.
Telecopy: (312) 861-2200
(b) if to Onex:
Onex Investment Corporation
712 Fifth Avenue, 40th Floor
New York, New York 10019
Attention: Eric J. Rosen
Telecopy: (212) 582-0909
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, P.C.
John A. Schoenfeld, Esq.
Telecopy: (312) 861-2200
(c) if to Windward:
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<PAGE>
Windward Capital Partners
1177 Avenue of the Americas, 42nd Floor
New York, New York 10036
Attention: Anthony J. Almy
Telecopy: (212) 382-6534
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Howard Ellin, Esq.
Telecopy: (212) 735-2000
(d) The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Jeffrey Lueken
Telecopy: (414) 299-2174
(c) if to any other person which becomes a party to this
Agreement in accordance with the terms hereof, at the address for delivery of
notices or communications given to all other parties by such party at such time.
Notices to any director of the Company shall be given:
(i) by telephone or delivery in person to such director at the
address (or telephone number) designated by him from time to time by notice to
Onex and the Company (in the case of directors designated by any Other
Stockholder) or to the Other Stockholders and the Company (in the case of
directors designated by Onex), confirmed by letter to such address; or
(ii) by registered mail with postage prepaid. If a director
has not designated an address, notice to such director may be given to his
address last known to the Company.
9.4 EXTENDED MEANINGS. In this Agreement, words importing the
singular number include the plural and vice versa and words importing gender
include all genders.
9.5 CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement.
9.6 APPLICABLE LAW. The corporate law of Delaware will govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement will be governed by the internal law, and not the law of
conflicts, of the State of New York.
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<PAGE>
9.7 TIME. Time shall be of the essence of this Agreement.
9.8 SEVERABILITY. The provisions of this Agreement are
intended to be and shall be deemed severable. The invalidity or unenforceability
of any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
9.9 CURRENCY. References in this Agreement to monetary amounts
shall be in United States currency unless otherwise expressly stated.
9.10 ARBITRATION PROCEDURE.
(a) The parties hereto agree that the arbitration procedure
set forth below shall be the sole and exclusive method for resolving and
remedying claims or disputes arising out of the provisions of this Agreement
(the "DISPUTES"). Nothing in this Section 9.10 shall prohibit a party hereto
from instituting litigation to enforce any Final Determination (as defined
below) or the provisions of this Section 9.10. The parties hereto hereby agree
and acknowledge that, except as otherwise provided in this Section 9.10 or in
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA") as in effect from time to time, the arbitration procedures and any Final
Determination hereunder shall be governed by, and shall be enforced pursuant to
the Uniform Arbitration Act.
(b) In the event that any party hereto asserts that there
exists a Dispute, such party shall deliver a written notice to each other party
hereto involved therein specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such resolution is
reached within ten business days after such delivery of such notice, the party
delivering such notice of Dispute (the "DISPUTING PARTY") may, within 45
business days after delivery of such notice, commence arbitration hereunder by
delivering to each other party hereto involved therein (collectively, the "OTHER
PARTIES") a notice of arbitration (a "NOTICE OF ARBITRATION"). Such Notice of
Arbitration shall specify the matters as to which arbitration is sought, the
nature of any Dispute, the claims of each party to the arbitration and shall
specify the amount and nature of any damages, if any, sought to be recovered as
a result of any alleged claim, and any other matters required by the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time to be included therein, if any.
(c) The Disputing Party, on the one hand, and the Other
Parties, on the other hand, each shall select one non-neutral arbitrator expert
in the subject matter of the Dispute (the arbitrators so selected shall be
referred to herein as the "DISPUTING PARTY'S ARBITRATOR" and the "OTHER PARTIES'
ARBITRATOR," respectively). In the event that either such party fails to select
an arbitrator as set forth herein within 20 days from the delivery of a Notice
of Arbitration, then the matter shall be resolved by the arbitrator selected by
the other party. The Disputing Party's Arbitrator and the Other Parties'
Arbitrator shall select a third independent, neutral arbitrator expert in the
subject matter of the dispute, and the three arbitrators so selected shall
resolve the matter according to the procedures
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<PAGE>
set forth in this Section 9.10. If the Disputing Party's Arbitrator and the
Other Parties' Arbitrator are unable to agree on a third arbitrator within 20
days after their selection, the third arbitration shall be chosen by the
President of the AAA.
(d) The arbitrator(s) selected pursuant to Section 9.10(c)
above will determine the allocation of the costs and expenses of arbitration
based upon the percentage which the portion of the contested amount not awarded
to each party to the arbitration bears to the amount actually contested by such
party. For example, if the Disputing Party submits a claim for $1,000 and if the
Other Parties contest only $500 of the amount claimed by the Disputing Party,
and if the arbitrator(s) ultimately resolves the dispute by awarding the
Disputing Party $300 of the $500 contested, then the costs and expenses of
arbitration will be allocated 60% (i.e., 300 / 500) to the Other Parties and 40%
(i.e., 200 / 500) to the Disputing Party.
(e) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time, except as modified by the agreement of all of the parties to the
arbitration. The arbitrator(s) shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "FINAL
DETERMINATION") is made or rendered as soon as practicable, but in no event
later than 90 business days after the delivery of the Notice of Arbitration nor
later than 10 days following completion of the arbitration. The Final
Determination must be agreed upon and signed by the sole arbitrator or by at
least two of the three arbitrators (as the case may be). The Final Determination
shall be final and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury, evident
partiality or misconduct by an arbitrator prejudicing the rights of any party to
the arbitration and to correct manifest clerical errors.
(f) The Disputing Party and the Other Parties may enforce any
Final Determination in any state or federal court having jurisdiction over the
Dispute. For the purpose of any action or proceeding instituted with respect to
any Final Determination, each party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of process by
registered mail or personal service and hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may have or hereafter
have as to personal jurisdiction, the laying of the venue of any such action or
proceeding brought in any such court and any claim that any such action or
proceeding brought in any court has been brought in an inconvenient forum.
(g) Any party hereto required to make a payment pursuant to
this Section 8.10 shall pay the party entitled to receive such payment within
three days of the delivery of the Final Determination to such responsible party.
If any party hereto shall fail to pay the amount of any damages, if any,
assessed against it within such three day period, the unpaid amount shall bear
interest from the date of such delivery at the lesser of (i) the prime rate of
interest published by the Board of Governors of the Federal Reserve System as
the "Bank Prime Loan" rate, in effect from time to time (which rate shall be
adjusted on the effective date of each change in such prime rate) plus 2.00% and
(ii) the maximum rate permitted by applicable usury laws. Interest on any such
unpaid amount shall be compounded semi-annually, computed on the basis of a
360-day year consisting of twelve 30-day months and shall be payable on demand.
In addition, such party shall
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<PAGE>
promptly reimburse the other party to the arbitration for any and all costs and
expenses of any nature or kind whatsoever (including but not limited to all
attorneys' fees) incurred in seeking to collect such damages or to enforce any
Final Determination.
9.11 ASSIGNMENT. This Agreement shall be binding upon the
parties hereto, all Stockholders and, to the extent expressly provided elsewhere
in this Agreement, their respective permitted transferees and assigns (other
than purchasers of Common Stock pursuant to a Public Sale), together with in
each case all successors, heirs, executors and administrators thereof, and shall
inure to the benefit of the parties hereto, all Stockholders and, to the extent
expressly provided elsewhere in this Agreement, assigns of the Stockholders,
together, in each case, with all successors, heirs, executors and administrators
thereof; provided that a Stockholder may assign its rights to purchase Common
Stock hereunder to one of its Affiliates so long as such Affiliate is, or agrees
to become, a party hereto. The parties hereto agree that the rights of each
Stockholder contained in this Agreement are personal to such Stockholder and may
not be assigned to, and will not inure to the benefit of any transferees of such
Stockholder other than its Affiliates or, as expressly provided herein, the
Company. Except as otherwise provided herein, no party may assign any of its
rights or delegate any of its duties under this Agreement.
9.12 AMENDMENT AND WAIVER. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or the Stockholders unless such
modification, amendment or waiver is approved in writing by the Company and the
holders of at least a majority of the shares of voting Common Stock and, to the
extent that any modification, amendment or waiver adversely affects the rights
of the holders of any class, series or sub-class of Common Stock, by the holders
of at least a majority of shares of such adversely affected class, series or
sub-class of Common Stock; provided that no modification, amendment or waiver of
any provision of Section 2.1 above that adversely affects the rights of any
Stockholder shall be effective unless such modification, amendment or waiver is
approved in writing by such Stockholder. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right there after to insist
upon strict adherence to that term or any other term of this Agreement. No
purported waiver shall be effective unless in writing. The waiver by any party
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent or other breach.
9.13 REMEDIES. The Stockholders shall be entitled to enforce
their rights under this Agreement specifically to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any Stockholder may in its sole discretion apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
9.14 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same
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<PAGE>
instrument.
9.15 COMPLETE AGREEMENT. This Agreement, the documents
expressly referred to herein (including the Registration Agreement) and other
documents of even date herewith embody the complete agreement and understanding
among the parties and supersede and preempt any prior understanding, agreements
or representations by or among the parties, written or oral, that may be related
to the subject matter hereof in any way, except for the Co-Investment Agreement
which will not be superseded or preempted as between Onex, J2R and their
Affiliates.
9.16 WINDWARD AGENCY.
(a) Each member of the Windward Group hereby irrevocably
(subject to the provisions of paragraph (c) below) designates and appoints
Windward as its attorney-in-fact, agent and representative, to act on its behalf
(i) in connection with exercising any of its rights hereunder, performing any of
its duties or obligations hereunder or enforcing any claims or rights on its
behalf under this Agreement, (ii) to investigate, contest, litigate, demand, sue
for, collect, recover and receive all claims, debts, monies and other amounts
whatsoever which may hereafter become due to the members of the Windward Group
in connection with this Agreement (including, without limitation, instituting
any action, suit or legal proceeding to enforce any of its rights hereunder) and
to make, execute and deliver receipts, releases, settlements, adjustments and
other discharges therefor, (iii) to defend, settle, adjust, submit to
arbitration or compromise all actions, suits, accounts, reckonings, claims and
demands that may be brought against the members of the Windward Group in
connection with this Agreement, (iv) to amend, supplement or grant any waiver
under this Agreement or any other agreement or document contemplated hereby, (v)
to vote at any annual or special meeting of shareholders, or to take action by
written consent in lieu of such meeting with respect to, all of the shares of
Common Stock owned or held of record by such Stockholder, but only for (vi) in
executing, acknowledging, verifying and/or delivering any and all agreements,
certificates and instruments in connection with taking any of the actions
referred to in clauses (i), (ii), (iii), (iv) and (v) above, and (vii) in doing,
executing and performing any other act, deed, matter or thing, of any kind or
nature whatsoever, that is necessary, appropriate or advisable to enforcing any
claims or rights under this Agreement or performing any of its duties or
obligations hereunder or otherwise representing its interest hereunder; all of
the foregoing actions may be taken in such manner as Windward determines in its
sole discretion to be appropriate, advisable or necessary.
(b) The designation and appointment of Windward referred to in
the previous paragraph (a) shall be deemed to be irrevocable (subject to the
provisions of paragraph (c) below) and coupled with an interest and shall
survive the death, dissolution, bankruptcy, incompetency or legal disability of
any member of the Windward Group. Without limitation to the foregoing and
notwithstanding anything to the contrary in this Agreement, if any payments or
other amounts are received by Windward on behalf of the members of the Windward
Group in connection with this Agreement, Windward shall, after deducting any
expense reimbursement amount with which it may be entitled, distribute such
amounts to the various members of the Windward Group in such manner as Windward
deems reasonably appropriate in light of each member's relevant interests and
the particular circumstances.
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<PAGE>
(c) Windward (or any successor thereof appointed pursuant to
this subsection (c)) may resign from the performance of all its functions and
duties as agent on behalf of the Windward Group under this Agreement at any time
by giving at least 10 days business days' prior written notice to the other
parties to this Agreement. Such resignation shall take effect upon the
acceptance by a successor agent of its appointment pursuant to this subsection
(c). Upon any such notice of resignation by Windward (or any successor thereof),
the Requisite Member shall appoint a successor agent. If a successor agent shall
not have been appointed within said 10 business day period, Windward (or any
duly appointed successor thereof) shall then appoint a successor who shall serve
as agent on behalf of the Windward Group under this Agreement until such time,
if any, as the Requisite Members appoint a successor agent as provided in this
subsection (c). Windward (or any successor thereof appointed pursuant to this
subsection (c)) may be removed by the Requisite Members and replaced with
another person, at any time and for any reason, upon ten days prior written
notice given by the Requisite Members to the agent then in effect and all other
parties to this Agreement. Upon the appointment of a successor agent hereunder,
references in this Agreement to Windward, acting in its role as agent for the
Windward Group, shall, for all purposes of this Agreement, thereafter mean such
successor agent.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto, all as of the date first above written.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: /s/ Thomas C. Dinolfo
Its:
---------------------------------
ONEX American Holdings LLC
By: /s/ Eric J. Rosen
Its:
---------------------------------
J2R PARTNERS III
By: /s/ Carl E. Nelson
Its:
---------------------------------
BANCAMERICA CAPITAL INVESTORS II, L.P.
By: BancAmerica Capital Management II,
L.P.
Its: General Partner
By: BACM II, GP, LLC
Its: General Partner
By: Signature Illegible
Its: Authorized Member
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Jerome R. Baier
Its:
---------------------------------
NORWEST EQUITY CAPITAL, L.L.C.
By: Itasca NEC, L.L.C., Managing Member
By: Signature Illegible
ROBERT W. BAIRD & CO. INCORPORATED
By: Signature Illegible
Its:
---------------------------------
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<PAGE>
BCP II AFFILIATES FUND LIMITED
PARTNERSHIP
By: Robert W. Baird & Co. Incorporated
Its: General Partner
By: Signature Illegible
Its:
---------------------------------
BAIRD CAPITAL PARTNERS II LIMITED
PARTNERSHIP
By: Baird Capital Partners Management
Company,L.L.C.
Its: General Partner
By: Signature Illegible
Its:
---------------------------------
RANDOLPH STREET PARTNERS II
By: Signature Illegible
Its:
---------------------------------
WINDWARD/METROPOLITAN, L.L.C.
By: Signature Illegible
Its:
---------------------------------
WINDWARD/PARK WACI, L.L.C.
By: Signature Illegible
Its:
---------------------------------
---------------------------------
/s/ Charles M. Waldon
---------------------------------
/s/ S.A. Johnson
---------------------------------
/s/ Dugald K. Campbell
<PAGE>
---------------------------------
/s/ Karl F. Storrie
---------------------------------
/s/ Scott D. Rued
---------------------------------
/s/ Robert R. Hibbs
---------------------------------
/s/ Carl E. Nelson
---------------------------------
/s/ David J. Huls
---- ----------------------------
/s/ Mary L. Johnson
---------------------------------
/s/ Judith A. Vijums
---------------------------------
/s/ Dan F. Moorse
<PAGE>
U.S. BANK TRUST NATIONAL ASSOCIATION
By: Signature Illegible
Its:
--------------------------------
<PAGE>
EXHIBIT 10.3
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of April 21, 1999, between J.L. French
Automotive Castings, Inc., a Delaware corporation (the "COMPANY"), and the
Persons listed on Schedule A attached hereto (the "INVESTORS").
Certain of the parties to this Agreement are parties to a
Recapitalization Agreement dated March 29, 1999 (the "RECAPITALIZATION
AGREEMENT"). In order to induce those Investors which are parties to the
Recapitalization Agreement to enter into the Recapitalization Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. Unless otherwise provided in this Agreement, capitalized terms used
herein shall have the meanings set forth in paragraph 9 hereof.
The parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. Subject to Sections 1(b) and 1(c)
below, at any time, the holders of at least a majority of the Class B
Registrable Securities, or if no Class B Registrable Securities are then
outstanding, the holders of a majority of the Registrable Securities, may
request registration under the Securities Act of all or part of their
Registrable Securities on Form S-1 or any similar long-form registration
("LONG-FORM REGISTRATIONS") or, if available, on Form S-2 or S-3 or any similar
short-form registration ("SHORT-FORM REGISTRATIONS"). At any time after the
consummation of a Qualified Public Offering, the holders of at least 30% of the
Warrant Registrable Securities may request up to two Long-Form Registrations or,
if available, Short-Form Registrations of all or part of their Registrable
Securities (the "WARRANT DEMAND REGISTRATIONS"). Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering. Within ten days after receipt of any such request, the Company will
give written notice of such requested registration to all other holders of
Registrable Securities and, subject to Section 1(d) below, will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. All registrations requested pursuant to this Section
1(a) are referred to herein as "DEMAND REGISTRATIONS."
(b) LONG-FORM REGISTRATIONS. Such holders of Registrable Securities
will be entitled to request five Long-Form Registrations in which the Company
will pay all Registration Expenses and, at any time after the consummation of a
Qualified Public Offering, the holders of at least 30% of the Warrant
Registrable Securities will be entitled to request up to two Warrant Demand
Registrations in which the Company will pay all Registration Expenses
("COMPANY-PAID LONG-FORM REGISTRATIONS"). A registration will not count as one
of the permitted Long-Form Registrations until
<PAGE>
it has become effective (unless such Long-Form Registration has not become
effective due solely to the fault of the holders requesting such registration
and such holders do not agree to bear all Registration Expenses in connection
therewith), and the last or any subsequent Company-Paid Long-Form Registration
will not count as one of the permitted Long-Form Registrations unless the
holders of Registrable Securities are able to register and sell at least 90% of
the Registrable Securities requested to be included in such registration;
provided that in any event the Company will pay all Registration Expenses in
connection with any registration initiated as a Company-Paid Long-Form
Registration whether or not it has become effective. All Long-Form Registrations
shall be underwritten registrations.
(c) SHORT-FORM REGISTRATIONS. In addition to the Company-Paid Long-
Form Registrations provided pursuant to paragraph 1(b), the holders of at least
a majority of the Class B Registrable Securities, or if no Class B Registrable
Securities are then outstanding, the holders of at least a majority of the
Registrable Securities, will be entitled to request an unlimited number of
Short-Form Registrations in which the Company will pay all Registration
Expenses. Demand Registrations will be Short-Form Registrations whenever the
Company is permitted to use any applicable short form. After the Company has
become subject to the reporting requirements of the Securities Exchange Act, the
Company will use its best efforts to make Short-Form Registrations available for
the sale of Registrable Securities.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of at least a majority of the
Registrable Securities included in such registration. If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the marketability of the
offering, the Company will include in such registration prior to the inclusion
of any securities which are not Registrable Securities the number of Registrable
Securities requested to be included (whether upon exercise of a demand
registration right or upon exercise of the right to participate in such a demand
registration) which in the opinion of such underwriters can be sold without
adversely affecting the marketability of the offering, pro rata among the
respective holders thereof on the basis of the number of Registrable Securities
requested to be included by each such holder; provided that in the event such
Demand Registration is requested by the holders of the majority of the Warrant
Registrable Securities, the Company will include in such registration (i) first,
the number of Registrable Securities requested to be included therein by the
holders of the Warrant Registrable Securities requesting such registration which
in the opinion of such underwriters can be sold without adversely affecting the
marketability of the offering, pro rata among the respective holders thereof on
the basis of the number of Registrable Securities requested to be included by
each such holder, (ii) second, if all of the Registrable Securities requested to
be included in such registration by the holders of the Warrant Registrable
Securities requesting such registration have been included in such registration,
the number of other Registrable Securities requested to be included in such
registration which in the opinion of such underwriters can be sold without
adversely affecting the marketability of the offering, pro rata among the
holders of such Registrable Securities
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on the basis of the number of shares requested to be included by each such
holder, and (iii) third, if all of the Registrable Securities requested to be
included in such registration by the holders of Registrable Securities have been
included in such registration, the number of other securities requested to be
included in such registration which in the opinion of such underwriters can be
sold without adversely affecting the marketability of the offering.
(e) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company will not be
obligated to effect any Demand Registration within six months after the
effective date of a Demand Registration or a registration in which the holders
of Registrable Securities were given piggyback rights pursuant to Section 2 and
in which there was no reduction in the number of Registrable Securities
requested to be included. The Company may postpone for up to six months the
filing or the effectiveness of a registration statement for a Demand
Registration if the Company determines that such Demand Registration would
reasonably be expected to have an adverse effect (i) on any proposal or plan by
the Company or any of its Subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or similar transaction, or (ii) any material corporate development;
provided that in such event, the holders of Registrable Securities initially
requesting such Demand Registration will be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration will not count as
one of the permitted Demand Registrations hereunder and the Company will pay all
Registration Expenses in connection with such registration.
(f) SELECTION OF UNDERWRITERS. The holders of a majority of the
Registrable Securities included in any Demand Registration will have the right
to select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval which will not be unreasonably withheld.
(g) OTHER REGISTRATION RIGHTS. Except as provided in this Agreement
and that certain Management Stockholders Agreement to be entered into among the
Company, ONEX American Holdings LLC or its affiliates and certain of the
Company's executive officers, the Company will not grant to any Persons the
right to request the Company to register any equity securities of the Company,
or any securities convertible or exchangeable into or exercisable for such
securities, without the prior written consent of the holders of at least a
majority of the Registrable Securities; provided that the Company may grant
rights to other Persons to participate in Piggyback Registrations or Demand
Registrations so long as such rights are subordinate to the rights of the
holders of Registrable Securities with respect to such Piggyback Registrations
or Demand Registrations.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any
of its securities under the Securities Act (including secondary registrations on
behalf of the holders of its securities other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company
will give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and
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will include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
days after the receipt of the Company's notice.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of shares requested to be
included by each such holder, and (iii) third, other securities requested to be
included in such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, pro rata among the securities requested to be
included therein by the holders requesting such registration and the other
Registrable Securities requested to be included in such registration, on the
basis of the number of shares requested to be included by each such holder, and
(ii) second, other securities requested to be included in such registration.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities included in such Piggyback Registration. Such approval will not be
unreasonably withheld.
(f) OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least six months has elapsed from the effective date of such
previous registration.
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3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of
Registrable Securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration),
unless the underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-8 or
any successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) to cause each holder of its common stock, or
any securities convertible into or exchangeable or exercisable for common stock,
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any Registrable
Securities during such period (except as part of such underwritten registration,
if otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to each seller of Registrable
Securities, each underwriter participating in any disposition pursuant to such
registration and to the counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel);
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than six months and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
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(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
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corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(l) obtain cold comfort letters, dated (i) the effective date of such
registration statement, (ii) the date the Registrable Securities being sold are
delivered to the underwriters, if any, for sale pursuant thereto and (iii) if
required by the underwriters, if any, on or prior to the date of any preliminary
prospectuses, from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters and if the Registrable Securities included in such registration
statement constitute at least 10% of the securities covered by such registration
statement, also covering such matters as the holders of a majority of the
Registrable Securities being sold reasonably request;
(m) provide a legal opinion of the Company's outside counsel with
respect to the registration statement, each amendment and supplement thereto,
the prospectus included therein (including the preliminary prospectus) and such
other documents relating thereto in customary form and covering such matters of
the type customarily covered by legal opinions of such nature;
(n) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid thereof by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment;
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(o) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters; and
(p) use its best efforts to cause the Registrable Securities covered
by the applicable registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities.
5. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses associated with filings required to be made
with the NASD (including, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel as may be required by the rules and
regulations of the NASD), fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES"), will be borne as provided in this Agreement, except
that the Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on the NASD
automated quotation system (on the National Market System if the Company so
qualifies).
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company will reimburse the holders of Registrable Securities
covered by such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
initially requesting such registration (in the case of a Demand Registration)
and the holders of a majority of the Registrable Securities included in such
registration (in the case of a Piggyback Registration).
(c) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
will pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
will be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
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6. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls, is controlled by or is under common control with such
holder (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses (including any amounts paid in any settlement
effected with the Company's consent, which consent shall not be unreasonably
withheld) caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or any violation by the Company of any
federal, state or common law risk applicable to the Company and relating to
action required of or inaction by the Company in connection with such
registration, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder that it is for use in the preparation of
such registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto; provided that the obligation to
indemnify will be individual to each holder and will be limited to the net
amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (but any failure to so notify the indemnifying
party shall not relieve it of any liability which it may otherwise have to any
indemnified party unless such failure shall materially adversely affect the
defense of such claim) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
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indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld) . An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in such proportion as is appropriate to
reflect the relative benefits received by, and the relative fault of, the
Company and such indemnified party in the event the Company's indemnification is
unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any overallotment or "green shoe" option
requested by the managing underwriter(s)) and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
(b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph 4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such paragraph 4(e).
(c) In the event any registration hereunder is underwritten and the
managing underwriters advise the Company in writing that in their opinion the
Company's capital stock structure would adversely affect the marketability of
the offering, each holder of Registrable Securities shall consent to and vote
for a recapitalization, reorganization and/or exchange of the Company's capital
stock into securities that the managing underwriters and the Company's Board of
Directors find acceptable and shall take all necessary or desirable actions in
connection with the consummation of the recapitalization, reorganization and/or
exchange; provided that the resulting securities reflect and are consistent with
the rights and preferences set forth in the Company's Certificate of
Incorporation as in effect immediately prior to such underwritten offering.
8. CURRENT PUBLIC INFORMATION. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the
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Securities Act or the Securities Exchange Act, the Company will use reasonable
best efforts to file all reports required to be filed by it under the Securities
Act and the Securities Exchange Act and the rules and regulations adopted by the
Securities and Exchange Commission thereunder, and will take such further action
as any holder or holders of Registrable Securities may reasonably request, all
to the extent required to enable such holders to sell Registrable Securities
pursuant to Rule 144 adopted by the Securities and Exchange commission under the
Securities Act (as such rule may be amended from time to time) or any similar
rule or regulation hereafter adopted by the Securities and Exchange Commission.
9. DEFINITIONS.
(a) "CLASS A COMMON" means the Company's Class A Common Stock, par
value $.01 per share.
(b) The term "CLASS B COMMON" means the Company's Class B Common
Stock, par value $.01 per share.
(c) The term "CLASS B REGISTRABLE SECURITIES" means (i) any Class B
Common issued pursuant to the Recapitalization Agreement, (ii) any of the
Company's common stock issued or issuable with respect to the securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization, and (iii) any other shares of the Company's Class B
Common held by Persons holding securities described in clauses (i) or (ii)
above. As to any particular Class B Registrable Securities, such securities will
cease to be Class B Registrable Securities when they have been distributed to
the public pursuant to a Public Sale. For purposes of this Agreement, a Person
will be deemed to be a holder of Class B Registrable Securities whenever such
Person has the right to acquire directly or indirectly such Class B Registrable
Securities (upon conversion, exchange or exercise in connection with a transfer
of securities or otherwise, but disregarding any restrictions or limitations
upon the exercise of such right), whether or not such acquisition has actually
been effected.
(d) The term "CLASS C COMMON" means the Company's Class C Common
Stock, par value $.01 per share.
(e) The term "CLASS D-1 COMMON" means the Company's Class D-1 Common
Stock, par value $.01 per share.
(f) The term "CLASS D-2 COMMON" means the Company's Class D-2 Common
Stock, par value $.01 per share.
(g) The term "CLASS E COMMON" means the Company's Class E Common
Stock, par value $.01 per share.
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(h) The term "PERSON" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
The term "PUBLIC SALE" means any sale of the Company's common
stock to the public pursuant to an offering registered under the Securities Act
or to the public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 adopted under the Securities Act.
(i) The term "QUALIFIED PUBLIC OFFERING" means the sale in an
underwritten public offering under the Securities Act of equity securities of
the Company providing net proceeds to the Company and the selling equity holders
of at least $20 million.
(j) The term "REGISTRABLE SECURITIES" means (i) any Class A Common,
Class B Common, Class C Common, Class D-1 Common, Class D-2 Common and Class E
Common issued pursuant to the Recapitalization Agreement, (ii) any of the
Company's common stock issued or issuable with respect to the securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization, and (iii) any other shares of the Company's common
stock held by Persons holding securities described in clauses (i) or (ii) above
(other than any such shares which have been previously distributed pursuant to a
Public Sale). As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have been distributed to the public
pursuant to a Public Sale. For purposes of this Agreement, a Person will be
deemed to be a holder of Registrable Securities whenever such Person has the
right to acquire directly or indirectly such Registrable Securities (upon
conversion, exchange or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected.
(k) The term "SECURITIES ACT" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
(l) The term "SECURITIES AND EXCHANGE COMMISSION" includes any
governmental body or agency succeeding to the functions thereof.
(m) The term "SECURITIES EXCHANGE ACt" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force.
(n) The term "STOCKHOLDERS AGREEMENT" means the Investor Stockholder
Agreement, of even date herewith, entered into by and among the Company and the
Investors.
(o) The term "SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that
-12-
<PAGE>
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control a
majority of the managers or general partners of such limited liability company,
partnership, association or other business entity.
(p) The term "WARRANT" means the warrant issued pursuant to the
Warrant Agreement by and between J.L. French Automotive Castings, Inc. and U.S.
Bank Trust National Association dated on the date hereof.
(q) The term "WARRANT REGISTRABLE SECURITIES" means (i) any
Registrable Security held by holders of the Warrant, (ii) any of the Company's
common stock issued or issuable with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of the Company's common stock held by
Persons holding securities described in clauses (i) or (ii) above. As to any
particular Warrant Registrable Securities, such securities will cease to be
Warrant Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to the
public through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force). For purposes of
this Agreement, a Person will be deemed to be a holder of Warrant Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such Warrant Registrable Securities (upon conversion, exchange or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
Unless otherwise stated, other capitalized terms contained herein have
the meanings set forth in the Recapitalization Agreement.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
take any action, or permit any change to occur, with respect to its securities
which would materially and adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
-13-
<PAGE>
(c) REMEDIES. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the holders of at least a majority of the
Registrable Securities. To the extent that any amendment or waiver of this
Agreement disproportionately and adversely affects the rights of the holders of
any class of Registrable Securities relative to rights of the holders of any
other class of Registrable Securities, the prior written consent of the holders
of at least a majority of the disproportionately and adversely affected class of
Registrable Securities shall be required to effect such amendment or waiver. To
the extent that any amendment or waiver adversely affects the rights of the
holders of Class B Registrable Securities, the prior written consent of the
holders of at least a majority of the Class B Registrable Securities will be
required.
(e) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(f) SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(g) COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
(h) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(i) GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits and schedules hereto will
be governed by the internal law, and not the law of conflicts, of Delaware.
-14-
<PAGE>
(j) NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Investors and to the Company at the addresses
specified for notices in the Recapitalization Agreement or to such other address
or to the attention of such other Person as the recipient party has specified by
prior written notice to the sending party.
* * * * *
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: Thomas C. Dinolfo
Its:
--------------------------------------
ONEX American Holdings LLC
By: /s/ Eric J. Rosen
Its:
--------------------------------------
J2R PARTNERS III
By: /s/ Carl E. Nelson
Its:
--------------------------------------
BANCAMERICA CAPITAL INVESTORS II, L.P.
By: BancAmerica Capital Management II, L.P.
Its: General Partner
By: BACM II, GP, LLC
Its: General Partner
By: Signature Illegible
Its: Authorized Member
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Jerome R. Baier
Its:______________________________________
NORWEST EQUITY CAPITAL, L.L.C.
By: Itasca NEC, L.L.C., Managing Member
By: Signature Illegible
<PAGE>
ROBERT W. BAIRD & CO. INCORPORATED
By: Signature Illegible
Its:
-------------------------------------
BCP II AFFILIATES FUND LIMITED
PARTNERSHIP
By: Robert W. Baird & Co. Incorporated
Its: General Partner
By: Signature Illegible
Its:
-------------------------------------
BAIRD CAPITAL PARTNERS II LIMITED
PARTNERSHIP
By: Baird Capital Partners Management Company,
L.L.C.
Its: General Partner
By: Signature Illegible
Its:
-------------------------------------
RANDOLPH STREET PARTNERS II
By: Signature Illegible
Its:
-------------------------------------
WINDWARD/METROPOLITAN, L.L.C.
By: /s/ Gary L. Swenson
Its:
-------------------------------------
WINDWARD/PARK WACI, L.L.C.
By: /s/ Gary L. Swenson
Its:
-------------------------------------
-----------------------------------------
/s/ Charles M. Waldon
<PAGE>
------------------------------------------
/s/ S.A. Johnson
------------------------------------------
/s/ Dugald K. Campbell
------------------------------------------
/s/ Karl F. Storrie
------------------------------------------
/s/ Scott D. Rued
------------------------------------------
/s/ Robert R. Hibbs
------------------------------------------
/s/ Carl E. Nelson
------------------------------------------
/s/ David J. Huls
------------------------------------------
/s/ Mary L. Johnson
------------------------------------------
/s/ Judith A. Vijums
------------------------------------------
/s/ Dan F. Moorse
<PAGE>
U.S. BANK TRUST NATIONAL ASSOCIATION
By: Signature Illegible
Its:
-------------------------------------
<PAGE>
<PAGE>
SCHEDULE A
INVESTORS
ONEX American Holdings LLC, a Wyoming limited liability company
J2R Partners III a Minnesota general partnership
BancAmerica Capital Investors II, L.P.
The Northwestern Mutual Life Insurance company
Robert W. Baird & Co. Incorporated
BCP II Affiliates Fund Limited Partnership
Baird Capital Partners II Limited Partnership
Norwest Equity Capital, L.L.C.
Windward/Metropolitan, L.L.C.
Windward/Park WACI, L.L.C.
Charles M. Waldon
<PAGE>
<PAGE>
Exhibit 10.4
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of April 21, 1999 by and
between Hidden Creek Industries, a New York general partnership ("HCI"), and
J.L. French Automotive Castings, Inc., a Delaware corporation ("French").
BACKGROUND
French desires to receive financial and management consulting
services from HCI, and thereby obtain the benefit of the experience of HCI in
business and financial management generally and its knowledge of French and
French's financial affairs in particular. HCI is willing to provide financial
and management consulting services to French. Accordingly, the compensation
arrangements set forth in this Agreement are designed to compensate HCI for such
services.
NOW, THEREFORE, in consideration of the foregoing premises and
the respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, HCI and French hereby agree as follows:
TERMS
1. ENGAGEMENT. French hereby engages HCI as a financial and
management consultant, and HCI hereby agrees to provide financial and management
consulting services to French, all on the terms and subject to the conditions
set forth below.
2. SERVICES OF HIDDEN CREEK INDUSTRIES. HCI has provided
valuable services to French in connection with the consummation of the
transactions contemplated by the Transaction Agreement (as defined in Section 3
below). HCI hereby agrees during the term of this engagement to consult with
French's board of directors (the "Board") and the management of French and its
subsidiaries in such manner and on such business and financial matters as may be
reasonably requested from time to time by the Board, including but not limited
to:
(a) corporate strategy;
(b) budgeting of future corporate investments;
(c) acquisition and divestiture strategies; and
(d) debt and equity financings.
Members of the HCI Group will be available to serve on the Board and will devote
such time and attention to French's affairs as reasonably necessary to
accomplish the purposes of this Agreement. For purposes of this Agreement, the
"HCI Group" means S.A. Johnson, Scott D. Rued, Robert R. Hibbs, Carl E. Nelson,
Dave Huls, Daniel F. Moorse and such other persons as may be designated by HCI
from time to time, which persons shall be reasonably acceptable to French.
<PAGE>
3. COMPENSATION. (a) French agrees to pay to HCI as
compensation for services rendered to French with respect to the consummation of
the transactions contemplated by the Recapitalization Agreement, dated as of
March 29, 1999, by and between French and the stockholders listed on the
signature pages thereto and JLF Acquisition LLC (the "Transaction Agreement"), a
fee for management services equal to $3,000,000 payable upon the Closing (as
defined in the Transaction Agreement), (b) French agrees to pay to HCI as
compensation for services to be rendered by HCI hereunder, a fee equal to
$500,000 per year (the "Management Fee"), payable monthly in advance, commencing
on the first day of the first month following the Closing; provided, however,
that in the event the Closing does not occur on the last day of the month, then
HCI shall be entitled to receive a Management Fee for the period beginning on
the date on which the Closing occurred until the first day of the month
following the Closing in an amount equal to the product of (x) $41,666.67
multiplied by (y) a ratio, the numerator of which equals to the number of days
from and including the date on which the Closing occurred until the first day of
the month following the Closing, and the denominator of which equals the number
of days in the month in which the Closing occurred; provided, further, that on
January 1st of each calendar year during the term of the Agreement, the
Management Fee shall be increased by the percentage increase in the Consumer
Price Index for All Urban Consumers, U.S. City Average, for all items for the
preceding twelve calendar months, or if the U.S. government ceases to publish
such index, then by such index published by the U.S. government as is in HCI's
judgment most similar to such index, (c) French agrees to pay to HCI as
compensation for services to be rendered by HCI in connection with various
future transactions a reasonable and customary fee to be determined mutually and
in good faith by French and HCI, payable upon consummation of any such future
transaction. The Board may, at its sole discretion, elect to increase the amount
of the Management Fee. French shall promptly reimburse HCI for such reasonable
travel expenses and other direct out-of-pocket expenses as may be incurred by
HCI, its affiliates and their respective officers and employees in connection
with the acquisition and the rendering of services hereunder.
4. TERM. This Agreement shall be in effect for an initial term
of five years commencing on the date hereof, and shall be automatically renewed
thereafter on a year to year basis unless one party gives 30 days' prior written
notice of its desire to terminate this Agreement; provided, however, that this
Agreement shall terminate on the first to occur of (a) the date of the sale of
all or substantially all of French's assets (other than a sale to an affiliate
of French), (b) the date of the sale of all of the issued and outstanding
capital stock of French (other than a sale to an affiliate of French), or (c)
HCI giving French 30 days' prior written notice of termination. No termination
of this Agreement, whether pursuant to this paragraph or otherwise, shall affect
French's obligations with respect to the fees, costs and expenses incurred by
HCI in rendering services hereunder and not reimbursed by French as of the
effective date of such termination.
5. INDEMNIFICATION. French agrees to indemnify and hold
harmless HCI, its officers and employees against and from any and all loss,
liability, suits, claims, costs, damages and expenses (including attorneys'
fees) arising from their performance hereunder, except as a result of their
gross negligence or intentional wrongdoing.
- 2 -
<PAGE>
6. HCI AN INDEPENDENT CONTRACTOR. HCI and French agree that
HCI shall perform services hereunder as an independent contractor, retaining
control over and responsibility for its own operations and personnel. Neither
HCI nor its employees shall be considered employees or agents of French as a
result of this Agreement nor shall any of them have authority to contract in the
name of or bind French, except as expressly agreed to in writing by French.
7. CONFIDENTIAL INFORMATION. HCI acknowledges that the
information, observations and data obtained by it and its agents and employees
during the course of its performance under this Agreement concerning the
business plans, financial data and customer relations of French and its
subsidiaries (the "Confidential Data") are French's valuable, special and unique
assets. Therefore, it agrees that it will not, nor will it permit any of its
agents or employees to, use or disclose to any unauthorized person or use any of
the Confidential Data obtained by it during the course of HCI's performance
under this Agreement without French's prior written consent unless and to the
extent that (i) the Confidential Data becomes generally known to and available
for use by the public other than as a result of its acts or omissions to act or
(ii) such use or disclosure is required by any statute, rule, regulation or law
or any judicial or administrative body having jurisdiction.
8. NOTICES. Any notice, report or payment required or
permitted to be given or made under this Agreement by one party to the other
shall be deemed to have been duly given or made if personally delivered or, if
mailed, when mailed by registered or certified mail, postage prepaid, to the
other party at the following addresses (or at such other address as shall be
given in writing by one party to the other):
If to HCI:
Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attention: Carl E. Nelson
Telecopy: (612) 332-2012
If to French:
J.L. French Automotive Castings, Inc.
3101 South Taylor Drive
Sheybogan, WI 53802
Attention: President
Telecopy: (920) 458-4861
9. ENTIRE AGREEMENT; MODIFICATION. This Agreement (a)
contains the complete and entire understanding and agreement of HCI and
French with respect to the subject matter hereof; (b) supersedes all prior
and contemporaneous understandings, conditions and agreements, oral or
- 3 -
<PAGE>
written, express or implied, respecting the engagement of HCI in connection with
he subject matter hereof; and (c) may not be modified except by an instrument in
writing executed by HCI and French.
10. WAIVER OF BREACH. The waiver by either party of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach of that provision or any other
provision hereby.
11. ASSIGNMENT. Neither HCI nor French may assign its rights
or obligations under this Agreement without the express written consent of the
other.
12. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under, and is to be governed and construed in the accordance with
the internal laws (and not the law of conflicts) of the State of Delaware.
* * * *
- 4 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Management Agreement as of the date written above.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: /s/ Thomas C. Dinolfo
-----------------------------
Title:
-----------------------------
HIDDEN CREEK INDUSTRIES
By: /s/ Carl E. Nelson
-----------------------------
Title:
------------------------------
<PAGE>
Exhibit 10.5
[LETTERHEAD]
March 25, 1998
Mr. Thomas C. Dinolfo
JL French Corporation
3101 South Taylor Drive
PO Box 1024
Sheboygan, WI 53082-1024
Dear Tom:
As you are aware the offices in Dearborn are nearly ready for us to move in.
Accordingly, this provides you information related to the cost of your
leasehold improvements as well as my calculation of your pro-rata share of
monthly expenses.
1. I have attached a schedule provided by Ford Motor Land Development
Corporation which provides detail supporting the $102,677 expended
for improvements to the JL French section of the offices. The 2,569
square feet shown on this schedule represents usable square footage
and equates to 2,954 total rentable square feet (115% of useable
square footage per Ford). The original allowance for improvements was
$20 per rentable square foot or $59,080 dollars. The total overrun
for which you will be responsible is $43,597.
2. As shown in the enclosed Term Sheet, the total rentable square feet
under the lease is approximately 17,272. Your share based on 2,954
rentable square feet is 17.1%. Accordingly, your share of expenses
associated with the leased facility is as follows:
<TABLE>
<CAPTION>
TOTAL JL FRENCH SHARE
DESCRIPTION ANNUAL EXPENSE OF MONTHLY EXPENSE
----------- -------------- ------------------
<S> <C> <C>
Operating Expenses $ 86,357.40 $ 1,230,59
Property Taxes 24,130.07 344.57
Base Rent 284,988.00 4,061.08
-----------
Total Monthly
Lease Charges $ 5,636.24
-----------
-----------
</TABLE>
<PAGE>
I have been advised that we currently anticipate taking possession of the
leased premises on April 3, 1998. Accordingly, I am not requesting that you
forward payment at this time. Once we have been required to remit the payment
for improvements to Ford, I will notify you that the payment described under
paragraph 1 above is due. Also, once possession has been formally granted, I
will advise you of the prorated lease charges due for the month of April.
Thereafter, the total monthly lease charges will be due on or before the
first day of each successive calendar month during the five year term of the
lease.
If you have any questions or would like any additional information please
don't hesitate to call.
Sincerely,
/s/ Edward D. Corlett
- --------------------------------
Edward D. Corlett
Vice President of Finance
CC: Robert Barton
<PAGE>
TERM SHEET
BASIC LEASE PROVISIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Date: March , 1998
2. Landlord: Ford Motor Land Development Corporation
One Parklane Boulevard
Suite 1500 East
Dearborn, Michigan 48126
3. Tenant: American Bumper & Mfg. Co.
4. Section 1(c) Building: 500 Town Center Drive
Dearborn, Michigan 48126
5. Section 1(d) Premises: Approximately 17,272 Square Feet at
500 Town Center Drive
Suite 400
Dearborn, Michigan 48126
6. Estimated First Year Operating Expenses: $326,000.00
Tenant's Percentage Share of estimated
Operating Expenses: $ 86,357.40
7. Estimated First Year Property Taxes: $ 91,280.00
Tenant's Percentage Share of estimated
Operating Expenses: $ 24,180.07
8. Section 1(g) Tenant's Percentage Share: 26.49% of 65,200 Rental Square Feet
9. Section 2(a) Tenant's Commencement Date: April 1, 1998
10. Section 2(a) Term Expiration Date: March 31, 2003
</TABLE>
<PAGE>
11. Section 3(a) Base Rent:
<TABLE>
<CAPTION>
YEAR PER SQUARE FOOT YEARLY MONTHLY
<S> <C> <C> <C>
04/01/1998- $16.50 $284,988.00 $23,749.00
03/31/1999
04/01/1999- $16.50 $284,988.00 $23,749.00
03/31/2000
04/01/2000- $16.50 $284,988.00 $23,749.00
03/31/2001
04/01/2001- $17.00 $283,624.00 $24,468.67
03/31/2002
04/01/2002- $17.50 $302,260.00 $25,188.33
03/31/2003
</TABLE>
12. Section 4 Permitted Use: Sales and Administrative
Purposes
13. Section 32 Security Deposit: None
14. Section 34 Landlord's Address for Notices:
Ford Motor Land Development
Corporation
One Parklane Boulevard
Suite 1500 East
Dearborn, Michigan 48126
Tenant's Address for Notices:
American Bumper & Mfg. Co.
141 N. Beardsley Road
Ionia, MI 48846
Attn: Edward D. Corlett
Chief Financial Officer
15. Section 39 Broker or Agent: None
Additional Provisions:
16. Section 42 (a) Provided Tenant shall not be in default
of any terms or conditions of this Lease.
Tenant shall have one option to extend the
Lease Term (such extension being called the
"Extended Term") for three (3) years by
giving Landlord written notice of its
intention to do so at least six (6) months
prior to the end of the Initial Term upon
the same terms and conditions as herein
stated and at the rental rate specified
below. Tenant's failure to give notice
shall be deemed a waiver of Tenant's right
to extend.
(b) Within thirty (30) days following
Tenant's notice to Landlord to extend the
term of this Lease, Landlord shall notify
Tenant of the proposed Extended Term Rent
which shall be equal to the then Fair Market
Rental Value of the Demised Premises. Fair
Market Rental Value shall be delined as the
annual rental (projected from the date of
the commencement of the payment of the
<PAGE>
annual rental to which it applies) which
Tenant would expect to pay and Landlord
would expect to receive under leases of
space of comparable size and quality to the
Premises and as provided for in, and on
terms and conditions to, this lease
covering premises similar to the Premises
(without regard to free rent and other
inducements that Tenant might be able to
receive if Tenant relocated from the
Building.) Tenant shall have thirty (30)
days following the receipt of Landlord's
notice of the determination of the proposed
Extended Term Rent in which to:
(i) accept such determination; or
(ii) elect to have such determination
made by appraisal as described
below; or
(iii) withdraw its notice of exercise
of option to extend
IN WITNESS WHEREOF, Landlord and Tenant have executed the Lease to which
this Term Sheet is attached by signing and dating this Term Sheet and by
initialing the first page of the Lease.
Landlord: Tenant:
Ford Motor Land Development AMERICAN BUMPER & MFG. CO.,
Corporation, A Delaware corporation a Michigan corporation
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
Dated: Dated:
----------------------- -----------------------
<PAGE>
Exhibit 10.6
DATED 1st APRIL 1997
MORRIS ASHBY plc
- and -
P A BUCKLEY ESQ
---------------------------------------
SERVICE AGREEMENT AS
CHIEF EXECUTIVE
---------------------------------------
EVERSHEDS
SOLICITORS
10 NEWHALL STREET
BIRMINGHAM
B3 3LX
<PAGE>
CONTENTS OF SERVICE AGREEMENT
<TABLE>
<CAPTION>
CLAUSE PAGE
- ------ ----
<S> <C> <C>
1. Meaning of words used 1
2. Previous agreements 3
3. Appointment, term and notice 3
4. Duties 4
5. Place of work 4
6. House of work 5
7. Remuneration 5
8. Expenses 5
9. Motor car 5
10. Pension and other benefits 6
11. Holidays 7
12. Conflict of interest 7
13. Share dealings 8
14. Restrictive covenants 8
15. Confidentiality 12
16. Patents 13
17. Copyright 14
18. Incapacity 14
19. Termination 16
20. Deductions 17
21. Sale or reconstruction of the Company 18
22. Return of documents and property 18
23. Resignation as director 19
24. Rights following termination 19
25. Disciplinary and grievance procedures 20
26. Notices 20
27. Miscellaneous 20
</TABLE>
<PAGE>
THIS AGREEMENT is made on 1st April 1997 BETWEEN
(1) MORRIS ASHBY plc (Reg. No. 1598070) whose registered office is at
16 Freebournes Road, Wirtharm, Essex, CM8 3DX ("the Company") and
(2) PAUL ANTHONY BUCKLEY of Lothloren, The Ridge, Little Baddow, Chelmsford,
Essex ("the Director")
WHEREBY IT IS AGREED as follows:
MEANING OF WORDS USED
1.1 In this Agreement and the Schedule the following expressions have the
following meanings:
"Board" the Board of Directors of the Company from time to
time and any other person authorised by the Board as
its representative for the purposes of this Agreement;
"Group Company" any holding company for the time being of the Company
or any subsidiary for the time being of the Company
or of any such holding company (for which purpose
"holding company" and "subsidiary" have the meanings
ascribed to them by Section 736 of the Companies Act
1985 as amended by the Companies Act 1989);
"Group" the Company and all those Group Companies wherever
registered or incorporated for which the
<PAGE>
Director performs duties and/or functions
pursuant to Clause 4;
"Commencement Date" 1st April 1997
"Financial Period" an accounting reference period of the Company
determined in accordance with the provisions
of Sections 224 and 226 of the Companies
Act 1985.
"the 1996 Act" the Employment Rights Act 1996;
"The London Stock Exchange" the International Stock Exchange of Great
Britain and the Republic of Ireland Limited;
"PAYE deductions" deductions made to comply with regulations
made under Section 203 Income and Corporation
Taxes Act 1988 and with any obligations to
deduct national insurance contributions;
"recognised investment exchange" has the meaning in Section 207 of the
Financial Services Act 1986
1.2 References herein to "Clauses", "sub-clauses" and "the Schedule" are to
clauses and sub-clauses of this Agreement and the Schedule to this Agreement
unless otherwise specified.
1.3 Unless otherwise required words denoting the singular include the plural
and vice versa.
1.4 References in this Agreement to statutory provisions include all
modifications and re-enactments of them and all subordinate legislation made
under them.
1.5 Clause headings are included in this Agreement for convenience only and
do not affect its construction.
2
<PAGE>
PREVIOUS AGREEMENTS
2.1 This Agreement contains the entire and only agreement and will govern
the relationship between the Company and the Director from the Commencement
Date in substitution for all previous agreements and arrangements whether
written, oral or implied between the Company or any Group Company and the
Director relating to the services of the Director all of which will be deemed
to have terminated by consent with effect from the Commencement Date. The
Director and the Company acknowledge that in entering into this Agreement
neither has relied on any representation or undertaking by the other whether
oral or in writing except as expressly incorporated in this Agreement.
APPOINTMENT, TERM AND NOTICE
3.1 The Company will employ the Director and the Director will serve the
Company as Chief Executive.
3.2 The said appointment will commence on the Commencement Date and will
continue thereafter unless and until the employment is terminated by either
party giving to the other not less than two years written notice ("the notice
period").
3.3 The Director agrees that at its absolute discretion the Company may
terminate the Director's employment under this Agreement with immediate
effect by paying to the Director, in full and final settlement of all claims
which he has or may have against the Company or any Group Company or any
director, employee or agent of the Company or any such Group Company under or
arising out of his employment with the Company or any such Group Company, the
termination of his employment or otherwise, in lieu of the notice period or
part of the notice period if at the Company's request the Director has worked
during part of the notice period a termination payment equal the salary
referred to in Clause 7.1 to which he would have been entitled during the
balance of the notice referred to in Clause 3.2.
3.4 Notwithstanding the provisions of Clause 3.2, the Director's employment
under this Agreement will automatically terminate on his 60th birthday.
3.5 The Director's continuous employment with the Company for the purposes
of the 1996 Act commenced on 19 March 1982. His employment with Morris Ashby
Casings
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Limiting counts for the purposes of the 1996 Act as part of the Director's
period of continuous employment.
DUTIES
4.1 The Director will carry out such duties and functions, exercise such
powers and comply with such instructions in connection with the business of
the Company and the Group Companies as the Board determines from time to
time. Except when prevented by illness, accident or holiday as provided below
the Director will devote the whole of his time, attention and skill to the
affairs of the Company and where appropriate the Group Companies and use his
best endeavours to promote their interests provided that without prejudice to
sub-clause 4.4 the Board may at any time require the Director to cease
performing and exercising all or any of such duties, functions or powers.
4.2 The Director will if and so long as he is so required by the Company
carry out duties on for and/or act as director, officer or employee of any
other Group Company. The duties attendant on any such appointment will be
carried out by the Director as if they were duties to be performed by him on
behalf of the Company under this Agreement.
4.3 The Director will at all times promptly give to the Board (in writing if
requested) all information, explanations and assistance that the Board may
require in connection with the business or affairs of the Company and the
Group and his employment under this Agreement.
4.4 The Company may at any time appoint any person or persons to act jointly
with the Director to discharge his duties and functions hereunder.
PLACE TO WORK
5. The Director will perform his duties principally at the Registered
office of the Company or with his prior consent at such other place of
business of the Company or of any Group Company as the Company requires
whether inside or outside the United Kingdom but the Company will not require
him to go to or reside anywhere outside the United Kingdom except for
occasional visits in the ordinary course of his duties.
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HOURS OF WORK
6. The Company's normal office hours are from 9am to 5pm Monday to Friday
but the Director will be required to work outside these hours without
additional remuneration in order to meet the requirements of the business and
for the proper performance of his duties.
REMUNERATION
7.1 The Company will pay the Director from the Commencement Date until 31
March 1998, a salary of (francs)75,000 per annum and from 1 April 1998, a
salary of (francs)150,000 per annum (or at such higher rate as may from time
to time be notified to him by the Board) which salary will accrue form day to
day and be payable in arrears by equal monthly instalments on the last day of
each month.
7.2 The Director's salary will be subject to upwards only reviews by the
Board which will be effective on and from 1st April in each year during the
Director's employment under this Agreement provided that the increase (if
any) of such salary will be matter to be decided at the Board's absolute
discretion.
7.3 The salary referred to in Clause 7.1 will be inclusive of any
director's fees to which the Director may be entitled as a director of the
Company or of any Group Company.
7.4 Until 31 March 1998, the Director will be entitled to the bonus (or
bonuses) set out in the Schedule whilst serving as a Director of the Company
or of any Group Company. The Director will also be entitled to PSBII in
relation to the performance of the Morris Ashby Castings Division of the
Company being a monthly bonus payable the following month to all permanent
employees of that Division in proportion to his monthly gross pay. As from
1 April 1998, the Director will be entitled to "the Group Bonds" as referred
to in the Schedule but not to "the Divisional Bonus" nor to PSBII.
EXPENSES
8. The Director will be reimbursed all out of pocket expenses reasonably and
properly incurred by him in the performance of his duties under this Agreement
on hotel, travelling, entertainment and other similar items provided that he
complies with the Company's then
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current guidelines relating to expenses and produces to the Company all
relevant vouchers in respect of such expenses.
MOTOR CAR
9.1 During the Director's employment under this Agreement and whilst the
Director is legally entitled to drive the Company will provide him with a
motor car in accordance with the Company's Car Policy as amended from time to
time for use in the performance of his duties under this Agreement and
commensurate with his status. The Company will pay all costs of road fund
license, insurance premiums and running expenses in respect of the motor car
included fuel, oil, maintenance and repairs.
9.2 The Director will be permitted reasonable use of the motor car for his
own private purposes (including use on holidays).
9.3 The Director will take good car of the motor car and procure that the
provisions and conditions of any policy of insurance relating to it are
observed in all respects and will be all times conform with all regulations
which may from time to time be imposed by the Company in regard to motor cars
provided by the Company for use by its officers or employees.
9.4 On the termination of his employment under this Agreement for any reason
the Director will immediately return the motor car, its keys and all
documents relating to it to the Company at its principal place of business or
as otherwise directed by the Company.
PENSION AND OTHER BENEFITS
10.1 The Director will be entitled to continue to be a member of the Morris
Ashby plc Scheme ("the Pension Scheme") subject to and upon the rules of the
Pension Scheme from time to time in effect. A copy of the rules of the
Pension Scheme can be obtained on written application to the Company
Secretary. There is a contracting out certificate in force in respect of the
Director's employment under the provisions of the Pensions Scheme Act 1993.
10.2 During his employment the Director will be entitled to participate at
the Company's expense in the Company's:
10.2.1 life insurance scheme;
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10.2.2 private medial expenses insurance scheme for the benefit of the
Director and his wife and all dependent children in full time education
under the age of 25;
subject to the rules of the said schemes from time to time (and any
replacement schemes provided by the Company) and subject to the Director (and
where appropriate his wife and dependent children) being eligible to
participate in or benefit from such schemes pursuant to their rules.
HOLIDAYS
11.1 In addition to normal public holidays the Director will be entitled to
25 working days' paid holiday in each holiday year such holiday to be taken
at such time or times as may be approved by the Board.
11.2 For the purposes of this Clause "holiday year" means the period form
1st January to 31st December in each year. Any holiday entitlement which is
not taken by the end of the holiday year to which it relates will be lost and
may not be carried forward.
11.3 The Director will be entitled to be paid in lieu of any holiday which
is untaken at the date on which his employment terminates for any reason. The
Company will not be entitled to recover from the Director a sum in respect of
any holiday taken in excess of the Director's entitlement during the year in
which him employment terminates.
CONFLICT OF INTERESTS
12.1 The Director will disclose promptly to the Board in writing all his
interests in any business other than that of the Company and the Group and
will notify the Board immediately of any change in his external interests.
Except with the written consent of the Board the Director will not during his
employment under this Agreement be directly or indirectly engaged, concerned
or interested whether as principal, servant or agent (on his own behalf or on
behalf of or in association with any other person) in any other trade,
business or occupation competing in any material respect with the business
for the time being of the Company or any Group Company other than the
business of the Company or any Group
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Company provided that the Director will not be precluded from being
interested for investment purposes only as a member, debenture holder or
beneficial owner of any stock, shares or debentures which are listed or dealt
in on a recognised investment exchange and which do not represent more than
five per cent of the total share or loan capital from time to time in issue
in such company.
12.2 The Director will not during his employment introduce to any other
person, firm, company or organisation business of any kind with which the
Company or any other Group Company for which he has performed services under
this Agreement is able to deal and he will not have any financial interest
in, or derive any financial or other benefit from, contracts or transactions
entered into by the Company or any other Group Company for which he has
performed services under this Agreement with any third party without first
disclosing such interest or benefit to the Board and obtaining its written
approval.
SHARE DEALINGS
13.1 The Director will comply (where relevant) with every rule of law, every
regulation of The London Stock Exchange and every requirement, recommendation
or regulation of the Company from time to time in force in relation to
dealings with shares, debentures or other securities of the Company or any
Group Company and unpublished price-sensitive information affecting the
shares, debentures or other securities of any such company. In relation to
overseas dealings, the Director will also comply with all laws of the state
and all regulations of the stock exchange, market or dealing system in which
such dealings take place.
13.2 The Director will not (and will procure so far as he is able that his
wife and children do not) deal or become or cease to be interested (within
the meaning of Part I of Schedule XIII to the Companies Act 1985) in any
securities of the Company except in accordance with the Model Code of The
London Stock Exchange for transactions in securities by directors and others
and any legislation, regulations or rules for securities transactions
applicable from time to time.
RESTRICTIVE COVENANTS
14.1 In this Clause 14 the following expressions have the following meanings:
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"Critical person" any person who was an employee, agent, director,
consultant or independent contractor employed,
appointed or engaged by the Company or any
Relevant Group Company at any time within the
Relevant Period who by reason of such employment,
appointment or engagement and in particular
his/her seniority and expertise or knowledge of
trade secrets or confidential information of the
Company or any Group Company or knowledge of or
influence over the clients, customers or
suppliers of the Company or any Group Company is
likely to be able to assist or benefit a
business in or proposing to be in competition
with the Company or any Relevant Group Company;
"Relevant Customer" any person, firm company or organisation who or
which at any time during the Relevant Period is
or was:
(i) negotiating with the Company or a Relevant
Group Company for sale or supply of Relevant
Products or Services; or
(ii) a client or customer of the Company or any
Relevant Group Company for the sale or supply of
Relevant Products or Services; or
(iii) in the habit of dealing with the Company
or any Relevant Group Company for the sale of
supply of Relevant Products or Services
and in each case with whom or which the Director
was directly concerned or connected or of whom or
which the Director had personal knowledge during
the Relevant Period in the course of his
employment hereunder;
"Relevant Group Company" any Group Company (other than the Company) for
which the Director has performed services under
this Agreement or for which he has had
operational/management responsibility at any
time during the Relevant Period;
"Relevant Period" the period of 12 months immediately before the
Termination Date;
"Relevant Products or products or services which are of the same kind as
Services" or of a materially similar kind to or competitive
with any products or services sold or supplied
by the Company or any Relevant Group Company
within the Relevant Period and with which sale or
supply the Director was directly concerned or
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connected or of which he had personal knowledge
during the Relevant Period in the course of his
employment hereunder;
"Termination Date" the date on which the Director's employment
under this Agreement terminates and references to
"from the Termination Date" mean from and
including the date of termination.
"Restricted Territory" The United Kingdom of Great Britain and Northern
Ireland.
14.2 The Director will not without the prior written consent of the Company
directly or indirectly and whether alone or in conjunction with or on behalf
of any other person and whether as a principal, shareholder, director,
employee, agent, consultant, partner or otherwise:
14.2.1. within the Restricted Territory for a period of 12 months from
the Termination Date be engaged, concerned or interested in, or
provide technical, commercial or professional advice to, any
other business which supplies Relevant Products or Services in
competition with the Company or any Relevant Group Company
provided that this restriction does not apply to prevent the
Director from holding shares or other securities in any company
which is quoted, listed or otherwise dealt in on a recognised
investment exchange or other securities market and which confer
not more than 5% of the votes which could be cast at a general
meeting of such company;
14.2.2 within the Restricted Territory for a period of 12 months from
the Termination Date be engaged, concerned or interested in any
business which at any time during the Relevant Period has
supplied Relevant Products or Services to the Company or any
Relevant Group Company or is or was at any time during the
Relevant Period a Relevant Customer of the Company or any
Relevant Group Company if such engagement, concern or interest
causes or would cause the supplier to cease or materially
reduce its supplies to the Company (or any Relevant Group
Company as the case may be) or the Relevant Customer to cease or
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materially to reduce its orders or contracts with the Company or
any Relevant Group Company; or
14.2.3 for a period of 12 month from the Termination Date so as to
compete with the Company or any Relevant Group Company canvass,
solicit or approach or cause to be canvassed, solicited or
approached any Relevant Customer for the sale or supply of
Relevant Products or Services or endeavour to do so; or
14.2.4 for a period of 12 months from the Termination Date so as to
compete with the Company or any Relevant Group Company deal or
contract with any Relevant Customer in relation to the sale or
supply of any Relevant Products or Services, or endeavour to do
so; or
14.2.5 for a period of 12 months from the Termination date solicit,
induce or entice away from the Company or any Relevant Group
Company or, in connection with any business in or proposing to
be in competition with the Company or any Relevant Group
Company, employ, engage or appoint or in any way cause to be
employed, engaged or appointed a Critical Person whether or not
such person would commit any breach of his or her contract of
employment or engagement by leaving the service of the Company
or any Relevant Group Company;
14.2.6 use in connection with any business any name which includes the
name of any Group Company or any colourable imitation of it.
14.3 Whilst the restrictions in this Clause 14 (on which the Director has
had an opportunity to take independent advice as the Director hereby
acknowledges) are regarded by the parties as fair and reasonable, it is hereby
declared that each of the restriction in this Clause 14 is intended to be
separate and severable. If any restriction is held to be unreasonably wide
but would be valid if part of the wording (including in particular but without
limitation the defined expressions referred to in Clause 14.1) were deleted,
such restriction will apply with so much of the wording deleted as may be
necessary to make it valid.
14.4 If the Director breaches any of the provisions in this Clause 14 the
Company will be entitled by written notice to the Director to extend the
period during which the provisions
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of Clause 14 which have been breached apply by an equivalent period to that
during which the breach or breaches have continued, such additional period to
commence on the date on which the said period would have otherwise expired.
The Director hereby agrees that if the Company so extends the period of any
such restriction, this will not prejudice the right of the Company to apply
to the Courts for injunctive relief in order to compel the Director to comply
with the provisions of this Clause 14 and/or damages, as the case may be.
14.5 For the purposes of Clause 14 and 15 the Company has entered into this
Agreement as agent for and trustee of all Relevant Group Companies.
14.6 If the Director applies for or is offered a new employment, appointment
or engagement, before entering into any related contract the Director will
bring the terms of this Clause 14 and Clauses 3,4,15,16,17 and 19.2 to the
attention of a third party proposing directly or indirectly to employ,
appoint or engage him.
CONFIDENTIALITY
15.1 The Director acknowledges that in the ordinary course of his employment
he will be exposed to information about the Company's business and the
business of other Group Companies and that of the Company's and the Group
Companies' suppliers and customers which amounts to a trade secret, is
confidential or is commercially sensitive and which may not be readily
available to others engaged in a similar business to that of the Company or
any of the Group Companies or to the general public and which if disclosed
will be liable to cause significant harm to the Company or such Group
Companies. The Director has therefore agreed to accept the restrictions in
this Clause 15.
15.2 Without prejudice to Clause 15.3 or 15.4 and subject to Clause 15.3 the
Director will not during the period of his employment with the Company:
15.2.1 sell or seek to sell to anyone information acquired by him in
the course of his employment with the Company;
15.2.2 obtain or seek to obtain any financial advantage (direct or
indirect) from disclosure of such information.
15.3 The Director will not either during his employment or after its
termination without limit in time for his own purposes or for any purposes
other than those of the Company or any Group Company (for any reason and in
any manner) use of divulge or communicate to
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any person, firm, company or organisation except to those officials of any
Group Company whose province it is to know the same any secret or
confidential information or information constituting a trade secret acquired
or discovered by him in the course of his employment with the Company
relating to the private affairs or business of the Company or any Group
Company or their suppliers, customers, management or shareholders.
15.4 The provisions of this Clause 15 are without prejudice to the duties and
obligations of the Director to be implied into this Agreement at common law.
In addition to the restrictions in Clause 14 and this Clause 15 the Director
hereby agrees that at the request and expense of the Company he will enter
into a direct agreement or undertaking with any such Group Company whereby he
will accept restrictions and provisions corresponding to the restrictions and
provisions in Clause 14 and this Clause 15 (or such of them as may be
appropriate in the circumstances) in relation to such information and such
area and for such period as such Group Company may reasonably require for the
protection of its legitimate interests.
PATENTS
16.1 The Director must disclose immediately to the Company any discovery or
invention or secret process or improvement in procedure made or discovered by
the Director during his employment in connection with or in any way affecting
or relating to the business of the Company or any Group Company or capable of
being used or adapted for use in or in connection with any such company
("Inventions") which Inventions will belong to and be the absolute property
of the Company or such other person, firm, company or organisation as the
Company may require.
16.2 If requested by the Board (whether during or after the termination of
his employment) the Director will at the expense of the Company apply or join
in applying for letters patent or other similar protection in the United
Kingdom or any other part of the world for all Inventions and will do
everything necessary (including executing documents) for vesting letters
patent or other similar protection when obtained and all right and title to
and interest in all Inventions in the Company absolutely and as sole
beneficial owner or in such other person, firm, company or organisation as
the Company may require.
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16.3 The Director will (both during and after the termination of his
employment) at the Company's expense anywhere in the world and at any time
promptly do everything (including executing documents) that may be required
by the Board to defend or protect for the benefit of the Company all
Inventions and the right and title of the Company to them.
16.4 The Director hereby irrevocably authorises the Company to appoint a
person to execute any documents and to do everything necessary to effect his
obligations under this Clause 16 on his behalf.
16.5 The provisions of Clause 16.1 to 16.3 (inclusive) are without prejudice
to the provisions of the Patents Act 1977.
COPYRIGHT
17.1 The entire copyright and all similar rights (including future
copyright, the right to register trade marks or service marks and the right
to register designs and design rights) throughout the world in works of any
description produced by the Director in the course of or in connection with
his employment ("Works") will vest in and belong to the Company absolutely
throughout the world for the full periods of protection available in law
including all renewals and extensions.
17.2 The Director will (both during and after the termination of his
employment) at the Company's request and expense anywhere in the world and at
any time promptly do everything (including executing documents) that may be
required by the Board to assure, defend or protect the rights of the Company
in all Works.
17.3 The Director hereby irrevocably authorises the Company to appoint a
person to execute any documents and to do everything necessary to effect the
obligations of the Director under this Clause 17 on the Director's behalf.
17.4 For the purposes of Clause 16 and Clause 17 the Director hereby
irrevocably and unconditionally waives in favour of the Company the moral
rights conferred on him by Chapter IV Part 1 of the Copyright Designs and
Patents Act 1998 in respect of any Inventions or Works in which the copyright
is vested in the Company under Clause 16, this Clause 17 or otherwise.
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INCAPACITY
18.1 If the Director is absent from his duties as a result of illness or
injury he will notify the Company Secretary as soon as possible and complete
any self-certification forms which are required by the Company. If the
incapacity continues for a period of seven days or more he will produce to
the Company a medical certificate to cover the duration of such absence.
18.2 Subject to the rest of Clause 18 and to 19.1.7 and subject to the
receipt of the appropriate certificates in accordance with Clause 18.1, if
the Director is absent form his duties as a result of illness or injury he
will be entitled to payment of his salary at the full rate in respect of such
illness or injury for a period (in total) of no more than 26 weeks in any
period of 12 months (whether the absence is intermittent or continuous).
Thereafter the Director will not be entitled to any further payment from the
Company or any other Group Company (other than Statutory Sick Pay) until he
has returned to work and completed six months' continuous service with no
absences from work other than agreed holidays.
18.3 If the Director is absent from work because of any injury or condition
(physical or mental and whether or not sustained in the course of his duties)
caused wholly or partly by any act or omission of any person, firm, company
or organisation (other than the Company or any Group Company) from whom the
Director may be or become entitled to recover damages or compensation, any
sum paid by the Company to the Director in respect of the said absence will
be an interest free loan (subject to any limit imposed under the Companies
Act 1985 or other relevant legislation) to the Director repayable immediately
by the Director to the Company on recovery by him of any such damages or
compensation.
18.4 If the Director has been absent from work because of any injury or
condition caused wholly or partly by the Company or any Group Company or any
person for whom the Company or any Group Company is vicariously liable and
for which the Director may be or become entitled to recover damages or
compensation, any such damages or compensation payable will be reduced by the
amount of any sick pay (statutory or otherwise) paid to him any by the
pension received or receivable by him in the period in respect of which such
damages or compensation are calculated.
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18.5 The remuneration paid under Clause 18.2 will include any Statutory Sick
Pay payable and when this is exhausted will be reduced by the amount of any
Social Security Sickness Benefit or other benefits recoverable by the
Director (whether or not recovered).
18.6 Whether or not the Director is absent by reason of sickness, injury or
other incapacity the Director will at the request of the Board agree to have
a medical examination performed by a doctor appointed and paid for by the
Company and the Director hereby authorises the Board to have unconditional
access to any report or reports (including copies) produced as a result of
any such examination as the Board may from time to time require and
entitlements to salary pursuant to Clause 18.2 will be conditional on the
Director complying with the terms of this Clause 18.6.
TERMINATION
19.1 The Company may terminate the Director's employment immediately by
summary notice in writing (notwithstanding that the Company may have allowed
any time to elapse or on a former occasion may have waived its rights under
this Clause) if he:--
19.1.1 commits, repeats or continues any breach of any part of this
Agreement or his obligations under it;
19.1.2 in the performance of his duties under this Agreement or
otherwise commits any act of gross misconduct or serious incompetence
or does or omits to do anything else which is prejudicial to the
interests of the Company or any Group Company;
19.1.3 adversely prejudices or because of his behaviour is likely in
the reasonable opinion of the Board to prejudice adversely the
interests or reputation of the Director, the Company or any Group
Company;
19.1.4 has committed any criminal offence involving dishonesty or
violence other than an offence which does not in the reasonable opinion
of the Board affect his position under this Agreement;
19.1.5 becomes bankrupt or enters into or make any arrangement or
composition with or for the benefit of his creditors generally;
19.1.6 becomes of unsound mind;
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19.1.7 becomes incapacitated from performing all or any of his duties
under this Agreement by illness, injury or otherwise for a period
exceeding (in total) 26 weeks (or such longer period as the Company may
agree) in any period of 12 months from performing all or any of his
duties under this Agreement; or
19.1.8 becomes prohibited by law from being a director of a company or
if the Director ceases to be a director of the Company without the
consent or concurrence of the Company.
19.2 Without prejudice to Clause 4.1 after notice of termination has been
given by either party pursuant to Clause 3.2 or if the Director seeks to or
indicates an intention to resign as a director of the Company or any Group
Company or terminate his employment, provided that the director continues to
be paid and enjoys his full contractual benefits until his employment
terminates in accordance with the terms of this Agreement, the Board may in
its absolute discretion without breaking the terms of this Agreement or
giving rise to any claim against the Company or any Group Company for all or
part of the notice period:
(i) exclude the Director from the premises of the Company and/or any
Group Company;
(ii) require him to carry out specified duties (consistent with the
Director's status, role and experience for the Company) other than those
referred to in Clause 4 or to carry out no duties;
(iii) announce to directors, employees, suppliers and customers and
The London Stock Exchange that he has been given notice of termination
or has resigned (as the case may be);
(iv) instruct the Director not to communicate orally or in writing
with suppliers, customers, directors, employees, agents or
representatives of the Company or any Group Company until his
employment hereunder has terminated.
19.3 Before and after termination of the Director's employment, the Director
will provide the Company and/or any Group Company with assistance regarding
matters of which he has knowledge and/or experience in any proceedings or
possible proceedings in which the Company and/or Group Company is or may be a
party.
19.4 The Director agrees that at the expense and request of the Company and
in any event on termination of his employment he will transfer or procure the
transfer of all shares
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held by him in trust or as a nominee by virtue of his employment with the
Company to such person or persons as the Company may direct. If the Director
fails to do so within seven days of any such request or the termination of
his employment (as the case may be) the Company is irrevocably authorised to
appoint a person or person to execute all necessary transfer forms and other
documentation on his behalf.
DEDUCTIONS
20. The Director hereby authorises the Company to deduct from his
remuneration (which for this purpose includes salary, pay in lieu of notice,
commission, bonus, holiday pay and sick pay) all debts owed by the Director
to the Company or any Group Company, including but without limitation the
balance outstanding of any loans (and interest where appropriate) advanced
by the Company to the Director.
SALE OF RECONSTRUCTION OF THE COMPANY
21. The Director will have no claim against the Company or any Group Company
in respect of the termination (by operation of law or otherwise) of his
employment under this Agreement on or in connection with the sale of the
whole or a substantial part of the business or undertaking of the Company or
on or in connection with the sale by the Company of any Group Company or on
or by reason of the liquidation of the Company for the purposes of
amalgamation or reconstruction (whether or not by reason of insolvency) if he
is offered employment on no less favourable terms than those contained in
this Agreement (apart from the identity of the employer) with any person,
firm, company or organisation which acquires such Group Company or which
acquires the whole or a substantial part of the undertaking or business of
the Company as a result of such sale or of such amalgamation or
reconstruction. For the purposes of this Clause "substantial part" means 51%.
RETURN OF DOCUMENTS AND PROPERTY
22. On termination of his employment for any reason the Director will
immediately deliver up to the Company all property (including but not limited
to documents and software, credit cards, keys and security passes) belonging
to it or any Group Company in the Director's possession or under his control.
Documents and software include (but are not
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limited to) correspondence, diaries, address books, databases, files,
reports, minutes, plans, records, documentation or any other medium for
storing information. The Director's obligations under this Clause include the
return of all copies, drafts, reproductions, notes, extracts or summaries
(however stored or made) of all documents and software.
RESIGNATION AS DIRECTOR
23.1 The Director will on termination of his employment for any reason at the
request of the Board give notice resigning immediately without claim for
compensation (but without prejudice to any claim he may have for damages for
breach of this Agreement):
23.1.1 as a director of the Company and all such Group Companies of
which he is a director; and
23.1.2 all trusteeships held by him of any pension scheme or other
trusts established by the Company or any Group Company or any other
company with which the Director has had dealings as a consequence of his
employment with the Company.
23.2 If notice pursuant to Clause 23.1 is not received by the relevant
company within seven days of a request by the Company, the Company is
irrevocably authorised to appoint a person to execute any documents and to do
everything necessary to effect such resignation or resignations on the
Director's behalf.
23.3 Except with the prior written agreement of the Board, the Director will
not during his employment under this Agreement resign his office as a
director of the Company or any Group Company.
23.4 The Director's appointment as a director of the Company or any other
Group Company will be subject to the Articles of Association from time to
time of the relevant company.
RIGHTS FOLLOWING TERMINATION
24. The termination of the Director's employment under this Agreement will
not affect any of the provisions of this Agreement which expressly operate or
lawfully have effect after termination and will not prejudice any right of
action already accrued to either party in respect of any breach of any terms
of this Agreement by the other party.
19
<PAGE>
DISCIPLINARY AND GRIEVANCE PROCEDURES
25.1 The disciplinary procedure which is applicable to the Director is set
out in the Company Rules, together with miscellaneous provisions which the
Director is required to observe and are incorporated into this Agreement.
25.2 If the Director has a grievance in relation to his employment or is
dissatisfied with a disciplinary decision against him he may apply in writing
to the Chairman of the Board whose decision will be final.
NOTICES
26. Notice under this Agreement by the Director to the Company should be
addressed to the Company and left at its registered office or is sent by
first class recorded delivery post to its registered office and notices given
by the Company to the Director should be served personally or sent by first
class recorded delivery or sent by facsimile transmission to his usual or
last known place of residence in England and in case of service by post the
day of service will be 48 hours after posting.
MISCELLANEOUS
27.1 This Agreement shall be governed by and interpreted in accordance with
the law of England and Wales.
27.2 The parties to this Agreement submit to the exclusive jurisdiction of
the English Courts in relation to any claim, dispute or matter arising out of
or relating to this Agreement.
27.3 Any delay by the Company in exercising any of its rights under this
Agreement will not constitute a waiver of such rights.
20
<PAGE>
THIS AGREEMENT has been signed on behalf of the Company by a director and
its secretary/two directors and executed and delivered as a deed by the
Director on the date set out at the beginning.
SIGNED by David Stephen Haggett and )
David Ian White for and on behalf of ) /s/ David S. Haggett
THE COMPANY ) -------------------------------
) Director
/s/ David I. White
-------------------------------
Director/Secretary
EXECUTED AND DELIVERED as a )
Deed by THE DIRECTOR in the ) /s/ [illegible]
presence of: ) -------------------------------
) [Director]
Witness:
/s/ Gemma Dow
Signature: --------------------------
/s/ Gemma Dow
Name: -------------------------------
11 Norfolk Close
Address: ----------------------------
Maloon, Essex, CM96BA
21
<PAGE>
SCHEDULE
BONUSES
<TABLE>
<CAPTION>
<C> <C> <C>
1.1 In this Schedule:
"Financial Period" means an accounting reference period of the
Company determined in accordance with the
provisions of Section 224 and 226 of the
Companies Act 1985;
"Operating Division" means the Morris Ashby Castings division of
the Company operating from Witham, Essex
"Relevant Companies" means the Company and all Group Companies;
"Group" means all Relevant Companies
"Divisional Profits" means the unaudited trading profits of the
Operating Division LESS the sum of pound
517,000 ("the Divisional Threshold") as shown
in or ascertained from the Management Accounts
of the Operating Division for a Financial
Period but before deducting any management
charges except for services specifically
provided.
"Divisonal Bonus" means 3% of the Divisional Profits;
"Trading Accounts" means the audited profits and loss account
and balance sheet of the Group for a
Financial Period consolidated in accordance
with generally accepted accounting principles
and practices;
"Group Profits" means the trading profits of the Group as
shown in or ascertained from the Trading
Accounts AFTER CHARGING
(i) all relevant expenses including any
Divisional Bonus payable to any director of
the Company and/or of the Relevant Companies
(ii) all amounts written off in respect of
depreciation and amortisation.
(iii) variable allowances for or provisions
in respect of bad or doubtful debts
</TABLE>
22
<PAGE>
(iv) the amount of any interest paid or payable
by the Company and/or the Relevant Companies
BUT BEFORE
(i) adding or deducting any sums in respect of
SSAP 24
(ii) deducting corporation tax, income tax and
any other tax which may be imposed on or by
reference to profits
(iii) carrying any sum or sums to reserves
(iv) deducting any Group Bonuses payable to any
director of the Company and/or the Relevant
Companies.
"Capital Employed" means the aggregate of the issued share capital
and reserves of the Company as shown in the
Trading Accounts.
"ROCE" means the ratio of Trading Profits to Capital
Employed expressed as a percentage.
"Group Threshold" means (pounds)725,000 of Group Profits provided
that if ROCE shall be greater than 25% or shall
fall below 25% in any Financial Period then the
Group Threshold for that Financial Period shall
be devalued or increased (as the case may be) by
(pounds)25,000 for each 1% movement in ROCE so
that (for example) if ROCE shall be 30% the
Group Threshold shall be (pounds)600,000 and if
ROCE shall be 20% the Group Threshold shall be
(pounds)850,000.
"Group Bonus" means 2.3% of the Group Profits above the Group
Threshold
"Bonuses" means the Divisional Bonus and the Group Bonus
taken together.
1.2 In addition to his salary the Director will be entitled to Bonuses in
respect of each Financial period from 1 April 1997.
1.3 The amount of the Bonuses (if any) payable to the Director in respect of
(or calculated by reference to) a Financial Period of more or less than
365 days will be calculated by increasing or decreasing all relevant
figures (including the Divisional Threshold and the Group Threshold) for
the relevant Financial Period in the proportion to which the number of
days in that Financial Period bears to 365.
23
<PAGE>
1.4 The Company will, within 14 days after the audited Trading Accounts for
each Financial Period have been prepared, deliver to the Director a
statement showing the amount of the Divisional Profits and the Group
Profits for such Financial Period and the amounts (if any) of Divisional
Bonus and Group Bonus payable to the Director which will become due and
payable within 14 days after that.
1.5 In respect of any Financial period during the currency of which the
Employment of the Director terminates, the amount of Bonus (if any)
payable to the Director shall be a rateable proportion of the bonus
(calculated from the date of commencement or to the date of termination
of his employment as that date may be) which he would have received if
his employment hereunder had existed or continued for the whole of that
Financial Period.
1.6 The Divisional Threshold will be adjusted each year (commencing at 31st
March 1999 when compared with 31st March 1998) in accordance with rises
in the Retail Prices Index.
1.7 Any dispute between the Company and the Director concerning the amount
of the Bonuses will be referred (at the request of either party and at
the expense of the Company) to the auditors for the time being of the
Company and a chartered accountant appointed by the Director or, if such
auditors and accountant fail to agree, to a person or persons nominated
by the President for the time being of the Institute of Chartered
Accountants in England and Wales on the application of either party. The
joint certificate of such auditor and accountant or the decision of such
nominated person will be final and binding on the parties and in giving
the same they or he (as the case may be) will be deemed to be acting as
experts and not as arbitrators and neither the Arbitration Acts 1950
to 1979 nor any statutory modification or re-enactment thereof for the
time being in force will apply.
1.8 The Director will be entitled to be paid Bonuses in respect of the
period to 31st March 1997 on the basis of the schemes previously
operated by the Company.
24
<PAGE>
Exhibit 10.7
In Madrid, on 30 April Nineteen hundred and ninety-eight.
TOGETHER
Of the one part, Fundiciones Viuda de Ansola S.A., a company validly
constituted for an indefinite period on 7 December 1963 before Mr. Luis
Valentin Chacartegui Saenz de Tejada, Notary of Bilbao, under protocol number
2290, registered at the Mercantile Registry of Bilbao at tome 1408, section
eight, book 941, folio 64, page 4439, with registered office in Poligono
Industrial Galarza, s/n, Etrcherria (Vizcaya), and Fiscal Identification
Number A-48036669 (hereinafter the "Company") represented by Mrs. Maria
Segimon de Manzanos, of legal age, married, of Spanish nationality, with
Fiscal Identification Number 826.346.W, with professional address in Madrid,
Paseo de la Castellana 110, a natural person representative of the Company
Sole Administrator.
And of the other, Juan Manuel Orbea Soro of legal age, born in San Sebastian,
on 28 August 1951, married, economist, of Spanish nationality, holding
identity National Document number 15.339.990, and resident in Zarautz.
C/ Nafarroa Kalea 11 F, 1-degree-B (hereinafter the "Senior Executive").
THEY DECLARE
That the parties recognise reciprocally each other's full capacity to enter
into obligations and contract and that it is in the interest of both of them
to agree the terms and conditions of an employment contract and, thus, to
formalise a special employment contract for senior executive staff regulated
by Royal Decree 1382/1985 dated 1 August (hereinafter the "Contract") based
on the mutual trust existing between them and in accordance with the
following.
<PAGE>
CLAUSES
1. APPOINTMENT, LEGAL NATURE AND DURATION OF THE CONTRACT
1.1 The Company contracts the services of the Senior Executive for an
indefinite term, and the Contract may be terminated at any moment
pursuant to Clause 9 of this Contract.
1.2 The Senior Executive shall hold the post of General Manager
("DIRECTOR GENERAL") of the Company.
1.3 The Company acknowledges to the Senior Executive a length of service
from 15 March 1977. Both parties declare that the post of General
Manager set forth above, which implies the condition of Senior
Executive and the mandatory application of Royal Decree 1382/1985
dated 1 August, has been held by the Senior Executive since he began
to work for the Company. Thus, both parties declare that the signing
of this Contract does not modify the special nature of the
employment relationship between them and, consequently, this is not
a case of "internal promotion" ("PROMOCION INTERNA").
2. DUTIES AND RESPONSIBILITIES
2.1 The Senior Executive assumes all the responsibilities inherent in
the job of General Manager of the Company, his tasks being those
applicable to someone in his position. For the carrying out of his
work and activities in the Company, the Senior Executive shall
report to and follow the criteria and direct instructions issued by
the Board of Directors of the Company. The Company has granted and
will grant the necessary powers of attorney (which are duly
registered at the relevant Mercantile Registry) in favour of the
Senior Executive so that he may carry out the duties assigned to him
under this Contract as General Manager of the Company.
2.2 The workplace of the Senior Executive shall be the registered office
of the Company, but the Company may ask the Senior Executive to
travel to other workplaces within and outside of the province and,
if necessary, outside Spain, which the Senior Executive hereby
accepts as an integral part of the duties.
2.3 The Senior Executive undertakes to provide his services to the
Company in a full, constant and exclusive manner, for the duration
of this Contract, and not to provide his services to any other
person or entity, even when the activity of the latter does not
involve any competition whatsoever for the Company. Similarly, he
will place all his professional knowledge at the disposal of the
Company and will dedicate all his efforts to the defence and
development of the interests of the Company. However, both parties
agree that as an exception to the aforementioned prohibition, the
Senior Executive will be able to sign an employment contract with the
Company "Ansola Acquisition Corporation S.R.L.".
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<PAGE>
2.4 For the duration of this Contract the Senior Executive shall not be
able to enter into employment or service contracts of any kind with
any other persons or entities, except in respect to "Ansola
Acquisition Corporation S.R.L." as provided in Clause 2.3, above.
Similarly, save with written authorisation from the Company, the
Senior Executive shall not be able to accept the post of director or
administrator of any other entity of any type, and the Senior
Executive declares that upon the date of the signature of this
Contract, he is not the holder of any post of this nature.
2.5 For the duration of this Contract the Senior Executive hereby
undertakes not to participate, without written authorisation from
the Company, in any form whatsoever (save as a shareholder of
companies whose securities are quoted on the stock exchange) in any
firm that may constitute direct or indirect competition for the
Company. Similarly, the Senior Executive declares that on the date
of the signature of this Contract he is not a shareholder nor does he
participate in the capital of any firm of this type.
2.6 Apart from the employment conditions agreed in this Contract, both
parties declare that the Senior Executive will participate in the JL
French Automotive Castings, Inc. Stock Option Plan, according to and
as permitted by CS and Spanish Law. Furthermore, both parties
declare that the Senior Executive will sign and will be part of a
"Stockholders Agreement" which will govern the transferability of
the stock and provide for the rights and obligations of the Senior
Executive on certain "Termination Events". The referred "Termination
Events" will be referred to those provided for in clause 9 of this
Contract, in the following terms:
"Termination for Cause": fair disciplinary dismissal ("DESPIDO
DISCIPLINARIO PROCEDENTE"),
"Voluntary termination": resignation ("DIMISION")
"Termination not for Cause": unfair disciplinary dismissal
("DESPIDO DISCIPLINARIO IMPROCEDENTE"): termination at the
discretion of the Company ("DESISTIMIENTO"), voluntary
termination according to clause 9.2.
3. CONFIDENTIALITY
3.1 The Senior Executive undertakes not to reveal to any person or
entity, for the duration of this Contract and following the
termination hereof, any information relating to business, clients,
operations, installations, accounts or finances of the Company, or
its procedures, methods, transactions, "know how" or any other
aspect related to the activity of the Company which the Senior
Executive may know or have known as a result of the provision of his
services to the Company, and shall act with the greatest diligence
to avoid the publication or revelation of any confidential
information relating to this material.
3.2 All the documents, material, files or any other article of any type
related to the Company shall be deemed confidential. Upon the
termination of this Contract for any
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<PAGE>
reason, the Senior Executive undertakes to return to the Company any
material of this nature which is, at such time, in his possession
and formally waives any right that he may have to retain it.
4. INVENTIONS, KNOW-HOW AND PATENTS
Any invention, know-how or patent invented or created by the Senior
Executive during the provision of his services to the Company shall
belong to the Company to the extent permitted, in accordance with the
terms of Articles 15 to 20 of Patent Law 11/1986 dated 20 March, and the
Company may freely use such inventions, know-how and patents without
having to pay the Senior Executive any amount by way of royalty or rent.
If it is necessary in order to perfect the title of the Company to the
said inventions, know-how and patents, the Senior Executive undertakes to
assign to the Company any right of this type which belongs to him, so
that the Company may register itself as owner therefore at the relevant
public Registry.
5. REMUNERATION
As consideration for the performance of his services, the Senior Executive
shall receive:
5.1 A base salary of 17,000,000 pesetas (SEVENTEEN MILLION PESETAS)
gross per annum (that is to say, before tax deductions and Social
Security payments) payable in twelve equal monthly payments. This
amount is the compensation for the services rendered, including all
the conditions agreed in clause 2 above, and replaces the salary and
allowance paid under previous arrangements between both parties.
5.2 A variable salary; an annual incentive bonus, which will be set in
the following terms:
An incentive annual bonus of 10,000,000 pesetas (TEN MILLION
PESETAS) will be paid for the fiscal year 1998 if the Company
achieves a "pre-bonus EBITDA" (Earnings Before Income Taxes and
Amortisations) in this year of at least 850 million pesetas. If the
figure of the referred "EBITDA" figure for this year is below that
level, a lower bonus will be paid to the Senior Executive, based on
the following levels:
<TABLE>
<CAPTION>
<C> <S>
(AMOUNTS IN MILLIONS OF PESETAS)
"PRE-BONUS EBITDA" INCENTIVE ANNUAL BONUS
850 or greater 10.0
800 up to 850 7.5
750 up to 800 5.0
700 up to 750 2.5
Below 700 0.0
</TABLE>
-4-
<PAGE>
The relevant payment of the annual incentive bonus for the fiscal
year of 1998 will be made in 1999 upon receipt of the financial
audit of 1998 and in the following month upon the approval of 1998
annual accounts by the Board of Directors.
For subsequent years, an equivalent annual incentive bonus will be
paid based on achievement of certain "EBITDA targets" that will be
decided by the Board of Directors before commencing the relevant
fiscal year.
5.3 Due to the simultaneity of this Contract with other contract to be
entered into by the Senior Executive with "Ansola Acquisition
Corporation S.R.L.", the Company guarantees to the Senior Executive
that in the event of termination of this second contract for reasons
beyond the Senior Executive's control, his gross base salary as
established in clause 5.1 above will be increased by an amount
equivalent to the remuneration paid to the Senior Executive by
virtue of the said contract with "Ansola Acquisition Corporation
S.R.L.", and effective from the date of termination of this second
contract.
6. EXPENSES
The Senior Executive shall be entitled, upon the submission of receipts,
to the reimbursement of reasonable expenses incurred in the performance
of his duties by and with the approval of the Company, which may be
subject to as such.
7. VEHICLE
7.1 The Company makes an all expenses paid vehicle ("Company Car")
available to the Senior Executive for the duration of the Contract,
according to the Company's policy in respect of this matter.
7.2 The Senior Executive hereby undertakes to maintain the Company Car
properly and regularly and to insure it with comprehensive coverage
in the name of the Company, and expressly waives any right that may
correspond to him or any member of his family or a third party to
file a claim for damages against the Company, derived from or
related to the use of the Company Car for strictly personal reasons.
7.3 The Company will reimburse the Senior Executive for private petrol
costs for regular travel, but not for private long haul travel. The
Senior Executive hereby undertakes to pay any tax or fine derived
from or relating to the personal use of the Company Car and shall
not allow the Company Car to be used by a third party, except for
his wife, as well as other employees of the Company (in this case,
in relation to the needs of the Company and in accordance with the
current practice of the Company).
7.4 According to the conditions of Clause 7.1 above, the Senior
Executive undertakes to return the Company Car to the company once
this Contract has been terminated.
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<PAGE>
8. INSURANCE FOR OTHER BENEFITS
The Company acknowledges to the Senior Executive the continuation of his
current conditions regarding "Individual Standard Accident Insurance",
"Lider Accident Insurance", and any other benefit plan currently applied
to him and in place in the Company.
Furthermore, in cases of temporary disability ("UNCAPACIDAD TEMPORAL")
according to Social Security legislation, the Senior Executive will be
entitled to maintain his insurance benefits.
9. TERMINATION
9.1 This Contract may be terminated at the discretion of the Senior
Executive by "resignation" ("DIMISION" or "BAJA VOLUNTARIA"), who
will send written notice thereof to Company at least three months in
advance. In this case, the Senior Executive will not be entitled to
receive any kind of compensation for the termination of the Contract.
If the Senior Executive fails either totally or partially to comply
with the notice obligation, the Company shall be entitled to
compensation equivalent to the salary corresponding to the period of
notice not complied with.
9.2 The Senior Executive shall be able to terminate this contract and
shall be entitled to the compensation established in Clause 9.3
below, in the circumstances provided for in articles 10.3 and 11.1
of Royal Decree 1382/1985, based on the following grounds:
9.2.1 Substantial modifications in his working conditions which
will plainly damage his professional training to the
detriment of his dignity, or which are decided upon in
serious breach of good faith by the Company.
9.2.2 A failure to pay or a continuous delay in paying his agreed
salary.
9.2.3 Any other serious breach by the Company of its contractual
obligations, except for cases of FORCE MAJEURE, where the
payment of the compensation referred to herein shall not be
admissible.
9.2.4 A succession in the business or a significant change in the
ownership of the Company which results in the renewal of its
governing bodies or in the content and basis of its principal
activity, provided that the termination takes place within
the first three months immediately following the occurrence
of these changes.
9.3 This Contract may be terminated at the discretion of the Company
("DESISSIMIENTO"), which shall send written notice thereof to the
Senior Executive at least three months in advance. In this case, the
Senior Executive shall be entitled to compensation equivalent to
twenty one (21) monthly payments of his base salary (according to
clause 5.1 above) plus benefits (according to clauses 7 and 8
above). Furthermore, if the Company fails either totally or
partially to comply with the notice obligation, the
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<PAGE>
Senior Executive shall be entitled to compensation equivalent to
the salary corresponding to the period of notice not complied with.
The above amount of compensation is agreed as the single and
complete compensation to be paid for the complete termination of
the whole employment relationship between both parties. Thus,
although both parties agree that there is no "internal promotion"
("PROMOTION INTERNA") in their employment relationship according to
article 9 of the Royal Decree 1382/1985, in the hypothetical event
of any claim or decision regarding this matter, the agreed
compensation set forth above will include any legal compensation or
any compensation which could be claimed in relation to the
complete termination of the employment relationship between both
parties.
Furthermore, the Senior Executive will be entitled to the accrued
but unpaid bonus (according to clause 5.2 above) at the time of the
termination of the Contracts decided by the Company.
In relation to this right, it is understood that the Senior
Executive will receive a proportional part of the bonus
corresponding to the year in which the termination of the contract
takes place, in proportion to the time of services rendered during
the said year and in accordance with "EBITDA targets" achieved
during the said period in relation to the annual total. To this
effect, said payment will be effective once the annual accounts are
approved under the terms provided in Clause 5.2 above and,
thereafter the corresponding estimates will be calculated in
accordance with the auditors' report. As an example, if the
termination of the contract took place by the end of the first
quarter of any given year and if during said quarter 25% of the
"EBITDA targets" were accomplished, the Senior Executive would be
entitled to 25% of the yearly bonus corresponding to the year in
which the contract termination takes place.
9.4 The Company may terminate his Contract by way of disciplinary
dismissal based on a serious breach of the contract by the Senior
Executive in the form and with the effect established in Article 55
of the Workers' Statute. The Senior Executive will not be entitled
to receive any kind of compensation in the case of "fair
disciplinary dismissal" ("DESPIDO DISCIPLINARIO PROCEDENTE").
However, both parties agree that if the disciplinary dismissal is
declared to be unfair ("DESPIDO DISCIPLINARIO IMPROCEDURE"), the
Senior Executive will be entitled to the compensation referred in
Clause 9.3 above.
9.5 If the Contract is terminated by death or serious invalidity, or
total or absolute permanent invalidity ("GRAN INVALIDEZ", or
"INVALIDEZ, PERMANENTE TOTAL O ABSOLUTA"), the Senior Executive (or
his legal successors in the case of his death) shall be entitled to
compensation equivalent to the amount of fifteen monthly payments
of his base salary (according to clause 5.1 above) plus benefits
(according to clauses 7 and 9 above).
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<PAGE>
Furthermore, the Senior Executive will be entitled to the accrued
but unpaid bonus (according to clause 5.2 above) at the time of the
termination of the Contract by death or total and permanent
disability. The relevant provisions in the fourth paragraph of
Clause 9.3 above shall also be applicable.
9.6 In the following clause 10 both parties agree the terms and
conditions regarding the Senior Executive's non-competition
obligation after the termination of the contract applicable to any
event of termination of the Contract, and with the relevant payment
of the specific compensation agreed to clause 10.
10. NON-COMPETITION
10.1 Based on the peculiarity and special nature of the duties which he
must carry out under this Contract, the Senior Executive undertakes
not to compete with the Company, once the Contract has been
terminated, whether for himself or for a third party, providing
services to firms or entities whose activity may involve
competition for the Company. Similarly, the Senior Executive
undertakes not to take on employees who, at the time of the
termination of this Contract, form part of the work force of the
Company.
10.2 The duration of the undertakings contained in clause 10.1, once the
Contract has been terminated, shall be for two years from the date
of the termination of the Contract, and its breach shall give rise
to compensation for damages from the Senior Executive to the Company.
10.3 As consideration for this limitation on his activities, the Senior
Executive shall receive adequate compensation from the Company,
which is agreed by both parties to be the payment of an amount
equivalent to 50% of his gross base annual salary as at the date of
the Contract's termination (per year of non-competition), payable
in monthly installments, one every month during the aforementioned
period of two years. That is to say, the complete payment of the
"adequate compensation" regarding the total period of two years of
non-competition will be equivalent to one year of the gross base
annual salary of the Senior Executive as at the date of the
Contract's termination.
The breach of the obligations undertaken in this clause shall, apart
from the compensation indicate in clause 10.2 above, require the
Senior Executive to return the amount paid by the Company referred
to in this paragraph.
11. APPLICABLE LAW
This Contract shall be governed by Spanish Law.
12. MODIFICATIONS
This Contract may be amended or modified solely by way of a document
signed by or on behalf of the parties hereto.
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<PAGE>
13. ENTIRE AGREEMENTS
This Contract constitutes the entire employment agreement between the
parties in relation to its content and revokes and replaces any previous
contract or agreement in relation to its content between the parties.
14. NOTICES
Any notice to be given by one party to the other pursuant to this
Contract shall be in writing and sent by certified post with
acknowledgements of receipt or by notarial notice.
15. ADDRESSES
For the purposes of this Contract, the addresses of the parties for
notices shall be the following:
15.1 The Company:
Poligono Industrial Galarza ??
Etxebarria
48277 Vizcaya
Attention: Mr. Charles Waldon
Copy to: Clifford Chance (Maria Segimon)
15.2 The Senior Executive:
C/Nafarroa Kalea 11 F.1" B
Edificio Eguzki-Lore
20800 Zarauci
16. INTERPRETATIONS
16.1 Headings are exclusively for the purpose of clarification and should
be ignored when interpreting the Contract.
16.2 In this Contract, "EBITDA" shall be considered to be the relevant
figure corresponding to "Earnings before Income Taxes" and
amortisations ("BENEFICIOS ANTERS 4e IMPUESTOS Y AMORTIZACIONES"),
according to "generally accepted accounting principles" (g.a.a.p).
Thus, "EBITDA" is defined as follows: with respect to any fiscal
period means the sum of net earnings (or loss) before provision for
income taxes for such period plus the net sum of financial expenses,
depreciation and amortisation for said period as determined in
accordance with "g.a.a.p.". "EBITDA excludes any
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gain or loss arising from the sale of capital assets or
extraordinary items, or any gain arising from any write-up of assets
17. CONDITION PRECEDENT
The validity and effectiveness of this Contract is conditional upon the
purchase of all of the shares of the Company not held by the same as
treasury stock, by "Ansola Acquisition Corporation S.R.L.".
This Contract may be executed in any number of counterparts, in English
and Spanish language, each of which, when executed and delivered, shall
be deemed to be an original, but all of which shall collectively
constitute one and the same instrument. In interpreting this Contract,
the Spanish version will prevail in case of conflict between the two
versions.
AND IN WITNESS WHEREOF, the parties, having carefully read the document,
they ratify and sign it in duplicate, each copy having identical weight.
[ILLEGABLE] [ILLEGABLE]
THE COMPANY THE SENIOR EXECUTIVE
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<PAGE>
Exhibit 10.8
In Madrid, on 30 April Nineteen hundred and ninety-eight.
TOGETHER
Of the one part, Ansola Acquisition Corporation, S.R.L., with its registered
office in Poligono Industrial Oalarza. s/n, Eixebarria (Vizcaya) and Fiscal
Identification Number B-48966154 (hereinafter the "Company"), represented by
Mrs. Maria Segimon de Manzanos, of legal age, married, Spanish by
nationality, holder of Fiscal Identification Number 826.346.W and resident
in Madrid. C/Breton de los Herreros 68, as Attorney.
And of the other, Juan Manuel Orbea, of legal age, born in San Sebastian on 28
August 1951, married, economist, Spanish by nationality, holder of National
Identity Document number 15.339.990. and resident in Zarautz, C/Nafarroa
Kalea 11 F. 1 degree B (hereinafter the "Senior Executive").
THEY DECLARE
That the parties acknowledge each other the full capacity to enter into
obligations and contract and that it is in the interest of both of them to
agree the following additional clauses, to be considered an integral part of
the part-time senior executive employment contract to be signed on the
official form, in accordance with Royal Decree 1382/1985 dated 1 August and
Royal decree 2317/1993 dated 29 December.
ADDITIONAL CLAUSES
1. APPOINTMENT, LEGAL NATURE AND TERM OF THE CONTRACT
1.1 The Company contracts the services of the Senior Executive for an
indefinite term and the Contract may be terminated at any time pursuant
to Clause 7 thereof.
1.2 The Senior Executive shall hold the post of General Manager ("DIRECTOR
GENERAL") of the Company, and this Contract will take effect (and the
relevant duties will be performed) once the Company has been duly
registered for Social Security purposes.
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2. DUTIES AND RESPONSIBILITIES
2.1 The Senior Executive assumes all the responsibilities inherent to the
job of General Manager of the Company, his tasks being those
applicable to someone in his position. For the carrying out of his
work and activities in the Company, the Senior Executive shall report
to and follow the criteria and direct instructions issued by the
Company's Board of Directors. The Company will grant the necessary
powers of attorney to the Senior Executive so that he may carry
out the duties assigned to him under this Contract as General Manager
of the Company.
2.2 The workplace of the Senior Executive shall be the registered office
of the Company or any other places mutually agreed.
2.3 For the full term of this Contract, the Senior Executive hereby
undertakes not to participate, without written authorisation from the
Company, in any form whatsoever (save as a shareholder of companies
whose securities are quoted on the stock exchange) in any firm that
may constitute direct or indirect competition for the Company.
Similarly, the Senior Executive declares that on the date of the
signature of this Contract he is not a shareholder nor does he
participate in the capital of any firm of this type.
3. CONFIDENTIALITY
3.1 The Senior Executive undertakes not to reveal to any person or
entity, for the full term of this Contract and following the
termination hereof, any information relating to business, clients,
operations, installations, accounts or finances of the Company, or
its procedures, methods, transactions, "known how" or any other aspect
related to the activity of the Company which the Senior Executive may
know or have known as a result of the provision of his services to
the Company, and shall act with the greatest diligence to avoid the
publication or revelation of any confidential information relating to
this material.
3.2 All the documents, material, files or any other articles of any type
related to the Company shall be deemed confidential. Upon the
termination of this Contract for any reason, the Senior Executive
undertakes to return to the Company any material of this nature which
is, at such time, in his possession and formally waives any right that
he may have to retain it.
4. INVENTIONS, KNOW-HOW AND PATENTS
Any invention, know-how or patent invented or created by the Senior
Executive during the provision of his services to the Company shall belong
to the Company to the extent permitted, in accordance with the terms of
Articles 15 to 20 of Patent Law 11/1986 dated 20 March, and the Company
may freely use such inventions, know-how and patents without having to pay
the Senior Executive any amounts by way of royalty or rent. If it is
necessary in order to perfect the title of the Company to the said
inventions, know-how and patents, the Senior Executive
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undertakes to assign to the Company any right of this type which
belongs to him, so that the Company may register itself as owner thereof
at the relevant public Registry.
5. REMUNERATION
As consideration for the performance of his services, the Senior
Executive shall receive a base salary of 15,500,000 pesetas (FIFTEEN
MILLION FIVE HUNDRED THOUSAND PESETAS) gross per annum (that is to say,
before tax deductions and Social Security payments) payable in twelve
equal monthly payments. This amount is the compensation for the services
rendered and, notwithstanding the date this Contract takes effect, the
Senior Executive will be paid as if it had taken effect on 30 April.
Thus, the relevant additional payments will be made with the first
monthly payment.
6. EXPENSES
The Senior Executive shall be entitled, upon the submission of receipts,
to the reimbursement of reasonable expenses incurred in the performance
of his duties by and with the approval of the Company, which may be
subject to an audit.
7. TERMINATION
7.1 This Contract may be terminated at the discretion of the Senior
Executive by "resignation" ("DIMISION" or "BAJA VOLUNTARIA"), who will
send written notice thereof to Company at least three months in
advance. In this case, the Senior Executive will not be entitled to
receive any kind of compensation for the termination of the Contract.
If the Senior Executive fails either totally or partially to comply
with the notice obligation, the Company shall be entitled to
compensation equivalent to the salary corresponding to the notice
period not complied with.
7.2 The Senior Executive shall be able to terminate this Contract and
shall be entitled to the compensation established in Clause 7.3 of
this Contract, in the events provided for in articles 10.3 and 11.1
of Royal Decree 1382/1985, based on the following grounds:
7.2.1 Substantial modifications in his working conditions which
will plainly damage his professional training to the
detriment of his dignity, or which are decided upon in
serious breach of good faith by the Company.
7.2.2 A failure to pay or a continuous delay in paying his
agreed salary.
7.2.3 Any other serious breach by the Company of its contractual
obligations, except for cases of FORCE MAJEURE, where the
payment of the compensation referred to herein shall not
be admissible.
7.2.4 A succession in the business or a significant change in
the ownership of the Company which results in the renewal
of its governing bodies or in the content and basis of its
principal activity, provided that the termination takes
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place within the first three months immediately following
the occurrence of these changes.
7.3 This Contract may be terminated at the discretion of the Company
("DESISTIMIENTO"), which shall send written notice thereof to the
Senior Executive at least three months in advance. In this case, the
Senior Executive shall be entitled to compensation equivalent to
twenty-one (21) monthly payments of his salary. Furthermore, if the
Company fails either totally or partially to comply with the notice
obligation, the Senior Executive shall be entitled to compensation
equivalent to the salary corresponding to the notice period not
complied with.
7.4 The Company may terminate this Contract by way of disciplinary
dismissal based on a serious breach of the contract by the Senior
Executive in the form and with the effect established in Article 55
of the Workers' Status. The Senior Executive will not be entitled
to receive any kind of compensation in the case of "fair
disciplinary dismissal" ("DESPIDO DISCIPLINARIO PROCEDENTE").
However, both parties agree that if the disciplinary dismissal is
declared to be unfair ("DESPIDO DISCIPLINARIO IMPROCEDENTE"), the
Senior Executive will be entitled to the compensation referred in
Clause 7.3 above.
7.5 If the Contract is terminated by death or serious invalidity, or
total or absolute permanent invalidity ("GRAN INVALIDEZ" or
"INVALIDEZ PERMANENTE TOTAL O ABSOLUTA"), the Senior Executive (or
his legal successors in the case of his death) shall be entitled to
compensation equivalent to the amount of fifteen monthly payments of
his salary.
7.6 In Clause 8 below, both parties agree the terms and conditions
regarding the Senior Executive's non-competition obligation after
the termination of the contract, applicable to any event of
termination of the Contract (unless upon termination, the employment
contract between the Senior Executive and Fundiciones Viuda de
Ansola S.A. should remain in force) and with the relevant payments
of the specific compensation agreed in Clause 8.
8. NON-COMPETITION
8.1 Based on the peculiariry and special nature of the duties which he
must carry out under this Contract, the Senior Executive undertakes
not to compete with the Company once the Contract has been
terminated, either himself or through a third party or by providing
services to firms or entities whose activity may involve competition
for the Company. Similarly, the Senior Executive undertakes not to
take on employees who, at the time of the termination of this
Contract, form part of the work force of the Company.
However, it is specifically agreed that this Clause will not be
applicable if, upon termination of this Contract, the Contract
between the Senior Executive and Fundiciones Viuda de Ansola S.A.
remains in force.
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8.2 The term of the undertakings set forth in Clause 8.1, once the
Contract has been terminated, shall be two years from the date of
the termination of the Contract, and its breach shall give rise to
compensation for damages from the Senior Executive to the Company.
8.3 As consideration for this limitation on his activities, the Senior
Executive shall receive adequate compensation from the Company,
which is agreed by both parties to be the payment of an amount
equivalent to 50% of his gross annual salary at the date of the
Contract's termination (per year of non-competition), payable in
monthly installments, one every month during the aforementioned two
year period. The is to say, the complete payment of the "adequate
compensation" regarding the total two year non-competition period
will be equivalent to one year of the Senior Executive's gross
annual salary at the date of the Contract's termination.
The breach of the obligations undertaken in this clause shall,
apart from the compensation indicated in clause 8.2 above, require
the Senior Executive to return the amount paid by the Company
pursuant to this paragraph.
9. APPLICABLE LAW.
This Contract shall be governed by Spanish law.
10. MODIFICATIONS
This Contract may be amended or modified solely by way of a document signed by
or on behalf of the parties hereto.
11. NOTICES
Any notice to be given by one party to the other pursuant to this Contract shall
be in writing and sent by certified post with acknowledgment of receipt or
by notarial notice.
12. ADDRESSES
For the purposes of this Contract, the addresses of the parties for notices
shall be the following:
12.1 The Company:
Poligono Industrial Galarza, s/n
Eotebarris
48277 Vizcaya
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12.2 The Senior Executive:
C/Nafarroa Kalea 11F.1B
Edificio Eguzki-Lore
20800 Zarautz
13. CONDITION PRECEDENT
The validity and effectiveness of this Contract is conditional upon the
purchase of shares of the Company by "Ansola Acquisition Corporation S.R.L."
AND IN WITNESS WHEREOF, the parties having carefully read the document, they
ratify and sign it in duplicate, each copy having identical weight.
THE COMPANY THE SENIOR EXECUTIVE
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Exhibit 10.9
MANAGEMENT STOCKHOLDERS AGREEMENT
DATED as of July 16, 1999
A M O N G:
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
a Delaware corporation (the "Corporation"),
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ONEX AMERICAN HOLDINGS LLC,
a Delaware limited liability company ("Onex"),
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The individuals named on Schedule I to this Agreement and each
additional management employee of the Operating Company (as
hereinafter defined) who, at any time, acquires securities of
the Corporation and executes a counterpart of this Agree ment
or otherwise agrees to be bound by this Agreement
(individually, a "Managementholder" and collectively, the
"Managementholders").
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WHEREAS:
A. As of June 1, 1999 the issued and outstanding capital of the
Corporation consists of:
(i) 6,998.4380 shares of Class A Common Stock, par value $.01 per
share (the "Class A Common");
(ii) 17,088.8931 shares of Class B Common Stock, par value $.01 per
share (the "Class B Common");
(iii) 4,274.9733 shares of Class C Common Stock, par value $.01 per
share (the "Class C Common");
(iv) 5,509.9658 shares of Class D-1 Common Stock, par value $.01
per share (the "Class D-1 Common");
(v) 5,699.9646 shares of Class D-2 Common Stock, par value $.01
per share (the "Class D-2 Common); and
(vi) 2,802.4826 shares of Class E Common Stock, par value $.01 per
share (the "Class E Common).
B. Each of the Managementholders is an employee of the Corporation
and/or a subsidiary of the Corporation and has acquired or is acquiring certain
shares of Class A Common.
C. In order to provide for the stability of the Corporation and to
restrict the manner and means by which the Class A Common held by the
Managementholders may be transferred, voted and otherwise dealt with, the
parties wish to enter into this Agreement.
E. Certain terms used in this Agreement are defined in Article Six of
this Agreement.
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
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ARTICLE ONE
MANAGEMENTHOLDER'S COMMON STOCK GENERALLY
1.1 MANAGEMENTHOLDER'S GENERAL REPRESENTATIONS AND WARRANTIES. Each
Managementholder represents and warrants that:
(a) he has acquired and is holding, or will acquire and hold, all
Managementholder's Stock held by him as sole principal and for investment only,
and not in trust in any manner for or on behalf of any other person or persons;
and
(b) he is not a party to or bound by any agreement regarding or
affecting his Managementholder's Stock or his rights as a holder of
Managementholder's Stock other than this Agreement, a pledge, if any, of
Managementholder's Stock in accordance with Section 1.5 or an agreement, if any,
to effect a transfer of Managementholder's Stock in accordance with this
Agreement.
1.2 TRANSFERS IN ACCORDANCE WITH THIS AGREEMENT. Each Managementholder
agrees that Managementholder's Stock held by him will not be transferred in
violation of this Agreement, the Securities Act of 1933, as amended (the "1933
Act"), or any other applicable law.
1.3 REGISTRATION OF TRANSFERS. The Corporation may refuse to register
any transfer by the registered holder of Managementholder's Stock in its
transfer books if such transfer is not in accordance with this Agreement, the
1933 Act, or any other applicable law.
1.4 RESTRICTIONS ON TRANSFER. Except as expressly provided in this
Agreement, the Managementholder's Stock may not be transferred without the
consent of the Corporation. The Managementholder's Stock may be transferred only
in a sale for cash or cash plus assumption of indebtedness in accordance with
Section 2.1 or in accordance with the other provisions of this Agreement. Any
purported transfer in any manner contrary to the terms of this Agreement shall
be void.
1.5 PLEDGE OF COMMON STOCK AS SECURITY. The Managementholder's Stock
may be pledged to the Corporation or to a bank or other bona fide financial
institution (in this paragraph, a "secured party") acting at arm's length with
any Managementholder and approved by the Corporation, as security for
indebtedness incurred solely to finance up to one-half of the purchase price
paid by such Managementholder for his Managementholder's Stock, on condition
that such secured party executes and delivers to the Corporation a written
agreement satisfactory to the Corporation that such pledge is subject to the
terms of this Agreement if so requested by the Corporation.
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1.6 SALES TO BE FREE OF ENCUMBRANCES.
(a) In connection with any sale of Managementholder's Stock pursuant to
this Agreement, the Managementholder shall discharge any indebtedness referred
to in Section 1.5 and deliver the Managementholder's Stock being sold free and
clear of any claim, mortgage, charge, pledge, lien, security interest or other
encumbrance of any kind.
(b) If the Managementholder fails to comply with subsection (a), the
purchaser may withhold from the purchase price for the Managementholder's Stock
an amount equal to the indebtedness secured by any such claim, mortgage, charge,
pledge, lien, security interest or other encumbrance or, if the amount of such
indebtedness is not known by the purchaser, an amount equal to the purchaser's
good faith estimate thereof, and shall pay such withheld amount to the person to
whom such indebtedness is owed. Any such payment of such withheld amount shall
discharge the purchaser's obligation to make payment for the purchased shares to
the extent of such withheld amount.
1.7 CLOSINGS OF SALES OF MANAGEMENTHOLDER'S STOCK.
(a) At the closing of any sale of Managementholder's Stock pursuant to
this Agreement, the Managementholder selling Managementholder's Stock shall
deliver to the purchaser the share certificates and other instruments
representing such Managementholder's Stock, together with stock powers and other
instruments transferring such Common Stock, duly endorsed for transfer and free
and clear of any claim, mortgage, charge, pledge, lien, security interest or
encumbrance of any kind, and the purchaser shall deliver to the Managementholder
the consideration payable upon closing. If subsection 2.3(b) of this Agreement
is applicable to the sale and the purchaser is other than the Corporation or
Onex, the purchaser shall also deliver to the Managementholder an under taking
to pay the increased purchase price for the Managementholder's Stock in
accordance with subsection 2.3(b) in the events therein described, as if such
purchaser were a party to this Agreement.
(b) If the Managementholder is not present at the closing, or is
present but for any reason fails to produce and deliver to the purchaser, in
accordance with subsection (a), the certificates or other instruments
representing any of the Managementholder's Stock being transferred or any other
document required under subsection (a), then the purchaser may deposit the
applicable consideration payable to such Managementholder, as and when payable
under this Agreement, into a special account in trust for the Managementholder
at a branch of the Corporation's bankers. Such deposit shall constitute valid
and effective payment to the Managementholder of the purchase price for such
Common Stock notwithstanding the fact that the Managementholder may have
voluntarily attempted to encumber or dispose of any of the Common Stock contrary
to the terms hereof, or that one or more certificates or other evidences of
ownership of the Common Stock may have been delivered to any other person. From
and after the date of such deposit (even though the share certificates in the
name of the such Managementholder or other instruments representing such Common
Stock have not been delivered to the purchaser), the purchase and transfer of
the Common Stock shall be deemed to have been fully completed and all right,
title, benefit and interest of the
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Managementholder in and to all such Common Stock, both at law and in equity,
shall be conclusively deemed to have been transferred and assigned to and become
vested in the purchaser.
(c) Where the purchaser has made a deposit in accordance with
subsection (b), the Managementholder shall be entitled to receive the
consideration for his Managementholder's Stock deposited with the Corporation's
bankers, without interest, upon delivery to the Corporation of (i) the
certificates or other instruments representing the Managementholder's Stock duly
endorsed for transfer in the manner required by subsection (a) and (ii) any
other document required under subsection (a) to be delivered by him at the
closing including, without limitation, the release or discharge of any
encumbrance relating to the Managementholder's Stock being sold.
(d) Each Managementholder irrevocably constitutes and appoints the
Secretary from time to time of the Corporation (the "Secretary") as his attorney
and agent authorized, in his name and on his behalf, to execute and deliver (i)
all such assignments, transfers, deeds and instruments as may be necessary to
effectively transfer the Common Stock being transferred to the purchaser on the
books of the Corporation and (ii) any other document required under subsection
(a) to be delivered by him at closing. Such appointment and power of attorney,
being coupled with an interest, shall not be revoked by the insolvency,
bankruptcy, death or incapacity of the Managementholder and the Managementholder
hereby agrees to ratify and confirm any act taken by the Secretary on his behalf
hereunder and agrees that the receipt of the Secretary as attorney shall be a
good discharge to the Managementholder.
(e) The Secretary of the Corporation (or another officer designated by
the Board of Directors to act in his stead) shall, at all times, hold the
certificates representing all Management holder's Stock. The Secretary or such
other officer shall hold such certificates in safekeeping to the order of the
registered holder of the Common Stock represented by the certificates (but
subject to the terms of this Agreement); provided that, upon being satisfied
that a lender reasonably requires possession of any certificate for the purposes
of an arrangement permitted by Section 1.5, the Secre tary may release the
certificate to the lender upon receipt of an irrevocable direction from the
registered holder to the lender to return the certificates to the Secretary if
the registered holder would otherwise be entitled to the return of the
certificates.
(f) Nothing in this Section is intended to limit any other remedy
available to a purchaser of Managementholder's Stock.
1.8 APPLICATION OF THE AGREEMENT. For greater certainty, it is
acknowledged and agreed that this Agreement shall apply in respect of all Common
Stock now or hereafter acquired and held by a Managementholder including, but
not limited to, Common Stock acquired pursuant to Section 3.5, but not including
Common Stock purchased by a Managementholder through the facilities of a
securities exchange on which the Common Stock is then listed or quoted in the
NASDAQ System or the over-the-counter market after the Corporation has become a
Public Company.
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ARTICLE TWO
SALE OF MANAGEMENTHOLDER'S STOCK
2.1 SALES TO ANOTHER MANAGEMENTHOLDER OR MANAGEMENT EMPLOYEE.
(a) If a Managementholder desires to transfer Managementholder's Stock
at any time pursuant to a bona fide written offer to purchase his
Managementholder's Stock for cash or for cash and the assumption of indebtedness
referred to in Section 1.5 (an "Offer") from another Managementholder or a
management employee of the Operating Company who in either case is acceptable to
the Board of Directors, in its sole discretion (an "Offeror"), he shall give the
Corporation and Onex notice thereof (a "Notice") attaching a copy of such Offer.
(b) If a Notice is given, the Corporation, or if the Corporation does
not exercise its option, Onex, shall have the option, exercisable by notice to
the Managementholder within 30 days after the date of receipt of the Notice by
the Corporation and Onex, to purchase all or any part of the Managementholder's
Stock proposed to be sold pursuant to the Offer for the same price per share and
on the same terms as the Offer.
(c) If the Corporation or Onex do not exercise the option referred to
in subsection (b) within the 30-day option period provided in subsection (b),
and the Board of Directors of the Corporation has consented to the proposed sale
to the Offeror pursuant to the Offer, the Managementholder shall have the right,
exercisable at any time within 60 days after the expiration of such 30-day
option period, to sell any of the Managementholder's Stock as to which the
option referred to in subsection (b) was not exercised to the Offeror in
accordance with the terms of the Offer. Notwithstanding the foregoing, the
consent of the Board of Directors shall not be required for such proposed sale
if the Offeror is, at the time of the sale, a Managementholder bound by this
Agreement. If the Managementholder's Stock as to which the option referred to in
subsection (b) was not exercised remains unsold at the end of such 60-day
period, such Managementholder's Stock may not thereafter be transferred unless
the Managementholder again complies with this Section 2.1.
(d) Any Offeror who acquires Common Stock pursuant to an Offer shall,
by its purchase of such Common Stock and acceptance of the certificates
therefor, be deemed to agree to, and shall be bound by, the provisions of this
Agreement and shall at the time of closing of the purchase of any Common Stock
execute such documents as may be, in the reasonable opinion of the Corporation,
required in order to evidence such agreement.
2.2 SALE WHEN THE CORPORATION IS A PUBLIC COMPANY.
(a) Notwithstanding Section 2.1, at any time when the Corporation is a
Public Company, except during any 180-day period following any final
qualification or registration of securities of the Corporation for a public
offering, a Managementholder shall, after complying in full with the provisions
of this Section 2.2, be entitled during any 90-day period to sell up to 5% of
the
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Managementholder's Stock then held by him through the facilities of any
securities exchange on which the Common Stock is then listed or quoted in the
NASDAQ System or the over-the-counter market, subject to compliance with
applicable securities laws and with the by-laws and regulations of such exchange
(such a sale is hereinafter referred to as a "Market Sale"). No Managementholder
shall, however, sell in the aggregate pursuant to this Section 2.2 more than a
maximum of one-third of the aggregate number of Managementholder's Stock
acquired to such date by such Managementholder; provided that the Board of
Directors may, on the recommendation of the Presi dent of the Corporation,
permit the Managementholder to sell in excess of the foregoing maximum
proportion of his Managementholder's Stock.
(b) Not less than five and not more than ten business days before
effecting any Market Sale, the Managementholder shall first give notice to the
Corporation and Onex (a "Market Sale Notice") offering to sell to the
Corporation or, if the Corporation elects not to purchase the Managementholder's
Stock, to Onex, all of that number of shares of Managementholder's Stock which
it proposes to sell, at a price per share of Common Stock equal to the average
closing price per share on such securities exchange on which the Common Stock is
then listed or which is quoted or the NASDAQ System or the over-the-counter
market for the ten trading days thereon immediately preceding the date of the
Market Sale Notice (the "Market Price").
(c) If the Corporation or Onex, wish to accept an offer made pursuant
to a Market Sale Notice they shall do so by notice of election to purchase (a
"Market Exercise Notice"), given to the Managementholder within three business
days after receipt by the Corporation and Onex of the Market Sale Notice, which
designates the number of shares of Managementholder's Stock to be purchased, and
the Managementholder shall thereupon be bound to sell such Managementholder's
Stock to the Corporation or Onex , as the case may be, and the Corporation or
Onex , as the case may be, shall be obligated to buy such shares of
Managementholder's Stock at the Market Price. If the Corporation or Onex elect
to purchase a part, only, of the number of the Managementholder's Stock which
the Managementholder offered to sell, the Managementholder may sell the balance
of the shares of Managementholder's Stock which were offered, through the
facilities of any securities exchange on which the Common Stock is then listed
or quoted on the NASDAQ System or the over-the-counter market, on any of the
five consecutive business days commencing on the fifth business day after
receipt by the Corporation and Onex of the Market Sale Notice.
2.3 SALE UPON CESSATION OF EMPLOYMENT.
(a) If a Managementholder ceases to be employed in a full-time capacity
by the Operating Company for any reason (including but not limited to the
Managementholder's voluntary termination, termination by the Operating Company
with or without cause, or the Managementholders' death, permanent disability or
retirement) prior to the time the Corporation becomes a Public Company, the
Corporation (or, if the Corporation elects not to purchase the
Managementholder's Stock, Onex) shall purchase, and the Managementholders shall
sell, all of the Managementholder's Stock owned by such Managementholder. The
Purchase Price payable per
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share in any sale of Common Stock pursuant to this Section 2.3 shall be equal to
Book Value Per Share.
(b) If the Corporation effects a public offering of securities of the
same class as the Managementholder's Stock purchased pursuant to this Section
2.3 within six months after the closing of such purchase, the purchase price per
share shall be increased by an amount equal to the excess, if any, of the public
offering price per share pursuant to such public offering (after deduction of
any applicable underwriters' commissions or discounts and expenses of such
offering on a per share basis) over the Book Value Per Share used in calculating
the original purchase price.
(c) The purchase price for Managementholder's Stock purchased pursuant
to this Section 2.3 shall be paid 100% in cash at the closing of such purchase.
(d) If so required by a selling Managementholder, the Corporation shall
deliver a copy of the balance sheet on which the determination of Book Value Per
Share was based and, in reasonable detail, a calculation of the purchase price
payable to the selling Managementholder. The selling Managementholder, upon
request, shall also receive a copy of a letter from the auditors of the
Corporation to the effect that they have reviewed the calculation of the
purchase price payable, and that nothing has come to their attention that caused
them to believe that such calculation was not in accordance with this Agreement.
If the Corporation delivers the balance sheet, calculation and letter, the
determination of the purchase price payable set forth therein shall be
conclusive and binding on all parties.
(e) If a Managementholder acquires any Common Stock following the
termination of his employment with the Operating Company through the exercise of
any option pursuant to the terms of a plan for the benefit of management
employees of the Operating Company, the Corporation (or, if the Corporation so
elects, Onex) shall purchase, and the Managementholder shall sell, all such
Common Stock at a purchase price of 100% of Book Value Per Share.
2.4 SALE UPON CESSATION OF EMPLOYMENT WHEN THE CORPORATION IS A PUBLIC
COMPANY.
Notwithstanding Section 2.2, if a Managementholder ceases to be
employed in a full-time capacity by the Operating Company for any reason
(including but not limited to the Managementholder's voluntary termination,
termination by the Operating Company, with or without cause, or the
Managementholder's death, permanent disability or retirement) after the time the
Corporation has become a Public Company, the Managementholder shall be entitled
to sell his Managementholder's Stock through the facilities of any securities
exchange on which the Common Stock is then listed or quoted on the NASDAQ system
or over-the-counter market, provided such sales are made in the normal course
and in a manner which complies with applicable securities laws and regulations
and stock exchange rules and provided further that no more than one-half of his
Managementholder's Stock may be sold prior to the first anniversary of such
termination of employment. Notwithstanding the previous sentence, (a) in the
event of the death of the
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Managementholder, his executors or administrators shall not be restricted as to
the proportion of his Managementholder's Stock that may be sold during the year
following termination of employment, (b) in the event of the termination of his
employment by reason of his permanent disability, the Managementholder shall not
be restricted as to the proportion of his Managementholder's Stock that may be
sold during the year following termination of employment, and (c) in the event
of the retirement of the Managementholder, up to 75% of his Managementholder's
Stock may be sold during the year following termination of employment.
2.5 DEFINED TERMS AND EXPRESSIONS. As used in this Article:
(a) "permanent disability" means the inability of a Managementholder to
fulfill his duties as an employee of the Operating Company as a result of
illness, accident or physical or mental disability either for a period of six
consecutive months or for any 180 days in any 365-day period.
(b) "retirement" means retirement of a Managementholder in accordance
with the retirement policy provided for in the Operating Company's employment
policies in effect from time to time.
(c) "termination by the Operating Company without cause" shall mean
termination by the Operating Company on grounds other than gross or continued
neglect of duty, serious and wilful misconduct, theft, embezzlement, fraud,
breach of fiduciary duty or other like cause.
(d) "termination by the Operating Company" shall include a refusal by
the Operating Company to renew an employment contract at the end of its stated
term.
2.6 SALE UPON DEFAULT OF INDEBTEDNESS. If a Managementholder defaults
on any indebtedness referred to in Section 1.5, the Corporation (or, if the
Corporation does not exercise such option, Onex) shall have the option to
purchase the shares of Managementholder's Stock held by such Managementholder at
a purchase price per share determined in accordance with subsection 2.3(a)
exercisable by notice (for purposes of this Section, a "Notice") to such
Managementholder.
2.7 CLOSING.
(a) The closing of any purchase and sale of Managementholder's Stock
pursuant to exercise by the Corporation or Onex of a right, or fulfillment of an
obligation, under Section 2.1, 2.2, 2.3 or 2.6 shall be held at the registered
office of the Corporation at a date and time designated by the purchaser, but in
any event not later than 60 days (or, in the case of a purchase and sale
pursuant to subsection 2.3(e), 120 days) after the date of receipt of the
Notice, receipt of the Market Sale Notice, cessation of employment or date of
acquisition of Common Stock following termination of employment referred to in
subsection 2.3(e), as the case may be.
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(b) Any Managementholder's Stock purchased by Onex or the Corporation,
pursuant to the exercise of a right, or fulfillment of an obligation, under
Section 2.1, 2.2, 2.3 or 2.6, shall be free and clear of all liens, charges,
encumbrances or restrictions with the exception of any restrictions imposed by
this Agreement where such Managementholder's Stock is purchased by Onex.
2.8 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Each Managementholder
acknowledges that, in the course of performing and fulfilling his duties and as
an employee of the Operating Company (which in this section includes its
affiliates), he may have access to and may be entrusted with confidential
information concerning its activities, business operations and its customers and
clients, which information is not generally known in the industry in which the
Operating Company does business ("Confidential Information"). The disclosure of
any Confidential Information to competitors of the Operating Company or to other
persons would be highly detrimen tal to the interests of the Operating Company.
Each Managementholder further acknowledges and agrees that the right to maintain
confidential such Confidential Information is a proprietary right which the
Operating Company is entitled to protect. Accordingly, each Managementholder
covenants and agrees with the Operating Company that (a) he will not during the
continuance of his employment by the Operating Company disclose any such
Confidential Information to any person, nor shall he use the same, except as
required in the normal course of his employment by the Operating Company, and
(b) after the termination or expiration of his employment by the Operating
Company, he will not disclose or make any use of same without the consent of the
Operating Company, provided, however, that he shall not be prohibited by this
paragraph from using the personal skills and knowledge developed by him prior to
and during his employment by the Operating Company. Each Managementholder
acknowledges that the above covenants are reasonable and agrees that, in
addition to any other remedies at law it may have (which other remedies such
Managementholder acknowledges to be inadequate to protect its legitimate
interests), the Operating Company shall be entitled to injunctive relief in the
event of a breach thereof.
ARTICLE THREE
SALE OF COMMON STOCK BY ONEX AND THE CORPORATION
3.1 PIGGY-BACK RIGHT.
(a) Except as provided in Section 3.4, if at any time the Board of
Directors approves a Sale of the Company (an "Approved Sale"), the Corporation
shall, at least 20 days prior to the Approved Sale, give notice (a "Sale
Notice") to the Management Representatives (as hereinafter defined) on behalf of
the Managementholders describing the terms of the Approved Sale in reasonable
detail, including the identity of the proposed purchaser, and stating that each
Managementholder has (and each Managementholder shall then have) the option to
sell to the proposed purchaser his Managementholder's Stock, simultaneously with
and conditional upon the closing of the Approved Sale, at the price per share
and on the other terms consistent with the rights
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and preferences of the Common Stock set forth in the Corporation's Certificate
of Incorporation as is reasonably determined by the Board of Directors.
(b) The option pursuant to subsection (a) shall be exercised by notice
to the Corporation given not later than the date specified therefor in the Sale
Notice, which shall be not less than 10 business days after such Sale Notice is
given. If a Managementholder gives notice of his election to sell, he shall be
obligated to sell the shares of Managementholders' Stock specified in his notice
upon the terms specified in subsection (a) to the proposed purchaser,
conditional upon the closing of the Approved Sale.
(c) If the proposed purchaser pursuant to the Approved Sale has
specified a limited number of shares of Common Stock which it is willing to
purchase in the aggregate, each Managementholder shall have the right to sell to
the proposed purchaser up to that number of shares of Common Stock which is in
the same proportion to all shares of Common Stock being purchased by the
proposed purchaser as the number of shares of Common Stock then owned by such
Managementholder is of the total number of shares of Common Stock then
outstanding (in each case, assuming the conversion or exchange of all securities
convertible into or exchangeable for Common Stock).
3.2 DRAG-ALONG RIGHT. If at any time the Board of Directors proposes an
Approved Sale, the Corporation may, by so notifying the Management
Representatives on behalf of the Managementholders in the Sale Notice, require
each Managementholder to sell his Managementholder's Stock, simultaneously with
and conditional upon the closing of such Approved Sale, at the price (whether in
cash or other consideration) per share and other terms consistent with the
rights and preferences of the Common Stock set forth in the Corporation's
Certificate of Incorporation as is reasonably determined by the Board of
Directors, and each Managementholder shall thereupon be obligated to sell such
Managementholder's Stock. If the form of consideration to be received on such
Approved Sale is, in the reasonable opinion of the Board of Directors after
consultation with the Management Representatives, inappropriate as a form of
consideration for Managementholders, the Corporation shall use its best efforts
to have such consideration converted to cash or more appropriate consideration
at a fair value.
3.3 REPRESENTATIONS AND WARRANTIES ON A DISPOSITION. In connection with
any Approved Sale, in which Managementholder's Stock is to be sold by a
Managementholder, the Corporation may require the Managementholder to enter into
agreements with the purchaser representing and warranting that, except as
specifically disclosed to the purchaser in writing, such Managementholder, at
the time of the closing of the Approved Sale, does not have actual knowledge
that any representation or warranty made by the Corporation or any other
shareholder in connection with the Approved Sale was untrue in any material
respect when made or is untrue in any material respect as of such closing; the
liability of the selling Managementholder under such representation and warranty
shall be limited to the amount which he receives from the sale of his
Managementholder's Stock in connection with the Approved Sale and shall be pro
rata in accordance
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with the number of shares of Common Stock sold by the Managementholder in
relation to the shares of Common Stock being sold by all shareholders as part of
the Approved Sale.
3.4 EXCEPTIONS TO THE PIGGY-BACK RIGHT. Section 3.1 shall not apply to
any sale as part of a public offering of Common Stock.
3.5 PIGGY-BACK RIGHT ON A PUBLIC OFFERING.
(a) If the Corporation proposes to effect a public offering of shares
of Common Stock in which shares of the Corporation's Common Stock held by Onex
are to be included, the Corporation shall, at least 20 days prior to the
proposed initial filing or registration, give notice thereof and of the manner
of offering contemplated thereby ("Public Offering Notice") to each of the
Managementholders unless a determination has been made by the managing
underwriter(s) pursuant to sub-section (g) of this Section 3.5 to the effect
that there is reasonable cause to believe that the inclusion of the
Managementholders' Stock might adversely affect the offering.
(b) The Corporation shall not be required to give a Public Offering
Notice in accordance with subsection (a) or to register Managementholder's Stock
in accordance with subsection (c) if the distribution of shares of Common Stock
being proposed cannot, under applicable law and regulations, be combined
(pursuant to the form of prospectus or registration statement proposed to be
used) with a distribution of shares of Managementholder's Stock or if and to the
extent that such distribution of Managementholder's Stock would contravene an
agreement with a security holder that prohibits or restricts the inclusion of
securities to be sold by others.
(c) If a Public Offering Notice is given, then, on written notice to
the Corporation (a "Holder's Request") from a Managementholder within 10 days
after the receipt of the Public Offering Notice (which Holder's Request shall
specify the number of shares of Managementholder's Stock which the
Managementholder wishes to sell and distribute, which number shall not represent
a greater proportion of such Managementholder's Stock than the proportion of all
shares of Common Stock held by Onex which is proposed to be sold and distributed
pursuant to such public offering) the Corporation will use its best efforts to
register the shares of Managementholder's Stock stated in the Holder's Request
(or, if less, the Pro Rata Number of such Managementholder's Stock) for
distribution pursuant to the proposed public offering in addition to the shares
of Common Stock being offered by Onex. If the number of shares of Common Stock
which Onex, the Managementholders and other holders of Common Stock wish to sell
and distribute exceeds the number thereof which, in the opinion of the managing
underwriter(s), is the maximum number thereof that might be included with the
offering without adversely affecting the offering, then the excess above such
maximum number shall not be included with the offering, and the number of shares
of Common Stock of Onex and each Managementholder wishing to sell, to be sold
with the offering, shall be proportionate to their respective holdings of Common
Stock. If any of the Managementholders is thereby entitled to sell more shares
of Common Stock than he wishes to sell, Onex and each remaining Managementholder
shall be entitled to make up the difference pro-rata from its or his respective
holdings, provided that any such Managementholder shall have confirmed
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his desire to make up his pro-rata proportion of the difference out of his
holdings within 5 days after notice of his entitlement to do so is given to him.
(d) As used in this Section 3.5, the term "Pro Rata Number" shall mean
the product of (i) the total number of shares of Common Stock held by the
Managementholder and (ii) a fraction, the numerator of which is the aggregate
number of shares of Common Stock which are to be so registered and the
denominator of which is the aggregate number of shares of Common Stock
outstanding.
(e) On a sale pursuant to this Section 3.5, Managementholders shall
sell their shares of Common Stock through the underwriters on the same terms as
Onex or the Corporation generally are selling their or its shares of Common
Stock.
(f) The Corporation shall be responsible for the preparation of the
preliminary prospectus, the prospectus or registration statement and related
papers and filings (including any Blue Sky filings) in connection with the
proposed public offering.
(g) Notwithstanding the provisions of this Section 3.5, the Corporation
(i) may at any time delay, abandon or withdraw such prospectus or registration
statement relating to a proposed offering, and (ii) shall not be required to
register Managementholder's Stock pursuant to subsection (c) in connection with
any proposed offering if, in the opinion of the managing underwriter(s), there
is reasonable cause to believe that the inclusion of such Managementholder's
Stock might adversely affect the offering.
(h) Each participating Managementholder shall supply the Corporation
with such information as the Corporation may reasonably request in order to
prepare any preliminary prospectus, prospectus and registration statement
required in connection with the proposed public offering, to prepare any related
papers and filings, to effect the qualifications required by this Section 3.5
and to comply with applicable securities laws.
(i) Each Managementholder's registration rights are limited solely to
the rights set forth in this Section 3.5.
3.6 COSTS OF PUBLIC OFFERING. Each Managementholder who participates in
a public offering of Common Stock of the Corporation pursuant to any provision
of this Article 3 shall bear a portion of all costs incurred in connection with
such offering including, without limitation, the fees of investment bankers,
lawyers and accountants in the same proportion as the number of shares of Common
Stock sold by such Managementholder is of all the Common Stock sold pursuant to
such public offering unless such costs are to be borne by the Corporation. Each
Managementholder shall, in any event, pay the underwriting discounts or
commissions applicable to the sale of his Common Stock in such public offering
and, where required, execute the applicable underwriting agreement and all
related documents.
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ARTICLE FOUR
LEGENDING AND VOTING
4.1 LEGENDING OF STOCK CERTIFICATES. All certificates representing
shares of Common Stock held by Managementholders shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON THE VOTING OF SUCH
SECURITIES CONTAINED IN THE MANAGEMENT STOCKHOLDERS AGREE MENT, DATED
AS OF JULY 16, 1999 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY")
AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH MANAGEMENT
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY
TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
4.2 VOTING OF MANAGEMENTHOLDER'S STOCK. Each Managementholder shall at
all times vote his Managementholder's Stock (to the extent they are entitled to
vote) in the same manner as the Common Stock held by Onex is voted, on the
election of directors and on all other matters which are submitted to a ote (or
consent in lieu of voting) of the Corporation's stockholders, and for this
purpose, shall execute and deliver to Onex (or its designees) proxies to vote
such Managementholder's Stock in the same manner as the Common Stock held by
Onex is voted. To the extent permitted by law, each Managementholder, by his
execution of this Agreement, irrevocably constitutes and appoints the person who
is at any time the president of Onex, his proxy to vote all of his
Managementholder's Stock at any meeting of stockholders of the Corporation, or
to give consent in lieu of voting, on any matter which is submitted for a vote
or consent to the stockholders, provided that such Managementholder's Stock is
voted or consent is given with respect to them in the same manner as the Common
Stock held by Onex. Notwithstanding anything contained in this Section 4.2,
Managementholder's Stock shall not, except with the express consent of the
Managementholder, be voted in favor of any resolution the effect of which will
be to change the Managementholder's Stock or Onex Stock, or convert or exchange
the Managementholder's Stock or Onex Stock into or for different securities,
unless in every such case the Managementhold er's Stock and the Onex Stock are
thereby changed identically or converted into or exchanged for the same type of
securities in proportion to their respective holdings of Common Stock, in each
case on terms consistent with the rights and preferences set forth in the
Corporation's Certificate of Incorporation as is reasonably determined by Onex.
4.3 MANAGEMENT REPRESENTATIVES. Each of the Managementholders hereby
irrevocably constitutes and appoints the Management Representatives (as defined
in this Section 4.3) as his representatives to take all actions on his behalf in
connection with this Agreement, in their sole
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and absolute discretion, including but not limited to executing any consents or
waivers in connection with, or any amendments to, this Agreement (with the
exception of any decision to sell his Managementholder's Stock pursuant to
Section 2.1, 2.2, 3.1, or 3.5). In the event of a disagreement among the
Management Representatives, a majority of them shall have all authority granted
to the Management Representatives by the Managementholder under this Agreement.
The term "Management Representatives" shall mean the Chief Executive Officer of
the Corporation and any two Vice-Presidents of any Operating Company designated
from time to time by the Chief Executive Officer.
ARTICLE FIVE
COVENANTS OF THE CORPORATION
5.1 MERGERS, CONSOLIDATIONS, ETC. The Corporation shall not merge,
consolidate or reorganize with another corporation, or sell all or substantially
all of its assets to another person, if pursuant thereto Onex shall receive
equity securities as full or partial consideration for its Common Stock, unless
all Managementholders shall have the right to receive the same securities in
proportion to their respective holdings of Common Stock, in each case on terms
consistent with the rights and preferences set forth in the Corporation's
Certificate of Incorporation as is reasonably determined by the Board of
Directors.
5.2 FINANCIAL STATEMENTS. The Corporation shall deliver to each
Managementholder so long as he owns Managementholder's Stock:
(a) within 120 days after the end of each fiscal year of the
Corporation, a consolidated balance sheet of the Corporation and its
subsidiaries as at the end of such fiscal year, and consolidated statements of
income and of cash flows of the Corporation and its subsidiaries for such fiscal
year, accompanied by a report thereon of independent certified public
accountants; and
(b) within 45 days after the end of each fiscal quarter of the
Corporation, a consolidated balance sheet of the Corporation and its
subsidiaries as at the end of such quarter, and consolidated statements of
income and of cash flows of the Corporation and its subsidiaries for such
quarter, and a certificate of an officer of the Corporation certifying that, in
his opinion, the statements fairly present the financial position and results of
operation of the Corporation and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles (except that such
statements need not include complete notes).
(c) Except as otherwise required by any applicable law or judicial
order or decree or by any governmental agency or authority, each
Managementholder entitled to receive information regarding the Corporation and
its subsidiaries under this Section 5.2 shall maintain the confidentiality of
all nonpublic information obtained by such Managementholder hereunder which the
Corporation has reasonably designated as proprietary or confidential in nature;
provided that each such Managementholder may, to the extent required by law,
disclose such information in connection
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with the sale or transfer of Common Stock if such Managementholder's transferee
agrees in writing to be bound by the provisions hereof.
ARTICLE SIX
INTERPRETATION
6.1 DEFINITIONS. When used in this Agreement the following terms shall
have the respective meanings shown:
(a) "affiliate" means, with respect to any person, any of (i) a
director or executive officer of such person, (ii) a spouse, parent, sibling or
descendant of such person (or spouse, parent, sibling or descendant of any
director or executive office of such person), and (iii) any other person that,
directly or indirectly, controls, or is controlled by or is under common control
with such person (for purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any person, means the possession,
directly or indirectly of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or agency or otherwise);
(b) "Board of Directors" means the board of directors of the
Corporation;
(c) "business day" means any day which is neither a Saturday or Sunday
nor a legal holiday on which the banks are authorized or required to be closed
in New York City;
(d) "Book Value Per Share" as of any date means the quotient obtained
by dividing (i) consolidated common stockholders' equity of the Corporation and
its subsidiaries as of the end of the fiscal quarter immediately subsequent to
the date of the event that required the purchase and sale pursuant to Section
2.3 or Section 2.6, determined in accordance with generally accepted accounting
principles in effect in the United States on the date of this Agreement by (ii)
the number of shares of Common Stock outstanding on such date. In making
calculations for purposes of clauses (i) and (ii) it shall be assumed that all
options and rights to purchase shares of Common Stock and securities convertible
or exchangeable into Common Stock outstanding on the date as of which the
calculation is being made had been exercised or converted to the extent that the
exercise price or conversion price (expressed in terms of principal amount of
debt or liquidation preference in the case of shares) does not exceed Book Value
Per Share (determined without regard to this sentence) and any purchase price
for shares of Common Stock payable upon such exercise had been paid. The
determination of Book Value Per Share shall be based upon the audited (in the
case of the end of a fiscal year) or unaudited (in the case of the end of any of
the first three quarters of a fiscal year) balance sheet of the Corporation as
at the end of the fiscal quarter in question. Notwithstanding the foregoing,
Book Value Per Share shall be equitably adjusted by the Board of Directors if a
stock dividend, recapitalization (including, without limitation, the April 21,
1999 recapitalization transaction) or other material event occurs outside of the
ordinary course of business
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after the end of such fiscal quarter and before the closing of the sale in
respect of which the determination is being made;
(e) "Common Stock" means (i) any Class A Common, Class B Common, Class
C Common, Class D-1 Common, Class D-2 Common, Class E Common and any other
common stock of the Corporation outstanding from time to time and (ii) any
equity securities issued or issuable, directly or indirectly, with respect to
the securities referred to in clause (i) above by any of stock divided or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization;
(f) "Independent Third Party" means any person who, immediately prior
to the contemplated transaction, does not own in excess of 5% of the
Corporation's common stock on a fully-diluted basis (a "5% Owner") and who is
not an affiliate of a 5% Owner.
(g) "Management Representatives" shall have the meaning given to it in
Section 4.3;
(h) "Managementholder's Stock" means the Common Stock owned at any
particular time by any Managementholder other than Common Stock purchased by a
Managementholder through the facilities of a securities exchange on which the
Common Stock is then listed or quoted in the NASDAQ System or the
over-the-counter market after the Corporation has become a Public Company;
(i) "Onex" means Onex American Holdings LLC or any affiliate of Onex
American Holdings LLC;
(j) "Operating Company" means any one or more of the Corporation,
French Holdings, Inc. and their subsidiaries;
(k) "person" includes an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof;
(l) "Public Company" means a corporation which has effected a public
offering;
(m) "public offering" means public offering and sale of Common Stock
pursuant to an effective registration under the 1933 Act;
(n) "Sale of the Company" means the sale of the Corporation to an
Independent Third Party or a group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Corporation
possessing the voting power to elect a majority of the Corporation's board of
directors (whether by merger, consolidation, recapitalization, reorganization or
sale of a majority of the Corporation's outstanding Common Stock and Common
Stock equivalents) or (ii) all or substantially all of the Corporation's
consolidated assets.
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(o) "subsidiary" means, with respect to any person, any corporation of
which the shares of stock having fifty percent (50%) or more of the general
voting power in electing the board of directors are, at the time is of which the
determination is being made, owned by such person either directly or indirectly
through subsidiaries; and
(p) "transfer" includes any sale, exchange, assignment, gift, bequest,
pledge, creation of a lien or security interest, disposition, encumbrance, or
other arrangement by which possession, legal title or beneficial ownership
passes from one person to another, or to the same person in a different
capacity, whether or not voluntary and whether or not for value.
6.2 EXTENDED MEANINGS. In this Agreement, words importing the singular
number include the plural and vice versa and words importing gender include all
genders.
6.3 GOVERNING LAW. This Agreement and all amendments hereof and waivers
and consents hereunder shall be governed by the internal law, and not the law of
conflicts, of the State of Delaware.
6.4 CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.
6.5 SEVERABILITY. The provisions of this Agreement are intended to be
and shall be deemed to be severable. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
6.6 TIME. Time shall be of the essence in this Agreement.
ARTICLE SEVEN
MISCELLANEOUS
7.1 TERMINATION. This Agreement shall terminate if Onex ceases to hold
at least one-third of the outstanding shares of Common Stock of the Corporation
and this Agreement shall terminate as to any person when that person no longer
owns any shares of Managementholder's Stock, or rights to acquire shares of
Common Stock to which this Agreement shall apply under Section 1.8.
7.2 NOTICES. All notices, consents and other communications required or
permitted to be given under or by reason of this Agreement shall be in writing
and shall be delivered personally or by telex or telecopy as described below,
and shall be deemed given on the date on
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which delivery is made. If delivered by telex or telecopy, such notices or
communications shall be confirmed by a registered or certified letter (return
receipt requested), postage prepaid. Any such delivery shall be addressed to the
intended recipient at the following addresses (or at such other address for a
party as shall be specified by such party by like notice to the other parties):
(a) if to the Corporation:
J.L. French Automotive Castings, Inc.
3101 South Taylor Drive
Sheboygan, WI 53802
Attention: President
Telecopy: (920) 458-4861
with a copy to:
Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Carl E. Nelson
Telecopy: (612) 332-2012
and
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Schoenfeld
Telecopy: (312) 861-2200
(b) if to Onex:
Onex American Holdings LLC
161 Bay Street
(P.O. Box 700)
49th Floor
Toronto, Canada M5J 2S1
Attention: President
Telecopy: (416) 362-5765
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with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Schoenfeld
Telecopy: (312) 861-2200
(c) if to any Managementholder, to him at his address as appears on
Schedule I attached hereto or as otherwise shown on the records of the
Corporation.
7.3 NO WAIVER. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. No purported waiver shall be
effective unless in writing. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent or other breach.
7.4 EXCLUSIVE AGREEMENT AND AMENDMENT. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter, is
intended as a complete and exclusive statement of the terms of the Agreement
among the parties with respect thereto and cannot be changed or terminated
orally. This Agreement may only be amended or altered by the mutual agreement of
the parties hereto, such amendments or alterations to become effective when
reduced to writing and signed by Onex, the Corporation, and a majority of the
Management Representatives or by the Corporation and the holders of at least 75%
of the shares of Managementholders' Stock.
7.5 FURTHER ASSURANCES. Each party agrees to take all such actions and
to execute all such documents as may be necessary or advisable to implement the
provisions of this Agreement fully and effectively.
7.6 ASSIGNMENT.
(a) Notwithstanding any provision of this Agreement, a Managementholder
may transfer all or any of his Managementholder's Stock to a Managementholder
Corporation (as hereinafter defined), which is then controlled by the
transferor, provided that simultaneously with or prior to such transfer such
Managementholder Corporation shall have agreed in writing with the other parties
to this Agreement to assume all of the obligations of the transferor hereunder
with respect to such shares of Managementholder's Stock and provided that the
transferor agrees to guarantee the performance of such obligations to the other
parties hereto, in each case by a written instrument reasonably satisfactory to
the Board of Directors, in which case references herein to Managementholders
shall thenceforth include any such Managementholder Corporation so long as it
shall continue to hold any Managementholder's Stock. In this Section,
"Managementholder Corporation" means (i) a corporation, all of the shares of
which are legally and beneficially owned
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by one or more of the transferor, his spouse, either of their children, and/or
any spouse of any of the children, or (ii) any trust exclusively in favor of any
of the foregoing persons. A Managementholder Corporation may, at any time, and
shall forthwith in the event that such Managementholder Corporation ceases to be
controlled by the transferor or ceases to qualify as a Managementholder
Corporation under the foregoing definition, transfer back to the transferor all
of the Manage mentholder's Stock, held by it. For purposes of Sections 2.3 and
2.4, Managementholder's Stock owned by a Managementholder Corporation shall be
deemed to be owned by the transferor.
(b) Subject to the foregoing, no party may assign any of its rights or
delegate any of its duties under this Agreement.
7.7 COUNTERPARTS.
(a) This Agreement may be executed in counterparts, each of which shall
be considered an original, but all of which together shall constitute one and
the same instrument.
(b) Any Managementholder may also execute this Agreement by executing
and delivering to the Corporation a Counterpart and Acknowledgment in the form
set out as Schedule II to this Agreement, whereupon such Managementholder shall
become bound by, and entitled to the benefits of, this Agreement as fully and
effectively as though such Managementholder had executed a Counterpart of this
Agreement together with the other parties to this Agreement.
7.8 BINDING EFFECT. This Agreement shall be binding upon, and shall
inure to the benefit of the parties to this Agreement and their respective
heirs, executors, administrators, personal representatives, successors and
permitted assigns.
7.9 DECISIONS OF BOARD OF DIRECTORS. All decisions and determinations
permitted or required to be made by the Corporation hereunder shall be made by
the Board of Directors in its sole unfettered discretion and all such decisions
and determinations shall be conclusive and binding on the parties hereto.
* * * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto, all as of the date first above written.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
By: /s/ Thomas C. Dinolfo
Its: ____________________________________
ONEX AMERICAN HOLDINGS LLC
By: _____________________________________
Its: ____________________________________
MANAGEMENTHOLDERS:
-----------------------------------------
Peter Allan
-----------------------------------------
Igotz Arocena Fernandez
-----------------------------------------
Martin Baranano Orbe
-----------------------------------------
Paul Buckley
-----------------------------------------
Larry J. Buvid
-----------------------------------------
Darren Christiansen
-----------------------------------------
Kim Clark
-----------------------------------------
Jeff Daehn
<PAGE>
-----------------------------------------
Nicholas Davey-Turner
-----------------------------------------
Paul A. Davidson
-----------------------------------------
Michael DeVriend
-----------------------------------------
Thomas C. Dinolfo
-----------------------------------------
Dan Evanoff
-----------------------------------------
Rodney Evans
-----------------------------------------
Chad Hayner
-----------------------------------------
Michael Isken
-----------------------------------------
Tim Kaderabek
-----------------------------------------
Bradley S. King
-----------------------------------------
Larry Lengfeld
-----------------------------------------
Robert J. Lodl
-----------------------------------------
Paul Moxley
-----------------------------------------
Michael Lutzke
<PAGE>
-----------------------------------------
Juan Manuel Orbea
-----------------------------------------
Brian Ott
-----------------------------------------
Rafael Paris Hurado
-----------------------------------------
Donald W. Porritt
-----------------------------------------
Timothy John Price
-----------------------------------------
Gordon Schloemer
-----------------------------------------
Lowell E. Shoaf
-----------------------------------------
Dan Skinner
-----------------------------------------
Stephen R. Southern
-----------------------------------------
Jose Manuel Susino De La Chica
-----------------------------------------
Russell Voss
-----------------------------------------
Joseph K. Wallstead
-----------------------------------------
Charles M. Waldon
-----------------------------------------
David White
<PAGE>
-----------------------------------------
Ian Wilson
-----------------------------------------
Richard H. Yinko Sr.
<PAGE>
SCHEDULE I
NAMES AND ADDRESSES OF MANAGEMENTHOLDERS
<TABLE>
<S> <C>
Peter Allan Igotz Arocena Fernandez
8, Cecil Road Paseo Toki-Eder, 40
Sheam Sutton 20013 San Sebastian, Spain
SM1 2DL England
Martin Baranano Orbe Larry J. Buvid
Avda Montevideo 25, 2 DEG. D 435 Sundstone Terrace
48200 Durango, Vizcaya Kiel, WI 53052
Spain
Kim Clark Darren Christiansen
155 West Ridge
Sheboygan Falls, WI 53085
Jeff Daehn Nicholas Davey-Turner
1109 Carver Avenue 5531 Windsor Drive
Howards Grove, WI 53083 Sheboygan, WI 53083
Paul A. Davidson Michael DeVriend
Border House, Ford Street 4013 North 47th Place
Stapleton, Presteigne Sheboygan, WI 53083
Powys LD8 2LW Wales
Thomas C. Dinolfo Dan Evanoff
2329 North 3rd Street N5748 County Road S
Sheboygan, WI 53083 Plymouth, WI 53073
Rodney Evans Chad Hayner
14 Highland Road W3171 Elm Lane
Bridgnorth Shropshire WV16 5BY Sheboygan Falls, WI 53085
England
Michael Isken Tim Kaderabek
520 Huenink Avenue 4565 Hunters Glen Drive
Cedar Grove, WI 53013 Sheboygan, WI 53083
Bradley S. King Larry Lengfeld
1627 Golfview Drive 223 River Oaks Drive
Sheboygan, WI 53083 Sheboygan Falls, WI 53085
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Robert J. Lodl Michael Lutzke
W8948 Butler Lake Road N7036 River Woods Drive
Cascade, WI 53011 Sheboygan, WI 53083
Juan Manuel Orbea Brian Ott
Edificio Equzki-Lore 303 Niagara Avenue
Nafarroa Kalea, 11-F 1 DEG. B Sheboygan, WI 53081
20800 Zarauz,
Spain
Rafael Paris Hurtado Donald W. Porritt
c/ Arramendi, 23 2202 Meadowland Drive
20240 Ordizia, Spain Apartment 104
Sheboygan, WI 53081
Timothy John Price Gordon Schloemer
31 Highfields N3897 N. Valley Road
Great Dunmow Plymouth, WI 53073
Chelmsford Essex, UK CM6 1ED
England
Lowell E. Shoaf Dan Skinner
13100 West Cold Spring Road 4925 Stonefield Road
New Berlin, WI 53151 Sheboygan, WI 53083
Stephen R. Southern Jose Manuel Susino De La Chica
35785 Huron River Drive Hompeschstr. 2a
New Boston, MI 48164 D-40239 Duesseldorf, Germany
Russell Voss Joseph K. Wallstead
5426 Superior Avenue 420 Van Buren Road
Sheboygan, WI 53083 Howards Grove, WI 53083
Charles M. Waldon David White
2018 North Sixth Street Page House
Sheboygan, WI 53081 148 Hanging Hill Lane
Hutton Brentwood Essex
England CM13 2HG
Ian Wilson Richard H. Yinko Sr.
Rough Hey Farm 5128 Moenning Road
Hobb Lane, Norland, Sheboygan, WI 53081
West Yorkshire
England HX6 3QP
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Paul Moxley Paul A. Buckley
Rosegarth Lothlorien
Ravens Green The Ridge
Little Bentley Little Baddow
Colchester, Essex CO7 8TA Chelmsford, Essex CM8 4RX
England England
</TABLE>
<PAGE>
SCHEDULE II
MANAGEMENT STOCKHOLDERS AGREEMENT
COUNTERPART AND ACKNOWLEDGMENT
TO: J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
THE MANAGEMENTHOLDERS
ONEX
RE: The Management Stockholders Agreement (the "Agreement") dated
as of __________, 1999 between J.L. French Automotive Castings,
Inc., Onex and the "Managementholders" (each, as defined in the
Agreement)
The undersigned hereby agrees to be bound by the terms of the
Agreement as a party to the Agreement, and shall be entitled to all benefits of
a Managementholder pursuant to the Agreement, as fully and effectively as though
the undersigned had executed a counterpart of the Agreement together with the
other parties to the Agreement. The undersigned hereby acknowledges having
received and reviewed a copy of the Agreement.
DATED this _____ day of ___________, 1999.
------------------------------
Signature of Managementholder
------------------------------
Name of Managementholder
(Please Print)
<PAGE>
Exhibit 10.10
STOCK SUBSCRIPTION AGREEMENT
THIS AGREEMENT, made as of the date of acceptance on the signature page
attached hereto, by and between J.L. French Automotive Castings, Inc., a
Delaware corporation (the "Company"), and the undersigned on the signature page
attached hereto (the "Subscriber").
The Subscriber is a management employee of the Company and/or a
subsidiary of the Company. The Company and Subscriber desire to enter into an
agreement pursuant to which Subscriber subscribes for an aggregate ______ shares
of the Company's Class A Common Stock, par value $.01 per share (the "Class A
Common"), and does hereby agree to pay as consideration therefor, at such time
or times as determined by the Company's board of directors (the "Board"), the
amount of $______. All of such shares of Class A Common and all shares of Class
A hereafter acquired by Subscriber are referred to herein as "Subscriber Stock."
The term "affiliates" as used herein with respect to any person or entity shall
include any person or entity directly or indirectly controlling, controlled by
or under common control with such person or entity.
The Company, the Subscriber and other stockholders are parties to a
Management Stockholders Agreement of even date herewith (the "Stockholders
Agreement").
The Company desires to sell, and the Subscriber desires to purchase,
certain shares of the Class A Common.
The Parties hereby agree as follows:
1. PURCHASE AND SALE OF CLASS A COMMON. Upon execution of this
Agreement, Subscriber shall purchase, and the Company shall sell, ______ shares
of Class A Common at a price of $4,212.00 per share. The Company shall deliver
to Subscriber such shares of Class A Common, and Subscriber shall deliver to the
Company a check or wire transfer of funds in the aggregate amount of $______ and
a promissory note in the form of Annex B attached hereto in an aggregate
principal amount of $______ (the "Subscriber Note"). Subscriber's obligations
under the Subscriber Note shall be secured by a pledge of all of the shares of
Subscriber Stock to the Company, and in connection therewith, Subscriber shall
enter into a pledge agreement in the form of Annex C attached hereto.
2. CLOSING. The closing (the "Closing") of the purchase and sale will
take place at such place and time as reasonably determined by the Company and
shall consummate the purchase and sale of the Class A Common as contemplated in
this Agreement.
3. RESTRICTIONS ON TRANSFERS.
(a) RESTRICTIONS. Restricted Securities are transferable pursuant to
(i) public offerings registered under the Securities Act, (ii) Rule 144 of the
Securities and Exchange Commission (or any
<PAGE>
similar rule then in force) if such rule is available, and (iii) subject to the
conditions specified in paragraph 3(b), any other legally available means of
transfer.
(b) PROCEDURE FOR TRANSFER. In connection with the transfer of any
Restricted Securities (other than a transfer referred to in clauses (i) or (ii)
of paragraph 3(a) above), the holder thereof will deliver written notice to the
Company describing in reasonable detail the transfer or proposed transfer
together with an opinion of counsel (reasonably satisfactory to the Company)
which (to the Company's reasonable satisfaction) is knowledgeable in securities
law matters to the effect that such transfer of Restricted Securities may be
effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of such Restricted Securities delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer of
such Restricted Securities will require registration under the Securities Act,
the Company will promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
Legend set forth in paragraph 4(a) below. If the Company is not required to
deliver new certificates for such Restricted Securities not bearing such legend,
the holder thereof will not transfer the same until the prospective transferee
has confirmed to the Company in writing its agreement to be bound by the
conditions contained in this paragraph and paragraph 4(a).
4. SUBSCRIBER'S REPRESENTATIONS AND WARRANTIES.
(a) SUBSCRIBER'S INVESTMENT REPRESENTATIONS. The Subscriber hereby
represents that he or she is acquiring the Restricted Securities purchased
hereunder for his or her own account with the present intention of holding such
securities for investment purposes and that he or she has no intention of
selling such securities in a public distribution in violation of federal or
state securities laws; provided that nothing contained herein will prevent the
Subscriber and the subsequent holders of such securities from transferring such
securities in compliance with the provisions of paragraph 3 hereof. Each
certificate for Restricted Securities will be conspicuously imprinted with a
legend substantially in the following form (the "Securities Act Legend"):
"The securities represented by this certificate were originally issued
on July 16,1999 and have not been registered under the Securities Act
of 1933, as amended (the "Act"). The transfer of such securities is
subject to the conditions specified in the Stock Subscription Agreement
dated as of July 16, 1999, between the issuer (the "Company") and the
original purchaser hereof, and the Company reserves the right to refuse
to transfer such securities until such conditions have been fulfilled
with respect to such transfer. Upon written request, a copy of such
conditions will be furnished by the Company to the holder hereof
without charge."
Whenever any shares of Class A Common cease to be Restricted Securities and are
not otherwise restricted securities, the holder thereof will be entitled to
receive from the Company, without expense, upon surrender to the Company of the
certificate representing such shares of Class A Common, a new certificate
representing such shares of Class A Common of like tenor but not bearing a
legend of the character set forth above.
-2-
<PAGE>
(b) OTHER REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The
Subscriber hereby warrants to and covenants and agrees with the Company that:
(i) the Subscriber has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Class A Common and has had full access to such other information
concerning the Company and its subsidiaries and operations as the
Subscriber may have requested;
(ii) the Subscriber has such knowledge and experience in
business and financial matters that the Subscriber is capable of
evaluating the merits and risks of the investment to be made pursuant
to this Agreement;
(iii) the Subscriber is able to bear the economic risk of its
investment in the Class A Common purchased hereunder for an indefinite
period of time, including the risk of a complete loss of the
Subscriber's investment in such securities, because the Class A Common
has not been registered under the Securities Act and, therefore, cannot
be sold unless subsequently registered under the Securities Act and
qualified or registered under state securities laws or an exemption
from such registrations and qualifications is available; and
(iv) the Subscriber has duly executed and delivered this
Agreement, and this Agreement constitutes a valid and binding
obligation of the Subscriber, enforceable in accordance with its terms.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Subscriber that the Company has duly executed and
delivered this Agreement, and this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
the availability of equitable remedies and to the laws of bankruptcy and other
similar laws affecting creditors' rights generally.
6. SECTION 83(b) ELECTION. The Subscriber agrees that within 30 days
after he or she purchases Class A Common from the Company, the Subscriber will
make an effective election with the Internal Revenue Service under Section 83(b)
of the Internal Revenue Code and the regulations promulgated thereunder in the
form of Annex C attached hereto.
7. UNDERSTANDING AMONG THE PARTIES. The determination of the
Subscriber to purchase the Class A Common pursuant to this Agreement has been
made by the Subscriber independent of the Company and independent of any
statements or opinion as to the advisability of such purchase or as to the
properties, business, prospects or conditions (financial or otherwise) of the
Company which may have been made or given by the Company, or by any agent or
employee of the Company. In addition, it is acknowledged by the Subscriber that
the Company has not acted as an agent of the Subscriber in connection with
making its investment hereunder and that the Company will not be acting as an
agent of the Subscriber in connection with monitoring the Subscriber's
investment hereunder.
-3-
<PAGE>
8. TRANSFERS AND REPURCHASE. The Subscriber acknowledges that the
Class A Common purchased hereunder is subject to repurchase and restrictions on
transfer contained in the Stockholders Agreement. Sales or other transfers of
Class A Common shall be permitted only to the extent allowed pursuant to the
terms of the Stockholders Agreement and this Agreement.
9. DEFINITIONS.
"RESTRICTED SECURITIES" means the Class A Common issued hereunder and
any securities issued with respect to such Class A Common by way of any stock
dividend or stock split, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities will cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
(b) become eligible for sale pursuant to Rule 144 (excluding Rule 144 (k)) of
the Securities and Exchange Commission (or any similar rule then in force) or
(c) been otherwise transferred and new securities for them not bearing the
Securities Act Legend set forth in paragraph 4(a) have been delivered by the
Company in accordance with paragraph 3(b). Whenever any particular securities
cease to be Restricted Securities, the holder thereof will be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act Legend of the character set forth in paragraph 4(a).
"RULE 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental body or
agency succeeding to the functions thereof.
10. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signature of more than one
party, but all of which taken together will constitute one and the same original
agreement.
(b) ENTIRE AGREEMENT. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
(c) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware. In
-4-
<PAGE>
furtherance of the foregoing, the internal law of the State of Delaware shall
control the interpretation and construction of this Agreement, even though under
that jurisdiction's choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply.
(d) SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(e) SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(f) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are for convenience or reference only and are not a part of this Agreement.
(g) REMEDIES. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(h) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended, modified or waived only upon the
prior written consent of the Company and the Subscriber.
(i) NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
the Subscriber at the address indicated on the signature page and to the Company
at the address indicated below:
NOTICES TO THE COMPANY:
J.L. French Automotive Castings, Inc.
1301 South Taylor Drive
Sheboygan, WI 53802
Attention: President
-5-
<PAGE>
WITH A COPY TO:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: John A. Schoenfeld
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
11. BINDING AGREEMENT. This subscription is not binding unless
accepted in writing in its sole discretion by the Company, within 45 business
days after the Company's receipt of this Subscription Agreement and the
Stockholders Agreement, properly executed. Written notice of such written
acceptance will be given to the Subscriber by delivery of this Agreement signed
by the Company. For purposes of this paragraph 11, "delivery" means (i)
presented to the Subscriber in person, or (ii) deposited with Federal Express or
other overnight carrier.
-6-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement on July
16,1999.
-----------------------------------------
Signature
-----------------------------------------
(Name - please print)
Number of subscribed
shares of Class A Common:
---------
Mailing address:
---------------------------
---------------------------
---------------------------
J.L. French Automotive Castings, Inc. hereby accepts the foregoing
subscription.
Dated: July 16, 1999 J.L. FRENCH AUTOMOTIVE CASTINGS,
INC.
By:
-------------------------------------
Its:
-------------------------------------
<PAGE>
ANNEX A
July 16, 1999
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Class A Common Stock, par value
$.01 per share (the "Shares"), of J.L. French Automotive Castings, Inc., a
Delaware corporation (the "Company") on July 16, 1999. Under certain
circumstances, the Company has the right to repurchase the Shares at book value
from the undersigned (or from the holder of the Shares, if different from the
undersigned) should the undersigned cease to be employed by the Company and its
subsidiaries. Hence, the Shares are subject to a substantial risk of forfeiture
and are non transferable. The undersigned desires to make an election to have
the Shares taxed under the provision of Code Section 83(b) at the time he
purchased the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation
Section 1.83-2 promulgated thereunder, the undersigned hereby makes an election,
with respect to the Shares (described below), to report as taxable income for
calendar year 1999 the excess (if any) of the Shares' fair market value on July
16, 1999 over purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
---------------------
---------------------
---------------------
S.S. No.:
-----------
2. A description of the property with respect to which the election
is being made: ________ shares of J.L. French Automotive Castings, Inc. Class A
Common Stock, par value $.01 per share.
3. The date on which the property was transferred: July 16, 1999. The
taxable year for which such election is made: calendar 1999.
4. The restrictions to which the property is subject: Under certain
specified circumstances, the Company may elect to repurchase all or a portion of
the Shares at the book value of such Shares.
-1(a)-
<PAGE>
5. The fair market value on the date set forth below of the property
with respect to which the election is being made, determined without regard to
any lapse restrictions: $4,212.00 per share of Class A Common Stock.
6. The amount paid for such property: $4,212.00 per share of Class A
Common Stock.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 16, 1999
------------------------------
SUBSCRIBER
-2(a)-
<PAGE>
ANNEX B
PROMISSORY NOTE
$_______ July 16, 1999
For value received, ___________ ("Subscriber") promises to pay on the
fifth anniversary hereof to J.L. French Automotive Castings, Inc., a Delaware
corporation (the "Company"), at its offices in Sheboygan, Wisconsin, or such
other place as designated in writing by the holder hereof, the aggregate
principal sum of $_______. This Note was issued pursuant to and is subject to
the terms of the Stock Subscription Agreement, dated as of July 16, 1999,
between the Company and Subscriber.
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to the lesser of (i) 9% per annum or (ii) the highest rate
permitted by applicable law, and shall be payable quarterly, on the first day of
each January, April, July and October, commencing October, 1999.
The amounts due under this Note are secured by a pledge of _______
shares of the Company's Class A Common Stock, and the payment of the principal
amount and accrued interest under this Note is subject to certain offset rights
under the Stock Subscription Agreement.
In the event Subscriber fails to pay any amounts due hereunder when
due, Subscriber shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
Subscriber, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Subscriber hereunder.
This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Delaware.
------------------------------------
Subscriber
-1(b)-
<PAGE>
ANNEX C
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of July 16, 1999, between ________
("Pledgor"), and J.L. French Automotive Castings, Inc., a Delaware corporation
(the "Company").
The Company and Pledgor are parties to a Stock Subscription Agreement,
dated July 16, 1999, pursuant to which Pledgor purchased _______ shares of the
Company's Class A Common Stock, $.01 par value (the "Pledged Shares"), for an
aggregate purchase price of $________. The Company has allowed Pledgor to
purchase a portion of the Pledged Shares by delivery to the Company of a
promissory note (the "Note") in the aggregate principal amount of $________.
This Pledge Agreement provides the terms and conditions upon which the Note is
secured by a pledge to the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
partial payment for the Pledged Shares, Pledgor and the Company hereby agree as
follows:
1. PLEDGE. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Note and full payment and performance of the obligations and liabilities of
Pledgor hereunder.
2. DELIVERY OF PLEDGED SHARES. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificate(s) representing
the Pledged Shares, together with duly executed forms of assignment sufficient
to transfer title thereto to the Company.
3. VOTING RIGHTS; CASH DIVIDENDS. Notwithstanding anything to the
contrary contained herein, during the term of this Pledge Agreement until such
time as there exists a default in the payment of principal or interest on the
Note or any other default under the Note or hereunder, Pledgor shall be entitled
to all voting rights with respect to the Pledged Shares and shall be entitled to
receive all cash dividends paid in respect of the Pledged Shares. Upon the
occurrence of and during the continuance of any such default, Pledgor shall no
longer be able to vote the Pledged Shares and the Company shall retain all such
cash dividends payable on the Pledged Shares as additional security hereunder.
4. STOCK DIVIDENDS; DISTRIBUTIONS, ETC. If, while this Pledge Agreement
is in effect, Pledgor becomes entitled to receive or receives any securities or
other property in addition
- 1(c) -
<PAGE>
to, in substitution of, or in exchange for any of the Pledged Shares (whether as
a distribution in connection with any recapitalization, reorganization or
reclassification, a stock dividend or otherwise), Pledgor shall accept such
securities or other property on behalf of and for the benefit of the Company as
additional security for Pledgor's obligations under the Note and shall promptly
deliver such additional security to the Company together with duly executed
forms of assignment, and such additional security shall be deemed to be part of
the Pledged Shares hereunder.
5. DEFAULT. If Pledgor defaults in the payment of the principal or
interest under the Note when it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Note or this Pledge
Agreement occurs (including the bankruptcy or insolvency of Pledgor), the
Company may exercise any and all the rights, powers and remedies of any owner of
the Pledged Shares (including the right to vote the shares and receive dividends
and distributions with respect to such shares) and shall have and may exercise
without demand any and all the rights and remedies granted to a secured party
upon default under the Uniform Commercial Code of Wisconsin or otherwise
available to the Company under applicable law. Without limiting the foregoing,
the Company is authorized to sell, assign and deliver at its discretion, from
time to time, all or any part of the Pledged Shares at any private sale or
public auction, on not less than ten days written notice to Pledgor, at such
price or prices and upon such terms as the Company may deem advisable. Pledgor
shall have no right to redeem the Pledged Shares after any such sale or
assignment. At any such sale or auction, the Company may bid for, and become the
purchaser of, the whole or any part of the Pledged Shares offered for sale. In
case of any such sale, after deducting the costs, attorneys' fees and other
expenses of sale and delivery, the remaining proceeds of such sale shall be
applied to the principal of and accrued interest on the Note; provided that
after payment in full of the indebtedness evidenced by the Note, the balance of
the proceeds of sale then remaining shall be paid to Pledgor and Pledgor shall
be entitled to the return of any of the Pledged Shares remaining in the hands of
the Company. Pledgor shall be liable for any deficiency if the remaining
proceeds are insufficient to pay the indebtedness under the Note in full,
including the fees of any attorneys employed by the Company to collect such
deficiency.
6. COSTS AND ATTORNEYS' FEES. All costs and expenses (including
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Shares hereunder.
7. PAYMENT OF INDEBTEDNESS AND RELEASE OF PLEDGED SHARES. Upon payment
in full of the indebtedness evidenced by the Note, the Company shall surrender
the Pledged Shares to Pledgor together with all forms of assignment.
8. NO OTHER LIENS; NO SALES OR TRANSFERS. Pledgor hereby represents and
warrants that he has good and valid title to all of the Pledge Shares, free and
clear of all liens, security interests and other encumbrances, and Pledgor
hereby covenants that, until such time as all of the outstanding principal of
and interest on the Note has been repaid, Pledgor shall not (i) create, incur,
assume or suffer to exist any pledge, security interest, encumbrance, lien or
charge of any kind
- 2(c) -
<PAGE>
against the Pledged Shares or Pledgor's rights or a holder thereof, other than
pursuant to this Agreement, or (ii) sell or otherwise transfer any Pledged
Shares or any interest therein.
9. FURTHER ASSURANCES. Pledgor agrees that at any time and from time to
time upon the written request of the Company, Pledgor shall execute and deliver
such further documents (including UCC financing statements) and do such further
acts and things as the Company may reasonably request in order to effect the
purposes of this Pledge Agreement.
10. SEVERABILITY. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. NO WAIVER; CUMULATIVE REMEDIES. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12. WAIVERS, AMENDMENTS; APPLICABLE LAW. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company hereunder, inure to the benefit of the
Company and its successors and assigns. This Pledge Agreement shall be governed
by, and be construed and interpreted in accordance with, the laws of the State
of Delaware.
- 3(c) -
<PAGE>
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.
J.L. FRENCH AUTOMOTIVE CASTINGS,
INC.
By:
---------------------------------
Its:
---------------------------------
------------------------------------
Pledgor
- 4(c) -
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
MANAGEMENT OFFERING
JULY 16, 1999
<TABLE>
<CAPTION>
NAME CLASS A SHARES CASH NOTE
- ---- -------------- ---- ----
<S> <C> <C> <C>
Paul Anthony Buckley 200 842,400.00
Thomas C. Dinolfo 142.4501 600,000.00
Juan Manuel Orbea 60 160,600.00 92,120.00
Donald W. Porritt 17.8063 50,000.00 25,000.00
Lowell E. Shoaf 151.7094 575,500.00 63,500.00
Stephen E. Southern 94.9668 400,000.00
Charlie Waldon 118.7085 500,000.00
</TABLE>
<PAGE>
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
RATIO OF EARNING TO FIXED CHARGES
<TABLE>
<CAPTION>
Predecessor French Automotive
--------------------------------------- ----------------------------------------
Year Ended Three Months Nine Months Year Ended
December 31, Ended Ended December 31,
--------------------- March 31, December 31, ----------------------
1994 1995 1996 1996 1997 1998
-------- -------- ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Pretax income ........................... $ 30,999 $ 27,243 $ 5,788 $ (2,780) $ 12,678 $ 20,454
Fixed charges............................ 330 1,885 368 12,939 15,664 22,631
-------- -------- ------------ ------------ --------- ---------
$ 31,329 $ 29,128 $ 6,156 $ 10,159 $ 28,342 $ 43,085
-------- -------- ------------ ------------ --------- ---------
FIXED CHARGES:
Interest ................................ $ 330 $ 1,885 $ 350 $ 11,973 $ 13,981 $ 20,533
Dividends on convertible redeemable
preferred stock..................... -- -- -- 483 1,050 1,050
Amortization of deferred financing costs. 428 550 767
Interest component of rent expense ...... 18 55 83 281
-------- -------- ------------ ------------ --------- ---------
Total fixed charges ................ $ 330 $ 1,885 $ 368 $ 12,939 $ 15,664 $ 22,631
-------- -------- ------------ ------------ --------- ---------
RATIO OF EARNINGS TO FIXED CHARGES ........... 94.9 15.5 16.7 0.8 1.8 1.9
-------- -------- ------------ ------------ --------- ---------
-------- -------- ------------ ------------ --------- ---------
<CAPTION>
French Automotive
-----------------------------------------------------
Pro Forma
Six Months Ended ---------------------------
June 30, Year Ended Six Months
--------------------- December 31, June 30,
1998 1999 1998 1999
-------- -------- ------------ ----------
<S> <C> <C> <C> <C>
EARNINGS:
Pretax income ........................... $ 10,886 $ (8,424) $ (2,990) $ 5,100
Fixed charges............................ 9,785 14,345 44,915 14,857
-------- -------- ------------ ----------
$ 20,671 $ 5,921 $ 41,925 $ 19,957
-------- -------- ------------ ----------
FIXED CHARGES:
Interest ................................ $ 8,844 $ 13,823 $ 42,803 $ 13,823
Dividends on convertible redeemable
preferred stock..................... 525 -- -- --
Amortization of deferred financing costs. 276 404 1,831 916
Interest component of rent expense ...... 140 118 281 118
-------- -------- ------------ ----------
Total fixed charges ................ $ 9,785 $ 14,345 $ 44,915 $ 14,857
-------- -------- ------------ ----------
RATIO OF EARNINGS TO FIXED CHARGES ........... 2.1 0.4 0.9 1.3
-------- -------- ------------ ----------
-------- -------- ------------ ----------
</TABLE>
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
The following is a list of subsidiaries of J.L. French Automotive
Castings, Inc. (the "Company"). The common stock of the corporations listed
below is wholly owned, directly or indirectly, by the Company. If indented, the
corporation is a wholly-owned subsidiary of the corporation under which it is
listed.
<TABLE>
<CAPTION>
NAME OF CORPORATION JURISDICTION OF INCORPORATION
- ------------------- -----------------------------
<S> <C>
J.L. French Automotive Castings, Inc. Delaware
French Holdings, Inc. Delaware
J.L. French Corporation Wisconsin
Allotech International, Inc. Wisconsin
J.L. French FSC Corporation Barbados
Automotive Components Investments Ltd. England
Morris Ashby Limited England
Morris Ashby Castings Limited England
Kaye (Presteigne) Limited England
UJP Tools Limited England
MAC Leasing Limited England
Burdon & Miles Limited England
Wilson & Royston Limited England
Foundry Computational Services Limited1 England
Ansola Acquisition Corp., SRL Spain
Fundiciones Viuda de Ansola, s.a. Spain
Auxicomp Auxiliary Componentes, SL2 Germany
</TABLE>
- --------
1 Foundry Computational Services Limited is inactive. Morris
Ashby Limited owns 51%.
2 Ansola holds a 20% interest in Auxicomp Auxiliary Componentes, SL, which is
a German company.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
August 9, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
J.L. French Automotive Castings, Inc. of our report dated July 8, 1997, except
for Note 23, as to which the date is August 9, 1999, relating to the financial
statements of Morris Ashby plc, which appear in such Registration Statement. We
also consent to the reference to us under the heading "Independent Public
Accountants" in such Registration Statement.
PricewaterhouseCoopers
Birmingham, United Kingdom
August 9, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
11 1/2% SENIOR SUBORDINATED NOTES DUE 2009
OF
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
Pursuant to the Prospectus Dated ________, 1999
- ------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _______, 1999 UNLESS EXTENDED (THE "EXPIRATION DATE").
- ------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed, signed, and submitted to the Exchange Agent:
<TABLE>
<CAPTION>
<S> <C>
BY MAIL OVERNIGHT COURIER
U.S. Bank Trust National Association U.S. Bank Trust National Association
180 E. 5th Street 180 E. 5th Street
St. Paul Minnesota 55101 St. Paul Minnesota 55101
Attention: Specialized Finance Attention: Specialized Finance
Department Department
BY HAND FACSIMILE TRANSMISSION
U.S. Bank Trust National Association (651)244-1537
180 E. 5th Street
St. Paul Minnesota CONFIRM BY TELEPHONE
Attention: Specialized Finance (651)244-5011
Department
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT
(651) 244-5011, OR BY FACSIMILE AT (651) 244-1537.
The undersigned hereby acknowledges receipt of the Prospectus dated
_______, 1999 (the "Prospectus") of J.L. French Automotive Castings, Inc., a
Delaware corporation ("Company"), and this Letter of Transmittal (the "Letter
of Transmittal"), that together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 in principal amount of its Series B 11 1/2% Senior
Subordinated Notes due 2009 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement, for each $1,000 in principal
amount of its outstanding 11 1/2% Senior Subordinated Notes due 2009 (the
"Notes"), of which $175,000,000 aggregate principal amount is outstanding.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial
Owners") a duly completed and executed form of "INSTRUCTION TO REGISTERED
HOLDER AND/OR BOOK-
<PAGE>
EXHIBIT 99.1
ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER" accompanying this
Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns and transfers to,
or upon the order of, the Company all right, title, and interest in, to and
under the Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under
"SPECIAL DELIVERY INSTRUCTIONS" below (Box 3), please send or cause to be
sent the certificates for the Exchange Notes (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned
with respect to the Tendered Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver the Tendered Notes to the Company or cause
ownership of the Tendered Notes to be transferred to, or upon the order of,
the Company, on the books of the registrar for the Notes and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company upon receipt by the Exchange Agent, as the undersigned's agent,
of the Exchange Notes to which the undersigned is entitled upon acceptance by
the Company of the Tendered Notes pursuant to the Exchange Offer, and (ii)
receive all benefits and otherwise exercise all rights of beneficial
ownership of the Tendered Notes, all in accordance with the terms of the
Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between
the undersigned and the Company upon the terms and subject to the conditions
of the Exchange Offer, subject only to withdrawal of such tenders on the
terms set forth in the Prospectus under the caption "The Exchange Offer --
Withdrawal of Tenders." All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
Beneficial Owner(s), and every obligation of the undersigned or any
Beneficial Owner(s) hereunder shall be binding upon the heirs,
representatives, successors, and assigns of the undersigned and such
Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the
Tendered Notes and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances,
and adverse claims when the Tendered Notes are acquired by the Company as
contemplated herein. The undersigned and each Beneficial Owner will, upon
request, execute and deliver any additional documents reasonably requested by
the Company or the Exchange Agent as necessary or desirable to complete and
give effect to the transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) 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), (ii) 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, (iii) except as
otherwise disclosed in writing herewith, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company, and (iv) the undersigned and each Beneficial
Owner acknowledge and agree that 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 of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), in connection with
a secondary resale of the Exchange Notes acquired by such person and cannot
rely on the position of the Staff of the Securities and Exchange Commission
(the "Commission") set forth in the no-action letters that are discussed in
the section of the Prospectus entitled "The Exchange Offer." In addition, by
accepting the Exchange Offer, the undersigned hereby (i) represents and
warrants that, if the undersigned or any Beneficial Owner of the Notes is a
Participating Broker-Dealer, such Participating Broker-Dealer acquired the
Notes for its own account as a result of market-making activities
-2-
<PAGE>
EXHIBIT 99.1
or other trading activities and has not entered into any arrangement or
understanding with the Company or any "affiliate" of the Company (within the
meaning of Rule 405 under the Securities Act) to distribute the Exchange
Notes to be received in the Exchange Offer, and (ii) acknowledges that, by
receiving Exchange Notes for its own account in exchange for Notes, where
such Notes were acquired as a result of market-making activities or other
trading activities, such Participating Broker-Dealer will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "USE OF GUARANTEED DELIVERY" BELOW (Box 4).
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF NOTES TENDERED
(Attach additional signed pages, if necessary)
- --------------------------------------------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Registered Note Holder(s), Certificate Principal Amount Aggregate
exactly as name(s) appear(s) on Note Certificate(s) Number(s) of Represented by Principal Amount
(Please fill in, if blank) Notes* Certificate(s) Tendered**
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes.
All other tenders must be in integral multiples of $1,000 of
principal amount. Unless otherwise indicated in this column, the
principal amount of all Note Certificates identified in this Box 1 or
delivered to the Exchange Agent herewith shall be deemed tendered.
See Instruction 4.
- ------------------------------------------------------------------------------
-3-
<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BOX 2
BENEFICIAL OWNER(S)
- --------------------------------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED
NOTES ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE
UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
______________________________________________________________________________
(please print)
Address:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(include Zip Code)
Tax Identification or
Social Security No.:
- -------------------------------------------------------------------------------
-4-
<PAGE>
EXHIBIT 99.1
- -------------------------------------------------------------------------------
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
______________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery: __________________________
Name of Institution which Guaranteed Delivery: _______________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY
BOOK-ENTRY TRANSFER.
Name of Tendering Institution: _____________________________________________
Account Number: ___________________________________________________________
Transaction Code Number: __________________________________________________
- -------------------------------------------------------------------------------
-5-
<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
X ____________________________________________ Signature Guarantee
(If required by Instruction 5)
X ____________________________________________
(Signature of Registered Holder(s) or Authorized Signature
Authorized Signatory)
Note: The above lines must be signed by the X _____________________________________________
registered holder(s) of Notes as their name(s)
appear(s) on the Notes or by persons(s) Name: _________________________________________
authorized to become registered: holder(s) (please print)
(evidence of such authorization must be
transmitted with this Letter of Transmittal). Title: ________________________________________
If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer, or other Name of Firm: _________________________________
person acting in a fiduciary or representative capacity, (Must be an Eligible Institution
such person must set forth his or her full as defined in Instruction 2)
title below. See Instruction 5.
Name(s): _____________________________________ Address: ______________________________________
_____________________________________ ______________________________________
Capacity: ____________________________________ ______________________________________
(include Zip Code)
____________________________________
Area Code and Telephone Number:
Street Address: ______________________________ _______________________________________
______________________________ Dated: _______________________________________
(include Zip Code)
Area Code and Telephone Number:
______________________________
Tax Identification or Social Security Number:
______________________________
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
EXHIBIT 99.1
- ------------------------------------------------------------------------------
BOX 7
BROKER-DEALER STATUS
- ------------------------------------------------------------------------------
/ / Check this box if the Beneficial Owner of the Notes is a
Participating Broker-Dealer and such Participating Broker-Dealer
acquired the Notes for its own account as a result of
market-making activities or other trading activities. IF THIS BOX
IS CHECKED, A COPY OF THIS LETTER OF TRANSMITTAL MUST BE RECEIVED
WITHIN FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE BY J.L. FRENCH
AUTOMOTIVE CASTINGS, INC., ATTENTION CHIEF FINANCIAL OFFICER,
FACSIMILE (920) 458-4861.
- ------------------------------------------------------------------------------
-7-
<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PAYORS' NAMES: J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity whose
number you enter in Part 1 below. See instructions if your
name has changed.)
---------------------------------------------------------------------------------------
Address
---------------------------------------------------------------------------------------
SUBSTITUTE
City, State and ZIP Code
---------------------------------------------------------------------------------------
FORM W-9
List account number(s) here (optional)
Department of the
Treasury ---------------------------------------------------------------- ----------------------
PART 1--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER Social Security
Internal Revenue ("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING Number or TIN
Service BELOW
---------------------------------------------------------------------------------------
PART 2--Check the box if you are NOT subject to
backup withholding under the provisions of section
3406(a)(1)(C) of the Internal Revenue Code because
(1) you have not been notified that you are subject
to backup withholding as a result of failure to
report all interest or dividends or (2) the
Internal Revenue Service has notified you that you
are no longer subject to backup withholding. / /
- ---------------------------- ---------------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT PART 3--
THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND Awaiting TIN / /
COMPLETE.
SIGNATURE DATE
----------------------- --------------
- ---------------------------- ---------------------------------------------------------------- ----------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
-8-
<PAGE>
EXHIBIT 99.1
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. A properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein or such Tendered Notes must be
transferred pursuant to the procedures for book-entry transfer described in
the Prospectus under the caption "EXCHANGE OFFER--PROCEDURES FOR TENDERING"
(and a confirmation of such transfer received by the Exchange Agent), in each
case prior to 5:00 p.m., New York City time, on the Expiration Date. The
method of delivery of certificates for Tendered Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the tendering holder and the delivery will be deemed
made only when actually received by the Exchange Agent. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. No Letter of Transmittal or
Notes should be sent to the Company. Neither the Company nor the registrar is
under any obligation to notify any tendering holder of the Company's
acceptance of Tendered Notes prior to the closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their
Notes but whose Notes are not immediately available, and who cannot deliver
their Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date must tender their
Notes according to the guaranteed delivery procedures set forth below,
including completion of Box 4. Pursuant to such procedures: (i) such tender
must be made by or through a firm which is a member of a recognized Medallion
Program approved by the Securities Transfer Association Inc. (an "Eligible
Institution") and the Notice of Guaranteed Delivery must be signed by the
holder; (ii) prior to the Expiration Date, the Exchange Agent must have
received from the holder and the Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery or
facsimile transmission) setting forth the name and address of the holder, the
certificate number(s) of the Tendered Notes and the principal amount of
Tendered Notes, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, this Letter of Transmittal together with the certificate(s)
representing the Notes and any other required documents will be deposited by
the Eligible Institution with the Exchange Agent; and (iii) such properly
completed and executed Letter of Transmittal, as well as all other documents
required by this Letter of Transmittal and the certificate(s) representing
all Tendered Notes in proper form for transfer, must be received by the
Exchange Agent within five New York Stock Exchange trading days after the
Expiration Date. Any holder who wishes to tender Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery relating to such Notes prior
to 5:00 p.m., New York City time, on the Expiration Date. Failure to complete
the guaranteed delivery procedures outlined above will not, of itself, affect
the validity or effect a revocation of any Letter of Transmittal form
properly completed and executed by an Eligible Holder who attempted to use
the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or
the legal representative or attorney-in-fact of such registered holder) may
execute and deliver this Letter of Transmittal. Any Beneficial Owner of
Tendered Notes who is not the registered holder must arrange promptly with
the registered holder to execute and deliver this Letter of Transmittal on
his or her behalf through the execution and delivery to the registered holder
of the INSTRUCTIONS TO REGISTERED HOLDER AND/OR BOOK-ENTRY TRANSFER FACILITY
PARTICIPANT FROM BENEFICIAL OWNER form accompanying this Letter of
Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should
fill in the
-9-
<PAGE>
EXHIBIT 99.1
principal amount tendered in the column labeled "Aggregate Principal Amount
Tendered" of the box entitled "Description of Notes Tendered" (Box 1) above.
The entire principal amount of Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Notes held by the holder is not tendered, then Notes
for the principal amount of Notes not tendered and Exchange Notes issued in
exchange for any Notes tendered and accepted will be sent to the Holder at
his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, as soon as practicable
following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is
signed by the registered holder(s) of the Tendered Notes, the signature must
correspond with the name(s) as written on the face of the Tendered Notes
without alteration, enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be
issued (and any untendered principal amount of Notes is to be reissued) in
the name of the registered holder(s), then such registered holder(s) need not
and should not endorse any Tendered Notes, nor provide a separate bond power.
In any other case, such registered holder(s) must either properly endorse the
Tendered Notes or transmit a properly completed separate bond power with this
Letter of Transmittal, with the signature(s) on the endorsement or bond power
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be
endorsed or accompanied by appropriate bond powers, in each case, signed as
the name(s) of the registered holder(s) appear(s) on the Tendered Notes, with
the signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by
the Company, evidence satisfactory to the Company of their authority to so
act must be submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution unless the Tendered Notes are tendered (i) by a
registered holder who has not completed the box set forth herein entitled
"Special Delivery Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in
the applicable box (Box 3), the name and address to which the Exchange Notes
and/or substitute Notes for principal amounts not tendered or not accepted
for exchange are to be sent, if different from the name and address of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer.
If, however, a transfer tax is imposed for any reason other than the transfer
and exchange of Tendered Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered holder
or on any other person) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter
of Transmittal.
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<PAGE>
EXHIBIT 99.1
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide
the Company (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Company is not provided with the correct TIN,
the Holder may be subject to backup withholding and a $50 penalty imposed by
the Internal Revenue Service. (If withholding results in an over-payment of
taxes, a refund may be obtained.) Certain holders (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for additional instructions.
To prevent backup withholding, each holder of Tendered Notes must
provide such holder's correct TIN by completing the Substitute Form W-9 set
forth herein, certifying that the TIN provided is correct (or that such
holder is awaiting a TIN), and that (i) the holder has not been notified by
the Internal Revenue Service that such holder 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 holder that such holder is
no longer subject to backup withholding. If the Tendered Notes are registered
in more than one name or are not in the name of the actual owner, consult the
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of
Tendered Notes will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the right
to reject any and all Notes not validly tendered or any Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the right to waive any conditions of the
Exchange Offer or defects or irregularities in tenders of Notes as to any
ineligibility of any holder who seeks to tender Notes in the Exchange Offer.
The interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) by the
Company shall be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of Notes must be cured within
such time as the Company shall determine. Neither the Company, the Exchange
Agent nor any other person shall be under any duty to give notification of
defects or irregularities with respect to tenders of Notes, nor shall any of
them incur any liability for failure to give such notification. Tenders of
Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify any of the conditions in the Exchange Offer in the
case of any Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will
be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder
whose Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF NOTES; RETURN OF NOTES.
Subject to the terms and conditions of the Exchange Offer, the Company will
accept for exchange all validly tendered Notes as soon as practicable after the
Expiration Date and will issue Exchange Notes therefor as soon as practicable
thereafter. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted tendered Notes when, as and if the Company has given written or
oral notice (immediately followed in writing) thereof to the Exchange Agent. If
any Tendered Notes are not
-11-
<PAGE>
EXHIBIT 99.1
exchanged pursuant to the Exchange Offer for any reason, such unexchanged
Notes will be returned, without expense, to the undersigned at the address
shown in Box 1 or at a different address as may be indicated herein under
"Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer."
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<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
11-1/2% SENIOR SUBORDINATED NOTES DUE 2009
OF
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
Pursuant to the Prospectus Dated ___________, 1999
This form must be used by a holder of 11-1/2% Senior Subordinated Notes
due 2009 (the "Notes") of J.L. French Automotive Castings, Inc., a Delaware
corporation (the "Company"), who wishes to tender Notes to the Exchange Agent
pursuant to the guaranteed delivery procedures described in "The Exchange
Offer" of the Company's Prospectus, dated ___________, 1999 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus or the Letter of Transmittal.
- --------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ________, 1999 UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------
U.S. Bank Trust National Association
(the "Exchange Agent")
<TABLE>
<CAPTION>
<S> <C>
BY MAIL: OVERNIGHT COURIER:
U.S. Bank Trust National Association U.S. Bank Trust National
180 E. 5th Street Association
St. Paul Minnesota 55101 180 E. 5th Street
Attention: Specialized St. Paul Minnesota 55101
Finance Department Attention: Specialized
Finance Department
BY HAND: FACSIMILE TRANSMISSION:
(651) 244-1537
U.S. Bank Trust National Association
180 E. 5th Street CONFIRM BY TELEPHONE:
St. Paul Minnesota 55101 (651) 244-5011
Attention: Specialized Finance Department
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter
of Transmittal, receipt of which is hereby acknowledged, the principal amount
of Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the related Letter of
Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Signatures of Registered Holder(s) or
Authorized Signatory:_______________________________ Date: ___________________ , 1999
____________________________________________________ Address: _______________________________
____________________________________________________ ________________________________________
Name(s) of Registered Holder(s): ___________________ Area Code and Telephone No. ____________
____________________________________________________
____________________________________________________
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the Holder(s)
exactly as their name(s) appear on certificates for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): ___________________________________________________________________
_____________________________________________________________________________
Capacity: ___________________________________________________________________
Address(es): ________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
- -----------------------------------------------------------------------------
-3-
<PAGE>
- -----------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, guarantees deposit with the Exchange Agent of the
Letter of Transmittal (or facsimile thereof), together with the Notes
tendered hereby in proper form for transfer (or confirmation of the
book-entry transfer of such Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility described in the Prospectus under the caption
"The Exchange Offer - Guaranteed Delivery Procedures" and in the Letter of
Transmittal) and any other required documents, all by 5:00 p.m., New York
City time, on the fifth New York Stock Exchange trading day following the
Expiration Date.
<TABLE>
<CAPTION>
<S> <C>
Name of firm: ___________________________ ______________________________
(Authorized Signature)
Address: _________________________________ Name: ________________________
(Please Print)
__________________________________________ Title: _______________________
(Include Zip Code)
Area Code and Tel. No. ___________________ Dated: __________________, 1999
- -----------------------------------------------------------------------------
</TABLE>
DO NOT SEND SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF SECURITIES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF
TRANSMITTAL.
-4-
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole
risk of the holder, and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. As an alternative
to delivery by mail, the holders may wish to consider using an overnight or
hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. For a description of the guaranteed delivery
procedures, see Instruction 2 of the related Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant
of the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other
than the registered holder(s) of any Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Notes or signed as the name of the participant shown
on the Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and submit with the
Letter of Transmittal evidence satisfactory to the Company of such person's
authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
-5-
<PAGE>
EXHIBIT 99.3
INSTRUCTIONS
TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
11-1/2% SENIOR SUBORDINATED NOTES DUE 2009
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
__________________, 1999 (the "Prospectus") of J.L. French Automotive
Castings, Inc., a Delaware corporation (the "Company"), and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), that together constitute
the Company's offer (the "Exchange Offer"). Capitalized terms used but not
defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the
Exchange Offer with respect to the 11-1/2% Senior Subordinated Notes due 2009
(the "Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT):
$ of the 11-1/2% Senior Subordinated Notes due 2009
With respect to the Exchange Offer, the undersigned hereby
instructs you (CHECK APPROPRIATE BOX):
/ / TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED,
IF ANY): $
/ / NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in
the Letter of Transmittal that are to be made with respect to the undersigned
as a beneficial owner, including but not limited to the representations that
the undersigned's principal residence is in the state of (FILL IN STATE)
, (i) the undersigned is acquiring the Exchange Notes in
the ordinary course of business of the undersigned, (ii) the undersigned is
not participating, does not participate, and has no arrangement or
understanding with any person to participate in the distribution of the
Exchange Notes, (iii) the undersigned acknowledges that 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 of 1933, as amended (the "Act"), in
connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the Staff of the Securities
and Exchange Commission set forth in no-action letters that are discussed in
the section of the Prospectus entitled "The Exchange Offer - Resale of the
Exchange Notes," and the undersigned is not an "affiliate," as defined in
Rule 405 under the Act, of the Company or any Subsidiary Guarantor; (b) to
agree, on behalf of the undersigned, as set forth in the Letter of
Transmittal; and (c) to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of such
Notes.
- ------------------------------------------------------------------------------
Check this box if the Beneficial Owner of the Notes is a
Participating Broker-Dealer and such Participating Broker-Dealer
acquired the Notes for its own account as a result of market-making
/ / activities or other trading activities. IF THIS BOX IS CHECKED, A
COPY OF THESE INSTRUCTIONS MUST BE RECEIVED WITHIN FIVE BUSINESS
DAYS AFTER THE EXPIRATION DATE BY J.L. FRENCH AUTOMOTIVE CASTINGS,
INC., ATTENTION THOMAS C. DINOLFO, FACSIMILE (920) 458-4861.
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s): ________________________________________________
Signature(s): _______________________________________________________________
Name (PLEASE PRINT): ________________________________________________________
Address: ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Telephone number: ___________________________________________________________
Taxpayer Identification or Social Security Number: __________________________
Date: _______________________________________________________________________
- ------------------------------------------------------------------------------
-2-
